Power, gas shortages drive sharp rise in diesel demand

The country is seeing a sharp increase in demand for diesel as persistent electricity and natural-gas shortages force factories and other businesses to rely more heavily on diesel-powered generators, according to the Bangladesh Petrol Pump Owners Association.

In a letter sent to the chairman of the Bangladesh Petroleum Corporation (BPC) on Friday, the association’s convener, Syed Sazzadul Karim Kabul, urged the state-owned fuel agency to ensure adequate diesel supplies across the country in line with rising demand.

The association warned that limited supplies against elevated demand were creating what it described as a “silent shortage” of diesel in several areas.

It said the situation was particularly acute around industrial zones, where filling stations were reportedly having to ration supplies to customers.

According to the association, diesel demand in the Dhaka Division has increased by roughly 10 to 12 times compared with normal periods.

The claim, however, has not been independently corroborated by publicly available BPC consumption data and should therefore be treated as an industry-association estimate rather than an established national statistic.

The association also alleged that oil marketing companies have been subject to daily supply limits, preventing filling stations in high-demand areas from building stocks according to their requirements.

It further claimed that officials could face accountability for supplying fuel above prescribed quantities.

These allegations could not be independently verified from publicly available government documents reviewed for this report.

Power shortages drive generator use
The broader backdrop to the diesel demand surge is a severe energy squeeze that has affected Bangladesh since July.

Power shortages intensified in early August as gas shortages constrained gas-fired generation.

Power Grid Bangladesh data showed the average hourly load-shedding level reaching around 3,000 megawatts on Aug. 9, while the national generation shortfall had risen sharply from 335MW on Aug. 6 to 2,167MW on Aug. 8.

At the same time, the country’s gas system was hit by repeated disruptions at floating LNG terminals in Moheshkhali.

On Aug. 19, the Excelerate-operated LNG terminal temporarily stopped supplying the national grid after running out of LNG.

Total gas availability subsequently fell below 2,200 million cubic feet per day (mmcfd) against national demand of about 3,800 mmcfd.

Gas supply has since improved, but the gap remains substantial. On Aug. 17, total gas availability was reported at around 2,420 mmcfd against demand of approximately 3,800 mmcfd.

That implies a supply shortfall of about 36 percent at that point-not precisely the 25 percent figure cited in the association’s letter.

The 25 percent figure therefore should be presented as the association’s assessment rather than as a verified nationwide gas-supply statistic.

Factories increasingly turn to diesel
The shortage has had a direct impact on industry. Factory owners have reported using diesel generators to keep production running during power outages and periods of inadequate gas pressure.

In July that some factory owners were paying about Tk10 extra per litre for diesel to keep generators operating, underscoring the growing dependence on liquid fuel as an emergency alternative to grid electricity and gas.

The government has also moved to increase reliance on oil-fired power generation.

A plan announced this week envisages enabling diesel- and furnace-oil-fired power plants to generate an additional 2,500MW, potentially freeing up around 500 mmcfd of gas for industrial users.

Supply concerns raise risk of panic buying
The petrol-pump owners’ association warned that growing demand and uncertainty over supplies were creating a form of panic among buyers, particularly in industrial areas.

The association said filling stations serving densely industrialised areas were receiving quantities that were sometimes insufficient to meet customer demand, forcing operators to ration sales and maintain lower stocks than usual.

There is evidence that fuel-supply pressures have occurred in Bangladesh this year, but the current diesel situation should not be equated with a confirmed nationwide physical shortage.

BPC has continued importing and distributing petroleum products, and official data show that diesel remains the country’s largest petroleum-fuel market.

For August, the government has kept the retail price of diesel unchanged at Tk115 per litre.