[🇧🇩] Energy Security of Bangladesh

[Saif]

Low gas supply for three days from today

The piped gas supply will decrease across the country, state-owned oil company Petrobangla said in a notice issued on Thursday, warning about a low pressure in the piped gas supply for 72 hours starting today noon.

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Low gas supply for three days from today
Staff Correspondent 10 January, 2025, 00:11

The piped gas supply will decrease across the country, state-owned oil company Petrobangla said in a notice issued on Thursday, warning about a low pressure in the piped gas supply for 72 hours starting today noon.

This is the second time in less than two weeks the same floating storage and regasification unit is going offline for maintenance, triggering the gas crisis.

Petrobangla officials said that the maintenance of the FSRU owned by Excelerate Energy was not scheduled.

The FSRU remained out of operation between January 1 and 3, further worsening Bangladesh’s energy crisis.

The imported liquefied natural gas supply will be 550-560 mmcfd over the three days of maintenance, the Petrobangla notice said.

On Thursday, the LNG supply was 780.8mmcfd.

LNG accounts for a fourth of piped gas supply. After import, LNG is blended with locally extracted natural gas before being distributed through the national grid. Gas accounts for 60 per cent of Bangladesh’s primary energy consumption.

For a 100mmcfd drop in gas supply, electricity production may reduce by 500MW. The current power demand of the country is about 10,000MW and there is officially no load shedding at the moment.

The impending drop in the gas supply frustrated yet again households and industrialists who have been complaining about receiving far less gas than they paid for over the years, consumers said.

They said that many households were buying food from restaurants despite paying the government for gas and housemaids for cooking.

Many households are spending extra on using liquefied petroleum gas or using electricity for cooking, they said.

Industrialists, on the other hand, are reducing their production to cope with the situation.

Some areas in and adjacent to the capital Dhaka have recently complained about gas supply falling to near zero.

Excelerate Energy began operating Bangladesh’s first FSRU with the current handling capacity of 60mmcfd on August 19, 2018. LNG import through the FSRU at Moheshkhali was disrupted for months during the monsoon in 2018.

The other FSRU, Summit LNG Terminal, remained offline in six months of the first nine months of 2024.

The Summit-owned floating storage and regasification unit was on routine maintenance in Singapore between January 22 and March 31. It shut down again on May 24 after the cyclone Remal hit. The unit could not be reconnected until September 11, prompting the government to cancel four LNG shipments. LNG deliveries to the terminal resumed on September 19.

In 2021, the Summit LNG terminal was out of service for three months due to a damaged mooring line.

In May 2023, Cyclone Mocha shut down both the FSRUs.

Both the LNG import terminals have a contract to receive about $5,00,000 every day as regasification charge, not subject to the actual amount of gas handled.​

 

[Saif]

Govt floats tenders to purchase two more spot LNG cargoes in Feb

Bangladesh’s state-run Rupantarita Prakritik Gas Company Ltd (RPGCL) has floated a fresh tender and re-issued another to purchase two spot LNG cargoes for February 13-14 and February 06-07 delivery windows, respectively. The RPGCL re-issued the tender for one spot LNG cargo for the February

thefinancialexpress.com.bd

Govt floats tenders to purchase two more spot LNG cargoes in Feb
FE ONLINE REPORT
Published :
Jan 09, 2025 19:24
Updated :
Jan 09, 2025 19:26

Bangladesh’s state-run Rupantarita Prakritik Gas Company Ltd (RPGCL) has floated a fresh tender and re-issued another to purchase two spot LNG cargoes for February 13-14 and February 06-07 delivery windows, respectively.

The RPGCL re-issued the tender for one spot LNG cargo for the February 6-7 delivery window after cancelling the previous one due to higher-than-expected price quotes, nearing around US$16 per million British thermal units (MMBtu) from the bidders, said an official.

The bid winners will deliver the LNG cargoes to Moheshkhali Island in the Bay of Bengal, with options to discharge the cargo at either of the country’s two FSRUs (floating storage regasification units) located on Moheshkhali Island.

RPGCL, a wholly owned subsidiary of the state-run Bangladesh Oil, Gas, and Mineral Corporation (Petrobangla), handles LNG trades in Bangladesh.

The two tenders were floated on January 8, with the bid submission deadline ending on January 13.

