Payment normalisation may help avoid power crisis
Analysis
We have submitted a cost-effective power generation proposal to the power division for 2023. We have shown three matters broadly in the proposal.
Bangladesh received around 56 LNG-laden cargoes from long-term contracts at a cost of $11-$12 per metric million British thermal unit(mmBtu). We proposed to reduce the number of cargos in the four months of the year when demand for gas falls and distribute those cargoes when gas demand goes up.
This recommendation has already been implemented and you will see that the country won't have to import many cargoes from the spot market this year.
Another option we showed the government is how to generate cost-effective power at the moment when it is running out of reserve.
Fuel cost of furnace oil-based power plants would be cheaper than the spot LNG-based power generation because the energy cost of per unit furnace oil is around $12 per mmBtu while the spot LNG is now around $21 to $22 per mmBtu. So, the easiest option is to produce power at a cheaper rate.
Like LPG, we get the participation of the public and private sector in importing Heavy Fuel Oil (HFO). If private sector imported HFO, it will cost Tk70 per litre including delivery cost to the power plant while it will cost Tk88 if imported by the Bangladesh Petroleum Corporation.
We showed the government that power cost will be cheaper and it could save around Tk12,000 crore if these measures are adopted.
However, all these depend on the normalisation of the payment and availability of dollars.
Currently, we have six months' payment receivable to the Bangladesh Power Development Board. We are trying to drag it down to at least four months, though the normal acceptable payment due is only two months.
If the payment normalisation is not ensured, then we may have to see continuous load shedding 2,000MW or 2500MW.
Everything will be solved from subsidies on fuel price. But if financial reform is not ensured, it will always be a buckshot.
Imran Karim, Vice Chairman, Confidence Group and former President of BIPPA
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