Tk 600cr fails to boost power output

Bangladesh’s worsening fuel supply crisis is hampering electricity generation, with furnace oil-based power plants failing to deliver their targeted output despite a Tk 600 crore loan arranged to support fuel imports.

Delays in oil procurement, shortages of shipping capacity and a shortfall in supplies from the state-run Bangladesh Petroleum Corporation (BPC) have left a significant portion of liquid-fuel generation capacity underused.

The situation has raised concerns within the Power Division over whether the substantial allocation is translating into the expected benefit for consumers, particularly as the country continues to face a prolonged shortage of natural gas.

According to Power Grid Company of Bangladesh (PGCB) data at 2pm on Tuesday, national electricity demand stood at 15,828 MW against generation of 14,253 MW, leaving a shortfall of 1,575 MW.

Gas-fired plants supplied 5,083 MW, while oil-fired plants generated 2,487 MW and coal-fired plants 4,677 MW.

The remainder came from hydroelectricity (220 MW), solar (612 MW), wind (13 MW), and imports from India through Tripura (78 MW) and the Adani power plant (827 MW).

Output from oil-fired plants remains considerably below the level targeted for meeting additional demand.

For this summer, public and private liquid-fuel plants using heavy fuel oil (HFO) and high-speed diesel (HSD) were given an average daily generation target of 4,000 MW.

The plan envisaged generation of up to 2,180 MW during the daytime peak and 4,270 MW during the evening peak in September.

However, slow fuel-oil imports and supply constraints have made it difficult for the plants to meet those targets.

At a meeting on September 21, State Minister for Power Anindya Islam Amit expressed frustration over the shortfall despite the Tk 600 crore disbursement.

He sought details of how much each plant had received, how much oil had been imported and how much remained pending.

He also questioned the purpose of the disbursement if the public was not receiving the expected benefit.

Demand this year is higher than last year, while the loan was specifically intended to increase generation from liquid-fuel plants amid the continuing gas shortage.

Yet most plants reportedly failed to import oil despite receiving the funds in early September.

The Tk 600 crore loan will be adjusted against subsidies provided by the Finance Division to the power sector over four months, from March to June 2027.

Officials told the meeting that some plants had opened letters of credit (LCs) against the funds, some had already imported oil and others were still processing LCs.

Regular communication and monitoring with banks and shipping authorities have been ordered. Measures have also been sought for plants without their own oil-importing capacity.

BPDB Chairman Engineer Rezaul Karim said the crisis in the Middle East had disrupted fuel-oil imports in several ways. Most buyers are now attempting to source oil through Singapore, making it difficult to secure ships on time.

He expressed hope that oil imports would soon reach the targeted level and that generation from furnace oil-based plants would increase accordingly.

For September, liquid-fuel plants have a combined fuel-oil requirement of 630,000 tonnes.

Of this, 204,100 tonnes was sought from BPC, which has committed to supplying 163,000 tonnes during the month, leaving a shortfall of 41,100 tonnes.

State-owned companies have separately taken initiatives to import fuel oil.
The country’s power plants have a total derated capacity of 28,526 MW, including 5,331 MW from furnace oil-based plants and 768 MW from diesel-fired plants.

Furnace oil plants are primarily used during peak periods and cannot operate continuously at full capacity. At 70-80 per cent utilisation, they can generate up to around 4,000 MW.

At present, oil-based plants are producing about 3,233 MW.
Power Secretary Mirana Mahrukh has instructed officials to ensure that the generation target is achieved for the remainder of September.

The meeting also raised concerns over the prospect of higher subsidy costs from purchasing expensive oil-based electricity during the winter, when demand normally falls.

Plants with their own import capacity have therefore been advised to arrange independent oil imports during periods of lower demand, particularly in winter.

Monthly strategic planning has also been ordered to prepare for higher electricity demand next year during summer, Ramadan and the irrigation season.

Detailed information on fuel-oil imports, stockpiles, LCs, pending shipments and shipping arrangements is to be presented at the next meeting.

The meeting further discussed liquidated damages (LD) imposed on some companies over fuel shortages.

Officials noted that LD penalties had, in some cases, themselves hindered companies from importing oil on time.

The matter is to be reviewed from a legal perspective and appropriate measures taken.

Meanwhile, BPDB has substantial outstanding bills owed to private furnace oil-based power plants, which has also affected their ability to import fuel and maintain generation.

Power-sector losses could widen further this fiscal year amid the continuing gas shortage and high fuel prices, officials and industry sources said.

According to sources, the main obstacles to meeting the oil-import and generation targets despite the Tk 600 crore loan include disruptions caused by the Middle East crisis, a shortage of ships through the Singapore route, delays in LC processing, limited import capacity among some companies and BPC’s supply shortfall.

BPDB Chairman Rezaul Karim said efforts were continuing to secure fuel imports at the targeted level and increase generation from oil-fired plants as soon as possible.