Import of high sulfur fuel oil, or HSFO, during winter is projected to fall by around 40 per cent due to less consumption in the power plants commensurate with the lower electricity demand in the season.
The demand for the fuel oil is unlikely to increase even though the plan to import LNG, or liquefied natural gas, from the spot market for December delivery gets highly uncertain due to higher than expected price offer in a recent bid, industry sources said.
President of Bangladesh's Independent Power Producers' Association, or BIPPA, Imran Karim expected that the overall import of HSFO might be around 150,000 tonnes in December.
The privately-owned power plants are the lone importer of HSFO in Bangladesh.
The country's overall HSFO import during the current month of November will be around 200,000 tonnes due to less demand with the fall of temperature at the onset of winter, Mr Karim said.
During peak summer, the country imported around 250,000 tonnes of furnace oil.
Electricity demand in Bangladesh usually falls in winter due to non-operation of air conditioners, air coolers, electric fans in the industries and residences, he said. Use of room heaters is also rare in the country as winter in this country is not severe.
The government usually resorts to limit generation of electricity from HSFO and gasoil-fired power plants during winter, considering the higher cost of electricity generation compared to natural gas-fired, LNG-fired, hydro, or coal-fired power plants, said the BIPPA leader.
Bangladesh has cancelled tender to import LNG from the spot market for November and early December because of high spot prices, and a late December tender is also likely to be cancelled for the same reason.
If Bangladesh could manage to import LNG from spot market in November and December, its HSFO import would decline further as the government might shut some HSFO-fired power plants to make room for operations of more LNG-based power plants.
Major portion of the imported LNG and HSFO in Bangladesh is consumed mainly by the power plants.
At the same time, electricity demand may fall further with the looming second wave of coronavirus pandemic in Bangladesh like that of the other parts of the world which might see imposition of restrictions on the movement of people in near future.
The country has almost doubled its HSFO import since June to around 220,000 tonnes per month compared with 100,000 tonnes per month in April and May as businesses resumed operations, albeit limited in scale, following the lockdown for a long period of time due to the pandemic.
Bangladesh imported around 3.2 million tonnes of HSFO with 3.5 per cent sulfur during fiscal year 2019-20, of which 2.90 million tonnes were imported by the private sector to run their power plants and the remaining 300,000 tonnes by state-run Bangladesh Petroleum Corporation, or BPC.
The country's HSFO import in FY 2019-20 is almost equivalent to that of the previous FY's imports.
Bangladesh has around 5,700 MW, or megawatts, capacity HSFO-fired power plants, of which 4,500 MW capacity HSFO-fired power plants are owned by the private sector, while the remaining 1,200 MW capacity is state-owned.