Worst energy crisis in Bangladesh: The crisis is intensifying due to the global increase in oil and gas prices and insufficient natural gas
It is a country that provides electricity to more than 97% of the population in South Asia. Due to the ongoing conflict between Russia and Ukraine, due to the increase in energy prices in the world market, Bangladesh is facing a decrease in gas supply. Minister of Energy Bangladesh
Bangladesh is struggling with expensive and insufficient natural gas imports amid global energy price hikes, according to the report. We are facing a shutdown that we have not seen in a few years.
The South Asian country boasted a 97 percent electrification rate, meaning nearly all of its population has access to electricity, and increased its power generation capacity to 25,700 MW against a peak demand of about 15,000 MW.
However, since June, the country has seen a return to repeated power outages, or load shedding, as the government tries to reduce rising fuel costs.
Minister of State for Electricity, Energy and Mineral Resources Nasrul Hamid wrote in a Facebook post that due to the ongoing conflict between Russia and Ukraine, Bangladesh is facing a shortage of gas supply due to the increase in energy prices in the global market.
Simon Nichols, a researcher at the US-based Institute for Energy Economics and Financial Analysis said, This affects the production of electricity. However, observers say the roots of the crisis go back to before the pressure on oil and gas as a result of Russia's attack on Ukraine.
Bangladesh's power sector is increasingly dependent on fossil fuel imports, including liquefied natural gas (LNG), a highly volatile commodity that is too expensive for poor importing countries. There is danger.
About 60 percent of Bangladesh's electricity generation comes from natural gas, a quarter of which is imported. Experts have called for more exploration and expansion of domestic gas production to reduce dependence on imported fuels.
The Bangladesh Power Development Board (BPD) is facing financial pressure due to excess capacity created by expensive subsidies to independent power producers (IPPs) in the private sector, Simon Nicholls said in FY21- In 2020, the cost of electricity purchased from IPPs has for the first time exceeded half of PDB's total operating expenses.
This year, the government also paid Tk 1.32 billion ($1.4 billion) in capacity payments to IPPs and an equivalent amount of subsidies to state-owned power utilities. It included scheduled load-shedding, control of air-conditioning use and reduction of working hours to reduce pressure on fuel imports.
Dhaka Chamber of Commerce and Industry President Rizwan Rehman said that power outages and rising energy prices will increase business costs.
Cement, steel, leather and plastic products account for 15-20 percent of production costs, he said, adding that electricity prices have increased in both 2019 and 2020, while gas prices have recently increased by about 23 percent. As a result of which electricity prices will increase further.