Dollar crisis: Power, energy sectors saddled with $5bn outstanding payment

The country's power and energy sectors have been hit by a severe cash crunch, especially the US dollar, piling up a huge backlog in payment of their import bills, official sources said this week.

According to official sources, the sectors' cumulative outstanding bills have now jumped to about $5 billion of which the backlog amount in the power sector is about $4 billion (about Tk 43,093 crore) and remaining 1 billion is in the energy sector.

State Minister for Power, Energy and Mineral Resources Nasrul Hamid also admitted the severity of the crisis.

"Actually the crisis is not of local currency. Somehow we can manage it. But the main crisis is the dollar. We're not getting dollars from Bangladesh Bank as per our needs," he told UNB this week.

He noted that the power and energy sectors need at least $1 billion a month to meet payment obligations.

"But we're just getting less than half of that," he said, adding, "As a result, cumulative outstanding is rising every month".    

Sources said that the two main state-owned organisations' energy sector – Petrobangla and Bangladesh Petroleum Corporations have to spend huge amounts to import primary fuels like crude and refined petroleum and liquefied natural gas (LNG) from abroad.

Petrobangla also needs to pay foreign gas companies like Chevron to purchase natural gas to meet the local demands. All are paid in foreign currencies.

Similarly, the state-owned Bangladesh Power Development Board (BPDB) has to purchase electricity from independent power producers (IPPs) in dollars.

In addition, it has to import 2500 MW of electricity from India of which 1500 MW is coming from Adani power plant.

Sources familiar with the situation said that under the existing arrangement, the BPDB pays some large IPPs like SS Power, Payra, Rampal and Adani in foreign currency while the other IPPs are paid in local currency but they are allowed to convert the payment in foreign currency as deals' obligation.

"Each day we need at least 40 million US dollars from Bangladesh Bank to meet our payment obligation. But we're getting 5-7 million dollars a day", a top official of the BPDB told UNB, wishing anonymity as he is not authorised to talk to the media.

Officials at the Energy and Mineral Resources Division said the Petrobangla and BPC also need huge foreign currency, particularly the US dollar to continue its petroleum and gas imports and also to buy gas from foreign gas companies.

According to BPC's Annual Report, the total import of petroleum products was about 6.86 million metric tons and the total expenses of import was $6 billion (equivalent to Tk 62,132.61 crore) in fiscal 2022-23.

For the financial year 2023-24, the BPC planned to import more petroleum products than the previous fiscal, officials said.  

Petrobangla has also to import over 5 million metric tons from Qatar Gas, Oman Trading, and the Spot market spending $4.5 billion. It has also to pay US giant Chevron to buy gas from its three gas fields where unpaid bills now stand at $300 million due to backlog in payment.

Nasrul Hamid said his ministry has regularly been negotiating with the Bangladesh Bank to get more dollar supply.

"But the central bank only advises increasing the price of electricity, gas and petroleum which is not frequently possible for a political government", he said.

He also informed that his ministry was planning to receive a loan from Multilateral Investment Guarantee Agency (MIGA) to ease the situation.

"But the central bank is not supporting the idea", he added.