Home ›› 31 Aug 2022 ›› Front
Bangladesh is constantly becoming a big primary energy importer putting an extra pressure on its economy, and struggling forex reserves. Currently, the government yearly spends around $14 billion on importing fuel, gas, coal and electricity - the four major utilities.
By 2030, this expenditure will exceed around $25 billion, when 80 percent of country’s primary energy will be imported, the data from different energy and power policies by the government showed.
Experts have expressed concern that huge energy import cost would destabilize the economy and common people would not bear the burden in near future because the country’s foreign earning has not grown rapidly.
In the meantime, gas, oil and electricity prices have skyrocketed with ongoing load-shedding increasing the demand for more fuel import which the country is unable to bear.
$13b gas import by 2030!
Petrobangla’s documents show importing 850mmcfd LNG will cost Tk44, 000 (4.4b counting Tk100 against a dollar) crore annually but due to lack of money it is not possible to import this amount of gas.
Petrobangla says the daily gas demand is 3,400mmcfd while the supply stands at 2,800mmcfd. In 2030 the demand will be 4,500mmcfd while domestic production will decrease to 1,500mmcfd.
Given the present situation the Energy Division has planned to import 3,000mmcfd LNG by 2030. The price of this amount of LNG at the current market rate (10 dollars per MMBTU) will be $13 billion.
Recently a presentation at Bidyut Bhaban by Forum for Energy Reporters said the present ratio of domestic gas and LNG supply is 80:20 and per cubic meter average wholesale price is Tk12.
By 2030, the gas and LNG supply ratio will stand at 50:50 and selling price at Tk28.
Again, if the demand increases, domestic supply and LNG ratio will be 20:80 and the price will be Tk40. People will not be able to bear the burden of the prices, says the presentation.
‘’The new LNG import plan is unrealistic. The economy does not have the capacity to buy these global strategic products (gas). Bangladesh has no capacity to build the infrastructure to bear this amount of gas import by 2030,” said M Tamim, Prof of Petroleum Engineering at BUET.
97% fuel oil is imported
Bangladesh consumes 6.5 million tonnes of fuel oil annually of which 97 percent are imported. According to the Bangladesh Petroleum Corporation (BPC) it imported fuel oil of $4.4 billion in FY-22.
Recently BPC in a statement said unprecedented price hike after February this year fuel import cost has increased rapidly due to the global price hike. According to this BPC, cost of fuel oil will stand at over $6 billion in the FY-23.
BPC predicted that by 2030 the fuel oil demand can be 7 million tonnes when the import cost will exceed $8 billion if the fuel price comes down as normal as $70 per barrel, a higher official of BPC told The Business Post.
Meanwhile 4.5 million metric tonnes of diesel and furnace oil are annually used in private power plants of the country that are imported by the power plant owners.
Bangladesh Power Development Board (BPDB) pays its price based on the international market rate along with 10 percent service charge (Tk9,000 crore) which is illogical, explained Prof Shamsul Alam.
According to BPDB, currently 30 percent of electricity comes from oil-fired plants due to lack of gas adding an additional cost of Tk12, 000 crore and private plants spend Tk 24,000 crore annually on fuel cost.
Generation of 40,000MW power by 2030
According to the Power System Master Plan-2016, the government aims to achieve 40,000MW power generation capacity by 2030. There are also plans to import electricity from neighboring India, Bhutan and Nepal at affordable prices.
Despite long discussions, electricity import from Bhutan and Nepal has not yet been possible.
However, BPDB is currently importing 1,160MW of electricity from India which is 9 percent of the country’s total capacity. The expenditure on Indian electricity in FY21 was Tk4,712 crore, BPDB annual report shows.
In addition, BPDB signed an agreement with the country’s Adani Group in 2017 to buy another 1320MW of electricity from India that will start coming from December this year. BPDB will spend $19 billion and Tk8, 000 crore annually as per the 25-year contract.
From 2024, BPDB will spend Tk14, 000 crore annually on Indian electricity. Although there is a controversy over this power purchase agreement of Adani, Power Secretary Habibur Rahman said.
Adani’s power is cheaper than oil-based power plants. This power import is profitable for the country.
BPDB says four coal-fired power plants with a total capacity of 7,000MW are currently under construction. They are expected to come into production by 2024 and will run on imported coal.
The Power Division is also set to seek funding from Saudi Arabia for Matarbari 2X600MW Ultra Super Critical Coal-Fired Power Project (Phase 2). This project hit a dead-end after Japan suspended funding in June.
At present, of the two operational plants that generate 1,845MW together, the 525MW one in Barapukuria runs on coal from the mine there and the 1,320MW one in Payra, Patuakhali runs on coal imported from Indonesia.
According to BPDB estimates, it takes 3 million tonnes of coal to generate 1,000MW of electricity annually — which means the country will need 27 million tonnes of coal if seven plants are to add over 9,000MW to the National Power Grid from 2025.
Bangladesh will have to spend Tk4, 860 crore every year to import coal from 2025.
Professor Badrul Imam told The Business Post over import dependency had already created big threat to our energy security as the government policy is totally suicidal.
“Our gas prospect is very good and there is no alternative to domestic gas exploration,” he added.
