Govt sees some relief on power fuel cost with austerity

Spot LNG import suspension and shut down of 11 diesel power plants as part of austerity measures have saved the government the fuel cost of 597 tonnes daily.

Despite the relief from foreign import payment pressure, diesel demand saw an increase mainly for private generators run during load shedding hours.

Bangladesh Petroleum Corporation (BPC) data showed demand for diesel surged to 15,328 tonnes in the fourth week of July from 13,933 tonnes in earlier this month.

Mohammad Hossain, director general of Power Cell, the policy formulation wing of the Power Division, told The Business Standard that it is too early to specify how much the power austerity yielded.

"We saved 500MW of electricity as an outcome of the austerity measures," he said.

However, Mohammad Hossain claimed load-shedding and closure of diesel-run power plants reduced the power generation cost substantially.

In FY2020-21, the government spent Tk11,778 crore as a power subsidy to the BPDB. 

Data from the Bangladesh Power Development Board (BPDB) and the Power Grid Company of Bangladesh (PGCB) showed 13,126MW electricity generation cost the government around Tk323 crore on the first day of July.

Of the amount, Tk194crore was spent on furnace and diesel on that day. With the diesel-run power stations shut, the fuel cost of oil-based electricity came down to Tk106 crore on 25 July.

Though the diesel-run plants are shut, the government will have to pay around Tk145 crore to seven of the plants as monthly capacity payments, according to BPDB.

Apart from saving diesel, the government is trying to save around $300-$350 million each month by suspending import of liquified natural gas from the international spot market.

But businesses say they will have to incur huge productivity losses if the electricity outage does not improve.  

Demand for other fuels spikes too

The government came up with the power cut, electricity plant closure and shutting shops by 8pm announcement to reduce import bills. But the demand for liquid fuel in the country has increased reportedly after the imposition of austerity measures.

From 1 July to 18 July, before the imposition of austerity measures, the daily average demand of different types of fuel such as petrol and octane was 20,300 tonnes, BPC data showed.

But on 25 July, the sales of different types of fuel reached 21,600 tonnes.

In conditions of anonymity, BPC officials said demand for petrol and octane was low in early-July due to long Eid vacations. As the holiday hangover is now gone, increased mobility is pushing up the demand.    

Bangladesh's transportation sector consumes the highest 73% fuel oil, which so far remains almost out of the belt-tightening measures.