Govt plans common policy to allow private fuel oil imports, sales

Highlights

• Govt plans common policy allowing private fuel imports and sales
• Private firms would compete alongside state-owned fuel distributors
• Middle East conflict prompted rethink of fuel supply strategy
• Govt targets 10,000MW renewable electricity capacity within 4.5 years
• Bangladesh faces a 1,200mmcfd gas supply deficit
• Govt plans Matarbari land-based LNG terminal to boost imports

The government is preparing a common policy to allow qualified private companies to import and sell fuel oil alongside state-owned distributors, Power, Energy and Mineral Resources Minister Iqbal Hasan Mahmood said today (11 August).

"We are not doing this to give benefits to a particular company. Rather, we are making a general policy so that everyone can do business," the minister said.

Speaking at a seminar titled "Energy Sector: Crisis, Prospects and Ways Forward" organised by the Forum for Energy Reporters Bangladesh (FERB) at Dhaka Club, Iqbal said the government wants to expand private-sector participation in the fuel market based on its experience with private-sector purchases of some petroleum products.

Under the proposed policy, eligible private companies would be able to import and sell fuel alongside state-owned distributors such as Padma Oil, Jamuna Oil and Meghna Petroleum.

"If there is a private company's pump alongside Padma, Meghna or Jamuna's pump, consumers can buy fuel according to their choice," he said.

Consumers could continue buying from state-owned companies if they offered lower prices, while those willing to pay more could purchase from private operators, the minister added.

He cited India as an example of a market where state-owned and private companies operate alongside each other in fuel distribution.

Middle East crisis prompts rethink

Iqbal said the government's plan was partly prompted by the experience of the recent Middle East conflict, when fears of a fuel shortage triggered long queues at petrol stations despite the country having sufficient stocks.

"Even though we had sufficient stock, people stood in long queues at petrol pumps," he said.

He said motorists and motorcyclists rushed to refuel amid fears of shortages, while some areas experienced temporary supply disruptions, alleged hoarding and black-market sales.

The government ultimately managed to maintain fuel supplies, he added.

According to Iqbal, the experience prompted discussions with Prime Minister Tarique Rahman on how greater private-sector participation could strengthen the country's fuel supply chain.

He said private investment should also be encouraged in infrastructure related to primary fuels, including gas, coal and petroleum, as the government alone cannot meet the country's growing energy requirements.

"Private investment is very much needed, especially in the energy sector," he said.

Minister denies company-specific initiative

Iqbal's remarks come amid controversy over the government's move to open fuel imports to private companies.

Responding to questions about what was described as conflicting government statements, the minister said the apparent contradiction stemmed from a misunderstanding.

He said the government had not decided to provide special facilities to any particular company and was instead preparing a broader policy under which eligible private companies would be able to participate.

He also rejected allegations on social media that the initiative was intended to benefit specific businesses, describing such claims as "absurd".

Iqbal accused some groups of trying to create confusion over the country's energy situation, saying political opposition was legitimate but attempts to exploit an energy crisis for political gain would not serve the national interest.

Govt targets 10,000MW renewable capacity

State Minister for Power, Energy and Mineral Resources Aninda Islam Amit said the government plans to generate around 10,000MW of electricity from renewable sources within the next four and a half years.

The target is part of the government's plan to generate 20% of the country's total electricity from renewable sources, he said.

"After the mass uprising, the government has to be ambitious to fulfil the aspirations of the people," Amit said.

Around 40-60% of the targeted renewable capacity could come from ground-mounted and rooftop solar projects, he said.

The government is also working to remove bureaucratic obstacles to rooftop solar installations, Iqbal said.

He said city corporations would designate buildings for rooftop solar installations, while private investors could finance the projects and recover their investment through net metering.

"We are very adamant. It does not matter which building it is," he said.

If necessary, the government could also consider holding-tax-related incentives to facilitate rooftop solar installations, he added.

Bangladesh faces 1,200mmcfd gas deficit

Amit said Bangladesh has around 30,000MW of installed power generation capacity, but fuel shortages are preventing many plants from operating at full capacity.

The country currently faces a gas supply deficit of around 1,200 million cubic feet per day (mmcfd) against demand, even after combining domestic production and imports, he said.

Domestic gas production is declining by around 150mmcfd annually, Amit added.

"Even if you have the money, you cannot increase LNG imports overnight because you do not have the infrastructure," he said.

Bangladesh currently relies on two floating storage and regasification units (FSRUs), while establishing a new FSRU normally takes 30-36 months, according to the state minister.

The government, however, aims to make a new FSRU operational in less than two years and is also considering third and fourth FSRUs, he said.

Land-based LNG terminal planned

The government is moving ahead with plans to establish a land-based LNG terminal at Matarbari, which Amit described as the "ultimate solution" for expanding LNG import capacity.

He said the tender for appointing a transaction adviser had closed and land for the proposed terminal had already been identified.

The government is also hopeful that the ongoing offshore oil and gas bidding round will be successful, while preparations for an onshore bidding round are underway, Amit said.

The government plans to strengthen Bapex by improving its equipment and workforce, he added. Bapex officials will be sent abroad for six-month to two-year certificate courses to develop specialised skills.

Govt plans greater role in LPG market

Amit said the government wants to increase its presence in the LPG market to help stabilise prices.

Although the Bangladesh Energy Regulatory Commission (BERC) fixes LPG prices, consumers do not always receive the product at the regulated price, he said.

Only five or six private operators currently import LPG despite the presence of many operators in the market, Amit said.

The government plans to import LPG in bulk and use existing private-sector infrastructure to distribute it and help stabilise the market.

Damaged Excelerate FSRU remains challenge

Amit said the damaged Excelerate Energy-operated FSRU at Maheshkhali remains a major challenge for the government.

Partial operations have been restored with the help of local and foreign experts, with one boiler operational while the other remains out of service, he said.

Restoring the second boiler will require temporarily shutting down the first, meaning the government is trying to identify a period when the impact on consumers would be lowest.

"We are discussing with them what time we can choose when the suffering of the people will be less for at least 72 hours," he said.

The government is also working to restore the FSRU to full capacity, he added.