Amid the gas shortage, the government is looking to increase its reliance on furnace-oil-fired power plants to make up for the shortfall in electricity generation. It has planned to generate an average of around 4,000 megawatts of electricity a day from these plants in September.
To facilitate this, the Bangladesh Power Development Board (BPDB) has sought 204,100 tonnes of furnace oil from the Bangladesh Petroleum Corporation (BPC).
The oil has been requested on an urgent basis for 53 public and private power plants. Together, these plants have a generation capacity of 5,538 megawatts.
BPC sources, however, said meeting such a large demand would not be easy. During the first five days of September, BPC sold 31,902 tonnes of furnace oil across all sectors.
At the end of 5 September, its available stock stood at 14,751 tonnes. Another 100,000 tonnes is expected to be imported during the rest of the month, while 25,000 tonnes is expected from local sources.
This means that, under the current plan, the total amount of furnace oil available for supply throughout September would be around 171,653 tonnes. BPDB’s demand alone, excluding demand from industries and other sectors, is 32,447 tonnes higher than that.
Industries are buying additional furnace oil because of the gas shortage, causing sales of the fuel to rise sharply. During the first five days of September, average daily sales stood at 6,380 tonnes, compared with 2,177 tonnes during the same period last year. In other words, sales have almost tripled.
The electricity situation is now directly tied to the supply of furnace oil. According to Power Grid Bangladesh, electricity demand in the country stood at 16,619 megawatts on the evening of 5 September, while 14,361 megawatts was supplied. This resulted in a 2,258-megawatt shortfall, or load-shedding.
The Energy and Mineral Resources Division of the Ministry of Power, Energy and Mineral Resources held a meeting on 3 August to discuss the supply of furnace oil to power plants. Mohammad Mofizur Rahman, managing director of state-owned oil company Padma Oil PLC, attended the meeting.
He told Prothom Alo that BPDB had initially sought 84,000 tonnes of furnace oil for September. Later, after a decision was taken to increase generation from oil-fired plants, the demand rose to more than 200,000 tonnes. He said it would not be possible to supply such a large quantity at once, which is why the meeting discussed supplying the oil in phases.
Growing reliance on oil
The electricity situation was even worse toward the end of August. On 27 August, generation was disrupted at 62 of the country’s 137 power plants. Twenty of them were completely shut down. Load-shedding peaked at 3,664 megawatts that day. At the same time, 24 power plants faced shortages of fuel oil.
Bangladesh has 65 furnace-oil-fired power plants with a combined generation capacity of more than 6,000 megawatts. Toward the end of August, these plants were generating around 3,500 megawatts at night and between 1,500 and 2,000 megawatts during the day.
Because of the gas shortage, a large number of gas-fired plants could not be operated at full capacity. Against this backdrop, the government decided to increase generation from oil-fired plants.
Mohammad Zahurul Islam, BPDB member for generation, told Prothom Alo that BPC has some furnace oil in stock. Several oil tankers are also on their way, while efforts are underway to bring in another vessel. BPC has told them that, taken together, it should be possible to arrange an amount of oil close to BPDB’s requirement within this month.
However, all the oil will not be needed at once. The power plants can continue operating if the fuel is supplied in phases. He said BPDB’s demand for 204,100 tonnes covers only those plants that will receive oil through BPC. The demand of private plants that import furnace oil themselves is not included in this figure.
Generation will fall without enough oil
BPDB’s list shows that the largest quantity of furnace oil has been requested for three plants operated by B-R Powergen Limited (BRPL). The demand is 14,000 tonnes for the plant at Sreepur, 13,000 tonnes for Kadda and 8,000 tonnes for Mirsharai—a total of 35,000 tonnes for the three plants.
BRPL Executive Director Gobinda Chandra Laha told Prothom Alo that the Sreepur and Kadda plants each require an average of around 800 tonnes of furnace oil a day to operate at full capacity.
At Mirsharai, the oil has to be transported by road. Although three contractors are engaged there, they can collect a maximum of around 500 tonnes of oil a day.
Gobinda Chandra said all three plants are currently operational. However, their generation depends on demand from the National Load Despatch Centre and the availability of oil. Toward the end of last month, the plants could not be operated at full capacity for some periods because of a partial shortage of fuel.
Even if enough oil is available, however, generation costs will rise. Gobinda Chandra Laha said furnace oil cost around Tk 71 per litre last year, compared with around Tk 100 now. As a result, while running more oil-fired plants could reduce load-shedding, it would also increase the cost of electricity generation.
Limits on import capacity
BPC is trying to increase furnace oil imports to meet BPDB’s additional demand. However, there are infrastructural limitations on both imports and unloading.
An earlier letter from BPC said imported refined petroleum products are unloaded through Dolphins-5 and Dolphins-6 jetties. Using the same infrastructure, BPC can import a maximum of around 100,000 tonnes of furnace oil a month, alongside diesel, jet fuel, octane and marine fuel. The scope for importing more is limited.
This capacity is expected to increase once a project allowing fuel oil to be unloaded directly from large tankers at sea through pipelines becomes operational. However, the project has not yet started operating.
As a result, if demand for furnace oil suddenly doubles or triples, it becomes difficult for BPC to rapidly increase imports. There is also uncertainty over whether vessels will arrive on time because of conditions in the international supply market.
BPC Chairman Mohammad Manzur Alam Pradhan told Prothom Alo that efforts were underway to increase furnace oil imports. Although it may not be possible to meet BPDB’s entire demand, he said BPC would try to supply as much as possible, as close to the requested quantity as possible.