33pc power plants grapple with fuel crisis
At present, nearly 33 per cent of the total power plants are experiencing shortage of gas, coal and fuel oil. Of the 9000 megawatts capacity, these plants are only generating an average of 3,500 MW every day which has led to increased load shedding.
This has been derived by analysing the data from the Power Grid Company of Bangladesh (PGCB), the sole state agency that transmits electricity from power plants to the national grid.
In the last decade and a half, the number of power plants has risen from 27 to 153 in the country. Power-connection has been reached even in isolated chars, inaccessible hills. The government celebrated the milestone of 100 per cent electrification. Yet people have been suffering immensely due to load shedding for hours everywhere in cities and rural areas. Despite having the necessary capacity to generate adequate electricity, it is not being used due to energy crisis.
Experts are blaming mismanagement and import-oriented planning for causing such a crisis in the power and energy sector.
According to PGCB account, a large segment of the total 153 power plants in the country remains closed due to technical issues. On 3 June, 46 power plants were shut down due to technical issues. The full capacity of 56 plants was not used due to shortage of fuel on the same day. On 4 June, 50 plants got closed due to technical issues while 52 plants experienced fuel shortage. On 5 June, 50 plants were also closed due to technical reasons and 51 power plants could not produce electricity properly due to lack of fuel. Overall, the power plants suffering from fuel crisis are producing an average of 3,500 MW electricity out of the total capacity of 9,000 MW. Apart from this, an average of 8,000 MW is being produced per day from the remaining power plants.
Load shedding has been increasing every day for the past week because of low production and higher demand. About 3500MW load shedding per hour has to be implemented after midnight. On Tuesday the maximum load shedding during daytime reached nearly 3000 MW. Dhaka dwellers experienced three to four hours of load shedding while it reaches up to 10 hours in rural areas.
Now the prices are low in the international market and there is plenty of supply. But the government does not have dollars to purchase. This is a unique situation. Not just energy, economic mismanagement is now in all sectors
Members of parliament of the opposition party Jatiya Party expressed their agitation in the Jatiya Sangsad over the prevailing power outage across the country. They said, although the government was successful in the power sector, the situation suddenly changed. This growing trend of load shedding may ignite people’s anger. They further argued, this situation would not have exacerbated had coal and gas been imported earlier.
Responding to the arguments, state minister for Power Nasrul Hamid requested everyone to have 'a little patience' claiming that this crisis emerged all on a sudden. He further noted that the situation will restore in the next 15-16 days.
Coal shortage due to dollar crunch
There are five coal mines in the country but only one is extracting. A power plant at Barapukuria runs with its own coal. This plant also cannot use its full capacity due to lack of coal. The government made a policy decision not to extract from the remaining four mines due to debate over the method of coal extraction. So the remaining four power plants are dependent on imported coal. But now the government is thinking of extracting coal from domestic mines.
One out of five coal-operated power plants is completely shut down due to shortage of coal. Three of the remaining four have coal shortages. Only one of every five plant is running with full capacity.
Payra power plant with a capacity of 1,320 MW came into production three years ago with imported coal. The plant stopped production completely last Monday as coal supply was cut off due to outstanding bills caused by dollar crisis. The process of bringing coal has been resumed after paying USD 100 million dollars out of USD 300 million outstanding.
Bagerhat's Rampal power plant was closed twice due to shortage of dollars to buy coal. Currently it is operational but not producing electricity at full capacity. A unit of 660 MW capacity is generating an average of 300 MW.
Managing director of Rampal Power Plant Syed Ekram Ullah told Prothom Alo on Tuesday that the production is less than the capacity due to low stock of coal. A ship with coal is to arrive this Wednesday. Apart from this, the process of opening letter of credit is underway to increase imports.
Gas shortage prevailing for a long time
Of the total power generation capacity, 47 per cent is gas-fired. The production capacity of 64 gas-based plants is 11,000 MW. Due to shortage of gas supply, 3000 MW power generation capacity has to be shut down in turn. Of the remaining 8,000 MW capacity, an average of just over 6,000 MW is being generated. The current gas supply stands at 300 million cubic feet per day, falling short of the demand of 380 million cubic feet.
