Govt boosts oil fired-power to ease load-shedding

The government is ramping up furnace oil-fired power generation to ease severe load-shedding and free up scarce gas for industries, with around 2,500 megawatts (MW) of additional electricity expected to enter the national grid within three weeks.

The move comes as load-shedding has reached as high as 3,500MW in recent weeks despite Bangladesh having nearly twice as much installed generation capacity as current demand.

The government is working to clear outstanding payments to private power producers so they can import furnace oil and resume generation. 

At the same time, gas use by power plants will be reduced to divert supplies to industries facing prolonged shortages.

David Hasnat, president of the Bangladesh Independent Power Producers Association (BIPPA), said the government had informed private producers of plans to clear their outstanding bills.

“Once the outstanding billsare paid and accounts are updated, the plants will be able to return to full-capacity generation,” he said.

Private furnace oil-fired plants are currently generating around 2,600MW, while another 2,500MW could be brought back once fuel supplies improve, Hasnat said.

Around 60% of private producers’ total generation capacity is currently unused because they cannot import enough fuel due to unpaid bills, he said.

“Once the arrears are paid, furnace oil-fired plants could return close to full production within three weeks. The positive impact could be visible within 10-15 days,” he said.

Outstanding electricity bills owed to furnace oil-based private plants are estimated at around Tk12,000 crore, equivalent to about six months of payments.

The Bangladesh Power Development Board (BPDB) has prepared to generate up to around 4,000MW from furnace oil-fired plants, officials said.

The plants have been instructed to operate at around 80% capacity, with the target potentially rising to 90% depending on the power situation.

The Bangladesh Petroleum Corporation (BPC) has been asked to maintain adequate furnace oil stocks. 

BPC officials said demand from the power sector had risen by as much as 35%, prompting increased imports to build stocks and ensure uninterrupted supplies.

The government is also reducing gas supplies to power plants to divert more gas to industries, which have faced severe shortages for more than a month.

Energy expert Prof M Tamim said the move was practical under the circumstances.

“Reducing gas supplies to power plants and increasing supplies to industries is not an ideal solution, but there is no alternative at this moment,” he said.

He said around 2,500MW of oil-fired capacity was currently unavailable and could return quickly if private producers received their outstanding payments and secured fuel.

“Gas provides a higher economic return in industry. Many factories have been close to shutting down because of the prolonged gas shortage. So restoring gas supplies to industries should be given priority,” Tamim said.

He also urged the authorities to ensure adequate coal supplies so coal-fired plants do not stop because of fuel shortages.

Although oil-fired electricity is normally costlier than gas-fired generation, the economics have changed as LNG prices are currently around $24, Tamim said.

“Under the present market conditions, generating electricity with furnace oil has become a relatively cheaper option than using LNG,” he said.

However, he cautioned against increasing Bangladesh’s long-term dependence on oil-fired power.

The decision has also been influenced by uncertainty over LNG supplies amid the ongoing Middle East conflict. Officials said LNG suppliers had been difficult to secure through spot tenders, with even a cargo scheduled for 26 August reportedly unavailable.

BPDB data show Bangladesh has 133 power plants, including 78 private ones, with total grid-based generation capacity of around 29,593MW.

Gas-fired plants account for 12,472MW, or 42% of capacity; furnace oil-fired plants 5,641MW, or 19%; and coal-fired plants 7,203MW. Diesel, renewables and imported electricity account for 768MW, 1,129MW and 2,696MW respectively.

At 3pm on Monday, demand stood at 15,396MW against supply of 13,823MW, leaving a load-shedding gap of 1,573MW, according to the Power Division.

Power Division Secretary Mirana Mahrukh said the government was determined to reduce load-shedding and maintain industrial production.

“Instructions have been given to increase generation from furnace oil-fired power plants,” she said.

The gas crisis worsened after an accident at Maheshkhali on 21 July damaged an Excelerate LNG terminal during a ship-to-ship transfer, cutting supplies to the national grid by around 450MMcfd.

The terminal was later repaired after the government imported spare parts, and LNG supplies have begun recovering.

On Monday, two floating storage and regasification units at Maheshkhali supplied around 753MMcfd of LNG, while total gas supply stood at around 2,381MMcfd – an improvement from recent days when supply fell below 2,000MMcfd.

At a meeting chaired by State Minister for Power, Energy and Mineral Resources Anindya Islam Amit on Sunday, officials also stressed increasing furnace oil use to free up gas for industries.

The strategy is expected to provide short-term relief by boosting oil-fired generation and redirecting scarce gas to industry, but its success will depend on timely payments and adequate supplies of furnace oil and LNG.