Bangladesh to ramp up coal power as LNG imports face uncertainty over Mideast crisis
Officials say contingency measures are already underway but warn that prolonged disruption could force load shedding and higher fuel costs.
Bangladesh is preparing to ramp up electricity production from coal-fired power plants as uncertainty over liquefied natural gas (LNG) imports through the Strait of Hormuz raises the risk of gas shortages and a likely 1,800-megawatt electricity shortfall.
Officials say contingency measures are already underway but warn that prolonged disruption could force load shedding and higher fuel costs.
Power and Energy Division officials said instructions have been issued to relevant authorities to boost output from coal-based plants as a precaution.
Keep updated, follow The Business Standard's Google news channel
At present, state-owned Bangladesh Oil, Gas & Mineral Corporation Petrobangla is supplying between 850 and 900 million cubic feet per day (mmcfd) of gas to power plants, against a demand of 2,524.9 mmcfd in the power sector.
Energy Division officials said gas supply to power plants could be reduced by 200-250 mmcfd due to uncertainty over LNG cargoes passing through the Strait of Hormuz, potentially bringing supply down to around 700 mmcfd.
Such a cut could lead to a generation shortfall of between 1,400MW and 1,800MW, officials estimate.
Although the Energy Division had earlier planned to supply 1,000 mmcfd of gas to the power sector, official data show that on 1 March Petrobangla supplied only 869.7 mmcfd against the stated demand of 2,524.9 mmcfd – a figure sector insiders described as "suppressed demand".
When asked how the government plans to tackle the situation, Power and Energy Minister Iqbal Hasan Mahmud Tuku told The Business Standard yesterday, "We are observing the situation and drawing up a plan to tackle the issue as it develops."
Energy Secretary Mohammad Saiful Islam told TBS yesterday that Bangladesh's long-term LNG contracts are largely tied to Middle Eastern suppliers, with most cargoes routed through the Strait of Hormuz.
"Our largest long-term LNG supplier, QatarEnergy, ships via the Strait of Hormuz, which is worrying for us given the current situation in the Middle East. If supply is disrupted, we will have to reduce gas supply to power plants," he said.
Following strikes on Iran by the United States and Israel, a warning was aired over maritime radio on Saturday night urging ships to avoid transiting the Strait of Hormuz.
However, Iran's Foreign Minister Abbas Araghchi told Al Jazeera on Sunday that Tehran has no plans at present to shut the strategic waterway.
Shipping data showed that some vessels continued to pass through the route. Yet the pullback of commercial operators, major oil firms, and insurers has in effect left the corridor largely closed to global shipping.
According to Petrobangla's import plan, seven LNG cargoes are scheduled to arrive in April. Of these, six are expected to pass through the Strait of Hormuz and one from Angola.
"Our largest long-term LNG supplier, QatarEnergy, ships via the Strait of Hormuz, which is worrying for us given the current situation in the Middle East. If supply is disrupted, we will have to reduce gas supply to power plants"
Officials said three cargoes have already crossed the strait, while the rest remain uncertain.
However, the energy secretary said only two cargoes are currently at risk. "We are facing difficulties in bringing LNG from Qatar. If two cargoes become unavailable, we will lose 200-250 mmcfd in the supply line in March," he said.
When asked about the power generation outlook if LNG supplies are severely disrupted, he said, "We have already instructed the concerned authorities to ramp up production from coal-fired power plants."
"Considering all the options available to us, we may have to impose load shedding if LNG supply is disrupted for a longer period," he added.
Coal, oil to cushion shortfall
Latest data from Power Grid Bangladesh PLC show that as of 4pm yesterday, Bangladesh generated 12,454MW of electricity. Of this, 4,630MW came from gas-fired plants, 4,095MW from coal-fired plants and 1,345MW from HFO or furnace oil-based plants, with the remainder from other sources.
Bangladesh Power Development Board (BPDB) Chairman Md Rezaul Karim said measures have been taken to raise coal-based generation.
"Power generation from coal-fired plants will soon reach 5,000MW. We have coal reserves sufficient for one month to run coal plants at full capacity," he said.
The Energy Secretary Saiful Islam also noted that the government has reduced furnace oil prices and is exploring higher output from oil-fired plants to offset any LNG shortfall.
More spot purchases likely
Amid uncertainty over long-term LNG supplies – particularly from QatarEnergy, which is contracted to supply around 40 cargoes annually – policymakers are considering increasing purchases from the spot market, where prices are 35% to 40% higher than long-term contract rates.
Petrobangla officials said that if supplies under existing contracts dry up, the country will have little option but to procure more LNG from the spot market, increasing pressure on public finances.
When asked how the government would manage the additional financial burden amid fiscal constraints, Saiful said, "Spot purchases are more expensive than long-term contracts. The government will have to allocate additional funds if needed."
Bangladesh had earlier planned to import 115 LNG cargoes this year, including 103 under long- and short-term contracts and 12 from the spot market. However, the disruption in the Strait of Hormuz may force an increase in spot purchases.
Petrobangla's LNG import plan for March to May shows that 22 cargoes are scheduled to arrive over the three-month period. Of these, 18 are expected to pass through the Strait of Hormuz.
Power imports from India increase
Bangladesh has also ramped up electricity imports from India to stabilise supply.
According to Power Grid Bangladesh PLC, electricity import from Adani Power stood at 1,410MW at 4am yesterday. At 10pm on Sunday, imports from Adani were recorded at 1,452MW.
Under the Bheramara HVDC project, Bangladesh has a contract to import 1,000MW, with recent imports averaging between 850MW and 900MW. In addition, imports from Tripura range between 100MW and 120MW.