The volume of each spot LNG cargo will be around 3.36 million MMBtu.

Bangladesh last awarded a spot LNG cargo tender to Excelerate Energy LP of the USA for the January 30-31 delivery window at US$15.69 per MMBtu, the RPGCL official said.

Apart from spot LNG cargoes, Bangladesh has been importing LNG from its two existing long-term suppliers—Qatargas and OQ Trading International—for regasification in its two operational FSRUs.​

 

[Saif]

AL-APPROVED POWER PROJECTS: Govt still pays high capacity charge

Some of the power projects approved without tender by the Awami League regime ousted in August 2024 continue to receive excessive capacity charge, up to 73 per cent more than what they should get, according to a...

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AL-APPROVED POWER PROJECTS: Govt still pays high capacity charge
Emran Hossain 11 January, 2025, 00:08

Some of the power projects approved without tender by the Awami League regime ousted in August 2024 continue to receive excessive capacity charge, up to 73 per cent more than what they should get, according to a Bangladesh Power Development Board analysis.

The capacity charge entitlement is itself a controversial arrangement that allows power and energy sector investors handsome profits based on their investment, rather than on the quality of their service.

The capacity charge is an amount of money, often paid in dollars, guaranteed to be paid by the government irrespective of power plants producing power or floating storage and regasification units supplying gas.

Explaining how the past AL regime channelled public money into private pockets through the power sector, energy experts said that the BPDB analysis also highlighted the lack of initiatives on the part of the interim government to take steps against the companies making predatory profits.

The power sector had also turned into a key window to launder money, they said.

The interim government that took office after the ouster of AL regime on August 5, 2024 cancelled the special power act under which the past government had approved power plants without tender, but the interim government did not take any actions against the power plants in operation, saying that taking action against the power plants would be difficult.

The BPDB analysis compared capacity charge expenses in six furnace-oil based power plants – three of them set up competitively, through bidding, while the other three were built without tender.

The contracts for building the power plants, with their installed capacity ranged between 100MW and 163MW, were awarded between April 2017 and February 2018. They began commercial operation between November 2018 and September 2022 for 15 years.

The power plants installed through bidding are 163MW B-R Powergen, jointly owned by the BPDB and the Rural Power Company Limited, 105MW RPCL, owned by the Bangladesh Rural Electrification Board, and 149MW ACE Alliance Power Limited, 64 per cent of which owned by Summit Power.

The power plants installed without tender are 104MW Orion Power Sonargaon Limited, 113 MW Confidence Power Bogura Unit-1 Limited and 100MW Acorn Infrastructure Services Unit-3 Limited.

After comparing the construction costs, the BPDB analysis said that the installation costs of the two publicly-owned power plants were about $8 lakh per MW. State-owned power plants generally cost more than private power plants to be built. The analysis also considered equal returns on equity, LIBOR and fixed interest rate for all the power plants.

Built with a government loan, the power purchase agreement of B-R Power Generation Limited allowed $5.22 as capacity charge per MW per month, which could have been $8.37 per MW/month if the power plant got set up with commercial loan, the BPDB analysis showed.

The PPA of RPCL, built with commercial loan, allowed $8.35 as capacity charge per MW/month, which was less than what should be the actual capacity charge of such a power plant — $8.44 MW/month, the analysis said.

Of the power plants, Ace Alliance Power Limited secured a PPA allowing $8.81 MW/month as capacity charge, 10 per cent higher than the rate should be — $7.99 MW/month, according to the analysis.

Confidence Power’s PPA secured a capacity charge of $13.79 MW/month, which is 73 per cent higher than what the actual rate should be — $7.99 MW/month, the BPDB analysis said.

The PPA of Acorn Infrastructure Services allowed capacity charge payment of $12.75 MW/month, 60 per cent more than the reasonable rate of $7.99 MW/month.

Orion Power has a PPA with capacity charge entitlement of $12.64 MW/month, 58 per cent higher than the reasonable rate of capacity charge of $7.99 MW/month, the BPDB analysis revealed.

‘The same picture would have been found with all other power projects taken under the special power act without tender during the past AL regime,’ said Hasan Mehedi, member secretary of the Bangladesh Working Group on Ecology and Development, a coalition of green activists.

‘The lack of initiatives on the part of the interim government to stop paying such excessive capacity charges is a matter of concern,’ he said.

