Monday, 18 October, 2021
E-paper

Govt faces fund crisis as global fuel prices soar

Govt faces fund crisis as global fuel prices soar

Popular News

The government is facing huge fund crunch after an abrupt rise of fuel prices in the international market.

Bangladesh Power Development Board (BPDB) has yet to pay over two months of electricity bills to private sponsors while natural gas supply faces in unusual rationing due to sky-rocketing natural gas tariff hike in the international market.

“Cost of electricity generation is significantly high now as it increased by around Tk 40 billion each in July and August 2021. It might cross Tk 50 billion in the current month thanks to the higher tariff of furnace oil, diesel, coal and LNG in the international market,” BPDB chairman Engr Balayet Hossain told the Daily Sun.

The BPDB has a history to unpaid bill only one month, he said.

Now, the furnace oil tariff rose to $265 per metric tonnes, 2.5 times higher just in a year.

Besides, the LNG tariff increased to $25 per mmBtu (million British thermal units) which was only $18 just a month ago.

The Energy and Mineral Resources Division (EMRD) scrapped a proposal to procure LNG from the international market due to excessive tariff under bidding method.

The EMRD will invite fresh tender for import of the LNG to meet for reeling demand of the fossil fuel for electricity generation as well as industrial production.     

The cabinet purchase committee approved a proposal from the EMRD on Wednesday for extension of tenure of the Chinese XMC-CMC Consortium for a six-year term.

This is to extract coal from Boropukuria Coal Mine in Dinajpur with around Tk10.50 billion.

The EMRD has taken the initiative to extend the tenure as the coal prices increased significantly.

“We have down-sized our production of electricity from coal, gas and oil-based one now due to tariff hike of LNG, coal and even furnace oil,” State Minister for Power and Energy Nasrul Hamid told the Daily Sun.

“So, Prime Minister Sheikh Hasina has allowed to resume LNG import from spot market again,” he said.    

EMRD would procure some 33.60 lakh mmBtu LNG from the spot market from Vitol Asia Pte Ltd, Singapore with around Tk 10.02 billion after cabinet’s purchase committee approval last Wednesday.

The government has a target to generate 40,000MW of electricity by 2030 under short, mid and long terms plans.

BPDB already reached the capacity to generate 25,227MW of electricity including captive power plants, according to a power division official.

Due to natural gas supply shortfall, the BPDB is producing most expennsive electricity from 1200MW diesel-fired plants which require to feed Tk 12 billion per month.

Besides, the electricity generation from 5,800MW furnace oil-based plants have increased production cost burden.

Besides, due to limitation of transmission line, the 1320MW capacity Payra coal-fired plant produces only 500MW of electricity which required to pay capacity payment to the joint venture company.

In a letter to Power Division early this month, BPDB said it required around Tk 164.37 billion to meet the loss.

Natural gas supply from the existing onshore gas fields is projected to start depleting to 137mmcfd in the current fiscal year, according to a Petrobangla prediction.

The onshore (local) natural gas production will drop to 742mmcfd by 2041 if there is a delay in major hydrocarbon discoveries, according to the projection (2021-2041) made by Bangladesh Oil, Gas and Mineral Corporation (Petrobangla).

Petrobangla was supplying an average of 2432mmcfd of natural gas from onshore fields last fiscal year.

The supply will be reduced to 2,295mmcfd anytime this fiscal year thanks to over-dependency on a few sources, said officials.

The natural gas supply from the existing fields will come down by another 184mmcfd in FY2022-23 if the exploration companies don’t make major discoveries, sources said.

Besides, it is projected that the supply of natural gas will fall to 435mmcfd in FY2023-24 as most of the Chevron-operated gas fields are experiencing a fall in output.

Petrobangla has a plan to drill 86 work over wells, 23 development wells and 30 exploratory wells to raise the gas output in FY2022-23.

With this, the number of work-over wells will increase to 128 while the number of development and exploratory wells will also increase to 226 and 171 respectively.

In June last, the ministry formed a high-powered committee led by Additional Secretary AKM Fazlul Haque to feed the power plants with sufficient gas for power generation. The committee submitted its report before a meeting on July 7, 2021.

It made series of recommendations including rationing in gas supply to CNG stations, captive power plants and industrial units to feed power plants as the top priority.

This will be done as part of the government’s austerity measures in the supply of natural gas. The government has already started rationing in different sector including CNG stations.

The government has a plan to increase LNG import at least by 1600 mmcfd to supply 3465 mmcfd annually by FY 2023-24.

In FY 2024-25, the country’s LNG import will surge to 2350 mmcfd against the requirement of 4343 mmcfd of natural gas, according to a Petrobangla projection. 

The demand of natural gas is predicted to reach 5092 mmcfd by 2041, of which, 3850 mmcfd will be met by import.

According to sources, the EMRD has no specific plan how to overcome the natural gas crisis through existing fund.

It plans to raise gas tariff in coming days to meet the fund crunch, sources said.