The government is likely to approve 660-megawatt imported LNG-based power plant under an unsolicited deal, said officials.
As the international tariff of the liquefied natural gas (LNG) sky rockets, this is expected to ramp up pressure on the country’s economy.
Bangladesh Power Development Board (BPDB) will pay Tk 2.9437 per kilowatt hour for the electricity produced from the locally supplied natural gas.
However, the tariff will be raised to Tk 5.4377 when the power is generated from the imported LNG, officials said.
In sum, the BPDB will pay over Tk 374.43 billion for the electricity produced from the local gas and Tk 691.65 billion for electricity produced from imported LNG over the period 22 years, official sources said.
Power Division has so far allowed three LNG-based power plants. But the tariff of the EPH-WPL Consortium may be comparatively lower of them.
The British day-ahead contract for natural gas hit 277p per therm, 32 percent higher than Monday and surpassing the 275p per therm level seen since 2018. Bangladeshalso allowed purchasing LNG at a rate of $36 per mmbtu (million British thermal units) on Wednesday. The rate was only $18 just two months ago, officials said.
The government has a target to generate 40,000MW of electricity by 2030 whereas around 6424MW of capacity will go to retirement. “So, the government will require to install additional capacity to meet annual demand of 10-14 percent growth,” said an official concerned.
Insidershowever said the costly LNG price will push up the production cost of electricity from the proposed plant.
Officials said Power Division is likely to place the proposal to allow the power plant before the Cabinet Committee on Public Purchase anytime soon.
Bangladesh Power Development Board suggested a conditional approval of the power plant subject to getting approval from Petrobangla for available gas and LNG import. This will also require approval from the Power Grid Company of Bangladesh (PGCB) for power evacuation.
In June 2020, the Energy and Mineral Resources Division gave its approval to the project on the condition that BPDB would ration gas supply to other gas-based power plants.
The natural gas supply from the existing fields is projected to come down by another 184mmcfd in FY2022-23 if the exploration companies don’t make major discoveries, the sources concerned said.
This is also 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.
The government has a plan to increase LNG import by at least 1600 mmcfd to supply 3465 mmcfd annually by the fiscal year 2023-24. In FY2024-25, the country’s LNG import will surge to 2350 mmcfd against the demand of 4343 mmcfd of natural gas, according to a Petrobangla projection.
The demand for natural gas is predicted to reach 5092 mmcfd by 2041, of which, 3850 mmcfd will be met by import.
Due to shortfall in natural gas supply, BPDB is now producing electricity from the expensive 1200MW diesel-fired plants at a cost of Tk12 billion per month.