As furnace oil stock runs low, outages set to worsen
Diesel is the highest consumed fuel in the country – around 72% – but its stock has now reached around 4 lakh tonnes
Load shedding is set to worsen as the furnace oil-run power plants, which provide one-fifth of the country's total electricity, are running out of fuel stock.
Meanwhile, the government has stopped buying LNG –- critical for gas-based plants–- from the spot market because of the extremely high price, sources said.
To take pressure off the national exchequer, the government recently shut down 11 diesel-run plants, including three government ones. Keeping those idle, however, would result in the government paying penalties amounting to Tk1,700 crore.
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The government is bound by agreement to pay the private power plants a fee known as capacity charges.
But the government will at least save imports of around 1.43 lakh tonnes of diesel.
Diesel is the highest consumed fuel in the country – around 72% – but its stock has now reached around 4 lakh tonnes.
According to sources at the Bangladesh Petroleum Company (BPC), the country has only 25 days' diesel stock with the daily demand being around 16,000 tonnes. In normal times, the BPC maintains a 45-day reserve of all types of fuel oil.
ABM Azad, chairman of the BPC, on Tuesday told the media, "At present, we have a stock for above 30 days. As per plan, we have imported the fuel for the first half of the year and will import for the second half as per the contracts."
He, however, admitted that payments against the deliveries have been delayed for the last two months due to the prevailing dollar crisis.
Amid this situation, a reason for optimism could have been the 1,320 megawatt coal-fired Rampal plant, which is expected to go into operation in September, but this would not bring any respite to power cuts as the plant would only transmit power to the south-western part of the country instead of the power-hungry Dhaka and Chattogram regions.
To connect Rampal to the main power grid, the government needs to complete a transmission line over the Padma River, something that would not happen until sometime next year.
State Minister for Power, Energy and Mineral Resources Nasrul Hamid in a press conference at the Secretariat on Monday also hinted at more load shedding to come.
LNG from spot market stopped
Furthermore, while gas is cheaper than furnace oil and diesel, its supply has reportedly dropped after the government stopped importing liquified natural gas (LNG) from the international spot market because of its price volatility.
Out of the country's total gas consumption, around 23%-24% used to come from imported LNG – of which 3% were from spot purchase.
The global economy recovery race after the pandemic and the fuel supply disruption following Russian invasion of Ukraine has hiked LNG price at record rate to $41 per mmBtu (Metric Million British Thermal Unit) at the international spot market which was below $3 per mmBtu last September.
To reduce the foreign currency expenditure and load shedding, the government has decided to stop spot LNG imports and cope with the crisis through austerity measures announced on Monday.
Talking about the gas supply boost, Hamid said "We have decided not to import spot LNG from the spot market until price drops."
Primary fuel of second largest source of electricity depleting
Apart from gas based plants, furnace oil-fired plants are the second largest source of the country's daily electricity demand.
That source is drying up too.
But shortage of furnace oil – which makes up 21% of the country's electricity output – will lead to more load shedding for the next three to four months before winter.
Independent power producers, which import furnace oil for electricity production, are struggling to keep enough stock amid the dollar shortage as they have not been paid electricity bills since March.
Some private power producers wishing anonymity told The Business Standard that the furnace oil stock for power generation is running out as they failed to import the required fuel on a regular basis due to the dollar shortage.
Imran Karim, president of the Bangladesh Independent Power Producers' Association (BIPPA), told TBS that it is true that the stock of furnace oil had fallen.
"Small power plants are suffering while the large power plant owners are also going to face the same problem. However, the Bangladesh Power Development Board and the Bangladesh Bank are tirelessly working on this to keep fuel imports and stocks normal," he said.
Apart from furnace oil, stock of other types of fuel is also dwindling due to trouble in opening LC to import fuel, a source at the BPC said. Banks are not agreeing to open LCs for the corporation at the published rate which is lower than the market rate. The corporation is seeking help from the Bangladesh Bank in the ongoing US dollar crisis so that the central bank instructs other banks to provide it with the currency at the government determined rate.
Rain, Rampal plant could bring relief
As per the BPDB's prediction, the higher electricity demand in the ongoing summer heat may continue till next October.
Till then, citizens would have to suffer from the energy crisis and load shedding.
But rains, and Rampal going online, can mitigate some of the energy crisis.
