Bangladesh to trim high-sulphur fuel oil import 20% in Oct
The HSFO import volume for October 2023 is anticipated to be less than half of what it was in the same month in 2022
Bangladesh will import 20% less high-sulphur fuel oil (HSFO) in October due to a shift in power generation sources to coal and cooler temperatures, according to a report by S&P Global Commodity Insights.
Quoting Faisal Khan, president of the Bangladesh Independent Power Producers' Association, the report says the country is likely to import around 200,000 tonnes of 180 CST HSFO with 3.5% sulphur content in October, down from about 250,000 tonnes in September.
The HSFO import volume for October 2023 is anticipated to be less than half of what it was in the same month in 2022 when the country imported approximately 450,000 tonnes of HSFO.
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180 CST HSFO stands for 180 centistokes high-sulphur fuel oil that is used for generating electricity in Bangladesh and the country's private sector imports the major share to run their power plants, while state-run Bangladesh Petroleum Corporation imports the remaining.
Earlier in September, Bangladesh trimmed imports of HSFO by a third due to reduced demand from the power generation sector as monsoonal rains had brought down peak summer temperatures.
Bangladesh's HSFO imports have waned since August as several new coal-fired power plants came online, reducing the country's reliance on HSFO for electricity generation, according to S&P Global.
According to official data from the state-run Bangladesh Power Development Board, Adani Group's 1,496-MW coal-fired power plant in India, SS Power's 612-MW coal-fired power plant unit 1, and Barisal Electric's 307-MW coal-fired power plant have started operations in recent months to supply power to Bangladesh.
The president of the Bangladesh Independent Power Producers' Association tells S&P Global that the accumulation of unpaid government dues to HSFO-based power plant operators has prompted certain HSFO importers to reduce their imports or halt them altogether.
In August, the import of HSFO in Bangladesh surged, thanks to the government making partial payments of their overdue dues to power plant operators in dollars, as per S&P Global.
Bangladesh reduced its reliance on natural gas for electricity generation for around seven months from July 2022, as it stopped importing LNG from the spot market due to high costs, a senior official at state-owned gas company PetroBangla told S&P.
This time, Bangladesh will import two spot LNG cargoes in October, up from only one spot LNG cargo last month, the PetroBangla official said. For term LNG supply, however, the country will import five cargoes in total in October, unchanged from its September inflows.
Bangladesh's total generation capacity from oil-fired power plants is around 7.482GW, of which 6.441GW are HSFO-fired and 1.041GW are diesel or 0.005% sulphur gasoil-fired plants. They account for around 31% of the aggregate installed capacity of 24.143 GW, according to the Bangladesh Power Development Board (BPDP).
The country's overall power generation is currently hovering around 13.8GW during peak evening demand, around 8% lower than the average peak evening generation of 14.9GW in September, according to BPDB data.
Bangladesh's reduced HSFO imports this month come amid weakening fundamentals for the broader Asian HSFO market. Cash differentials for benchmark FOB Singapore 180 CST HSFO cargo have slumped in recent weeks amid greater inflows from Russia and the Middle East, and as the Middle East exits its peak summer power demand season, S&P Global says.