The AL government had approved more than 100 power projects after assuming power in 2009 under the Quick Enhancement of Electricity and Energy Supply Act, scaling up its installed power generation capacity to about 28,000MW, excluding 2,800MW of captive power capacity, in 2024 from about 5,000MW in 2009.

The power deals signed under the special act accommodated conditions discriminatory to Bangladesh and it remained entirely out of public notice for the deals were never made public, not even after the new government took office.

Energy experts had criticised the special act, often labelling it as the tool to transfer public money into private pocket, eventually leading to the dollar and economic crises that hit the country more than two years ago.

The BPDB said that the past AL government spent $32 billion only in the power sector before its ouster amid a student-led mass uprising.

Former state minister for power Nasrul Hamid told parliament in September 2023 that his government paid Tk 1.04 lakh crore to 82 independent and 32 rental power producers as capacity charge in the past 14 years.

RPCL and Bangla Trac, the owner of Acorn Infrastructure Services, were among the top 10 capacity charge receiving independent power producers with Tk 4,004.08 crore and Tk 1,853.22 crore received over the 14 years, respectively, Nasrul had said.

Two companies of Summit Power, partial owner of ACE Alliance Power, also found places on the list of top 10 capacity charge receiving IPPs with Tk 3,644.39 crore and Tk 2,683.03 crore earned as capacity charge over the 14 years.

Acorn Infrastructure Services was also among the top 10 rental power companies which had received Tk 1,484.30 crore over the 14 years in accordance with the government account.

Confidence Group was ranked sixth among a dozen IPPs listed as the ‘dirty dozen’ in a 2022 study released in March by the BWGED. The combined capacity of the ‘dirty dozen’ was 29.7 per cent of the then installed capacity and they accounted for 32.7 per cent of electricity generated in 2020-21. But the ‘dirty dozen’ received 66.4 per cent or Tk 8,730.14 crore of the capacity payment made in the financial year.

Rental power plants were introduced immediately after the AL assumed power as an immediate measure to tackle power shortages and were supposed to expire in a maximum of five years. But the past government continued to retain them, allegedly for paying huge sums to its favourites.

BD Rahmatullah, a former director general of the Power Cell, a regulatory agency under the power, energy and mineral resources ministry, said that those who had pulled the strings during the past AL regime still got to call the shots.

‘This is frustrating to see that the interim government fails to take initiative to change the system established by the past AL government,’ he said.

The power and energy adviser, the power secretary and the BPDB chairman could not be reached for comments on the issue over phone despite several attempts.​

 

[Saif]

Energy ministry order allowed United Power to make excessive profits

About four and a half months before a student-led mass uprising overthrew prime minister Sheikh Hasina, the energy ministry in an order sealed the deal on making excessive profits by the United Power, a private power generation company.

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Energy ministry order allowed United Power to make excessive profits
Emran Hossain 11 January, 2025, 00:13

About four and a half months before a student-led mass uprising overthrew prime minister Sheikh Hasina, the energy ministry in an order sealed the deal on making excessive profits by the United Power, a private power generation company.

Sheikh Hasina also held power, energy and mineral resources portfolio then.

Dated March 25, 2024, the order said that the United Power’s two power plants in the Dhaka and Chattogram export processing zones would receive gas at the independent power plant (IPP) rate for electricity generation supplied to the national grid and Bangladesh Export Processing Zones Authority.

The order went against a February 8 Supreme Court order that settled that the two power plants would pay the IPP rate for gas used for producing electricity supplied to the national grid and the captive rate for gas used for generating electricity commercially sold.

The ministry order immediately guaranteed the United Power an additional profit of Tk 4.61 per kWh besides its regular margin from selling electricity produced at the plants, according to a Bangladesh Power Development Board analysis.

The tariff of per unit electricity, generated using gas at the IPP rate of Tk 15.50 a unit, is Tk 6.41, as per the notification issued by the Bangladesh Energy Regulatory Commission on May 14. The tariff is far less than what the United Power gets by supplying per unit of electricity under a contract signed with BEPZA, Tk 11.03.

The contract with BEPZA was signed in May 2007, allowing the power plants to sell electricity to clients in the export processing zones.

Commercial power producers are supposed to pay the captive rate for gas, which is Tk 30.75 a unit.

The IPP rate is meant for independent power plants who supply electricity to the national grid and are not allowed to privately sell electricity.