Petrobangla sources said, Petrobangla is not able to pay the bills of the multinational company Chevron regularly due to dollar scarcity. LNG imports are also being disrupted as Tk 120 billion of import duty is outstanding at present.
People informed said, this situation has emerged due to focus on import rather than emphasis on gas exploration in the country. No major gas field has been discovered in the last 20 years. Meanwhile, BAPEX has discovered some small gas fields. The state gas exploration agency has not been upgraded. It has been more than a decade since the settlement of maritime dispute with neighbouring countries; no new gas exploration has been conducted.
Oil-powered plants have no funds
There are eight diesel powered power plants in the country. The government decided to close the diesel-powered plants due to the increase in the price of fuel oil in the global market last year. Three of those are now generating power at present and remaining five are kept closed. Apart from this there are 65 furnace oil fired power plants. The total production capacity is a little more than 6000 MW. Of this, 25 to 28 power plants are unable to produce regularly due to lack of fuel. In total, an average of 3,500 MW of electricity is being generated from oil-run power plants.
Sources of Bangladesh Power Development Board (PDB) say that PDB buys electricity at a steep price to sell it at low prices. The government provides subsidies to meet this deficit. But finance ministry does not pay subsidy regularly. The power plants are awaiting payment of Tk 270 billion while private sector power plants are owed Tk 200 billion.
Imran Karim, the former president of Bangladesh Independent Power Producers Association, an organisation of private sector power producers, told Prothom Alo that the price of oil in the global market went down. So generating electricity from furnace oil is now cost effective. But due to lapses in the payment of the bills, the bank's liability cannot be paid and new letter of credit to import fuel oil cannot be opened.
Dependence on import causing crisis
Experts argued that mega plans were adopted in 2010 and 2016 in energy sector depending on energy import. Considering the current prices in the international market, it will take USD 11 to 12 billion US dollars to import fuel annually. If the price rises, the demand for dollars will increase.
An account of Bangladesh Bank reveals that the cost of energy import has increased a lot. Only the import of petroleum products cost USD 3.67 billion from July to December of the last fiscal 2021-22. In the same time period of the current fiscal 2022-23, it went up by 46 per cent amounting to USD 5.36 billion. The central bank is struggling to meet the increased import costs in the energy sector.
According to the power division, the power and energy sector needs at least USD 1.25 billion on average every month to pay various bills and import all types of fuel. It amounts to a total annual requirement of USD 15 billion. Various agencies in the power and energy sector are regularly facing complications while opening letter of credit for imports. Outstanding bills to foreign suppliers are also increasing.
Power division said, Bangladesh has made extensive development in the power sector with various short, medium and long term plans. Every house in the country has been brought under electricity facility. In 2008, only 44 per cent of people had access to electricity, which now rose to 100 per cent. But the impact of the Covid-19 pandemic and the Russia-Ukraine war have caused severe instability in international energy markets.
However, experts say that the fuel price in global market is going down. Crude oil prices fell by around 33 per cent in May this year compared to the average price in April-June last year. LNG prices rose above USD 60 per million metric British thermal units (MMBTU). Now it's under USD 15. The price of coal has fallen from USD 300 per tonne to below USD 150. But the power plants are being shut down due to shortage of fuel. Every power plant has to pay rent (capacity charge) even if it does not generate power. PDB has spent more than Tk 200 billion as capacity charge in the previous fiscal 2021-22.
Energy expert M Tamim told Prothom Alo that import dependence is the root cause of the crisis. Dependency on import yields two types of crisis. Increase in prices and supply shortages in the global market. Now the prices are low in the international market and there is plenty of supply. But the government does not have dollars to purchase. This is a unique situation. Not just energy, economic mismanagement is now in all sectors.
* The report was originally published in the print edition of Prothom Alo and has been rewritten for English edition by Farjana Liakat