Electricity supplied through the national grid is all bought by the BPDB. The power sector is highly subsidised. A quarter of the supply of gas to the power sector comes via import as liquefied natural gas. A unit of LNG costs over Tk 60.

The annual power sector subsidy has recently crossed Tk 30,000 crore.

The order of the energy ministry is reminiscent of the arbitrary use of power by the past government to benefit its cronies, according to experts.

Almost all power and energy deals that the Hasina government allowed over the 14 years since 2010 had come through without bidding, mostly through one-to-one negotiation, under an indemnity law that the interim government has recently cancelled, they said.

The past government also striped the Bangladesh Energy Regulatory Commission of its power to set tariffs in December 2022. The BERC got back the tariff-setting power after the interim government took office on August 8.

The white paper on Bangladesh’s economy submitted recently to the interim government cited the United Group as the past AL government favourite raking abnormal profits by running its power plants in the export processing zones.

Initially, the United Power’s two power generation units used gas at the captive rate, which the company stopped paying in 2009 after the AL government assumed power. The plants with a combined capacity installed generation capacity of 164MW started commercial operation in 2008 and 2009.

Authorities, however, did not raise any objection over the United Power switching to the IPP rate, until in 2018, demanding that the company pay separate prices for electricity sold to the BPDB and private industries.

A prolonged legal wrangle ensued when the United Power went to the High Court challenging authorities’ demand for separate rates. The legal battle ended with the review of the Appellate Division order in February 2024 that went against the United Power.

United Power’s dues to state-owned Titas Gas Transmission and Distribution Company Ltd rose to Tk 486 crore by October 2024 as the company paid less than it should be for gas supplied by the Titas.

The company commercially producing power was not supposed to receive the gas in the first place, considering the 2008 policy, which spoke against supplying scarce national resources such as gas to commercial entities. The policy requires commercial power producers to arrange for their own energy.

The United Power that purchased gas for Tk 988 crore between 2017–18 and 2023–24, earned Tk 3,799 crore from electricity sales. The company enjoys monopoly at the export processing zone in its power business.

An analysis by the Bangladesh Working Group on Ecology and Development revealed that 23 per cent of the power produced between 2017–18 and 2023–24 was supplied to the national grid, while the rest went as a commercial supply to BEPZA.

In the past year, the plant factor at the CEPZ power plant was 76 per cent, following the DEPZ power plant running at 54 per cent capacity.

The United Power in the past year declared 20 per cent profit. Its profit stood at 74 per cent in 2018, followed by similar profits made in 2016 and 2017. In the other years, since 2013, the company has reported 50 per cent or more profit.

Since 2011, the United Power has set up seven more power plants — all IPPs — with installed generation capacity of 1,041MW.​

 

[Saif]

PDB plans to cut cost by Tk 10,000cr in FY25

The interim government has come up with a plan to reduce power sector expenses by Tk 10,000 crore while energy experts term the plan impractical, saying that a right intervention could save Tk 30,000 crore overnight.

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PDB plans to cut cost by Tk 10,000cr in FY25
Emran Hossain 18 January, 2025, 00:36

The interim government has come up with a plan to reduce power sector expenses by Tk 10,000 crore while energy experts term the plan impractical, saying that a right intervention could save Tk 30,000 crore overnight.

The interim government has made the plan as part of the ongoing efforts to revitalise the economy destroyed substantially during the ousted Awami League regime by predatory power and energy expenses.

Energy experts said that the plan ignored key areas of corruption and some proposals would bear serious consequences for industries, environment and public health.

‘The plan reflects our inefficiencies,’ said Hasan Mehedi, member secretary of the Bangladesh Working Group on Ecology and Development, a platform of green activists.

Prepared by Bangladesh Power Development Board, the plan aims at reducing cost by 10 per cent or Tk 10,548 crore in 2025 by reducing generation cost, avoiding surcharge, not renewing retired power plants and adopting austerity measures.

The power generation cost is planned to be reduced by Tk 6,830 by increasing gas use, replacing the use of furnace oil and coal substantially.

The plan proposes increasing gas supply by 150mmcfd which would cause an additional expense of Tk 2,405 crore. The gas supply now stands at 913mmcfd, BPDB document showed.

Increasing gas use implies an increase in liquefied natural gas import since output from local gas fields continues to decline. The BPDB used the subsidised rate of Tk 14.75 per cubic metre in calculating the expense needed to raise the gas supply, rather than using the current LNG import rate of nearly Tk 66 per unit. Petrobangla recently said that the gas import price would soon hit Tk 75.72.

The planned increase in gas supply through import will involve an additional spending of Tk 9,000 crore, more than what will be saved by reducing furnace oil and coal use –– Tk 6,299 crore and Tk 2,563 crore respectively, the experts said.

‘More imports will keep draining the forex reserve, affecting industrial production even more,’ said Hasan Mehedi.

Meeting the demand of additional gas supply from the existing supply, without increasing LNG import, implies diverting gas from industries, where gas is used both as raw material and fuel.

The problem with reducing the use of power plants based on furnace oil and coal is their capacity charge entitlement. More idle plants mean increased payment of capacity charge, the money the government is legally obligated to pay.

The BPDB plans to reduce the plant factor, the ratio of a power plant’s energy output to its capacity, in furnace oil-based power plants to 9 per cent from the existing 16 per cent. The plant factor was 21 per cent in the financial year 2023-24.

Similarly, the plant factor in the coal power plants is planned to be reduced to 58 per cent from the existing 64 per cent.

According to the plan, the increased gas use would reduce the power generation cost by 7.68 per cent to Tk 10.58 from Tk 11.46 per kWh.

Shafiqul Alam, lead analyst at the Institute for Energy Economics and Financial Analysis, Bangladesh found the plan too simple to address power sector challenges.

Power generation costs went up in FY24 despite substantial drop in fuel prices following new capacity addition, he said.

In FY24, the installed power generation capacity was increased by 3,187MW with 9,543MW of new capacity under construction and Tk 26,000 crore was paid in capacity charge.

‘For reducing cost power consumption will have to be increased besides rationalising fuel use,’ said Shafiq.

Bangladesh’s current installed power generation capacity is about 28,000MW. The peak demand during next high summer is estimated to be 17,500MW. The average maximum generation remains around 13,000MW.

Installment of 3,000MW of renewable energy could have saved about Tk 6,000 crore, Shafiq estimated.

The government, however, planned to reduce power production from renewable energy and to reduce the renewable energy plant factor to 18 per cent, which was 21 per cent in FY24.

‘Renewable energy revitalises the economy by saving dollars cutting the need to import fuel,’ said Hasan Mehedi.

The BPDB also planned to cut non-fuel costs by Tk 2,280 crore.

By halving the payment owed to Indian power plants, the BPDB planned to save Tk 543 crore in surcharge. Indian companies are entitled to get up to 1.5 per cent interest for delayed payment every month.

The BPDB planned to reduce its departmental cost by Tk 370 crore in six areas, including travel, power consumption, telephone and postal and machinery purchase. About 80 per cent of the savings is planned to be made in equipment procurement.

The BPDB planned to save Tk 525 crore by not extending contracts of 10 power plants. The power plants, worth 1,010MW, including seven based on furnace oil, retired by August 2024.

The implementation of the plan is subject to completion of the capacity building projects of Meghnaghat and Aminbazar grid substations and the transmission works in Cumilla, Mymensingh, Kodda, Kaliakair, Rangpur and Thakurgaon, the BPDB said.

Energy experts said that the plan ignored essential steps such as renegotiating predatory tariffs awarded to power producers through power purchase agreements necessary for saving the BPDB.

The energy transition policy, proposed by Consumers Association of Bangladesh in March 2022, estimated the power sector’s unjustified cost at Tk 8,000 crore.

In Bangladesh, transmission line construction costs Tk 10 crore per kilometre in Bangladesh against Tk 98 lakh in India, the association said.

In 2019-20, Barapukuria thermal power plant purchased coal at $150 a tonne, far higher than the then imported coal cost of $100, the CAB said.

‘The BPDB plan will rather increase cost. This is absurd. They are failing to make right interventions,’ said CAB energy adviser Shamsul Alam.

The right intervention, according to Shamsul Alam, included shutting down furnace oil-based power plants, refusing to pay local power plants in dollars and rationalising coal price.

‘The steps could save about Tk 30,000 crore overnight,’ he said.

Power secretary and BPDB chairman could not be reached over their phones for comments despite repeated attempts.​