Challenges for quality power supply and power tariff adjustment

Media reports that the government has been considering electricity price adjustment from March 2024. UNB reports that the government is in dilemma over raising power tariff at this stage. Media further speculates that the Power Division of the Ministry of Power, Energy and Mineral Resources is expected to publish soon the government's executive order in this regard. State Minister for Power, Energy and Mineral Resources Mr. Nasrul Hamid, MP informed the media on  February 20, 2024 that the bulk and retail prices for electricity would be adjusted. He further informed that the power tariff adjustment would vary according to the consumption volume of the consumers. As reported, the government considers power tariff adjustment to reduce the burden of subsidy for the sector. The price adjustment for energy commodities is planned in stages and it is not unlikely that there will be multiple price adjustments for power in the coming months. As per BPDB sources, during the last 14 years BPDB adjusted 12 times power price for its consumers. Earlier the government adjusted 5 per cent price for electricity  in March 2023. As a result, average power price per unit stood at Taka 8.24.

It is anticipated that the withdrawal of subsidies will lead to average power tariff at Taka 14.68 per unit for retail consumers. Published sources report that the Bangladesh Power Development Board (BPDB) owes approximately Tk. 440 billion to private power producers, Bangladesh Petroleum Corporation (BPC), Petrobangla and others. It depends on government subsidies significantly for addressing the gaps between its generation and distribution costs and the revenue it earns from electricity sale.

Business communities have been expressing concern as the manufacturing industries could not get uninterrupted and quality power supply for their industries. Their concerns are based on the reports that the power generation capacity installed in the country will continue to suffer from primary fuel supply shortages.

After the winter, the country starts slowly experiencing increased atmospheric temperature and humidity. Demands for electricity supply for towns and rural areas have been increasing (during last summer the peak electricity demand was approximately 16,000 MW in the country. Power sector officials anticipate that during the upcoming summer demands for electricity may rise to approximately 16,500 MW). Electricity demands will rise for facilitating irrigation in the crop fields for the coming weeks.

Power generation capacity (including 2,800 MW captive generation) has been increased to nearly 29,000 MW in the country. Natural gas based power generation capacity stands at nearly 14,000 MW and coal fired power generation capacity (including import from Indian coal plant)  has reached  6,760 MW. In addition import from India (through Bheramara and Tripura) will add 1,160 MW, Hydro 230 and Solar and wind based 500 MW power. The remaining capacity is liquid fuel based generation capacity. BPDB considers its effective generation capacity stands at around 20,000 MW. For utilising the natural gas based power generation capacity optimally, at least 2,000-2,300 mmcfd gas supply is required. Petrobangla is hopeful that approximately 1,300 mmcfd gas would be supplied during the summer months (provided Petrobangla can import approximately 112 cargos of LNG and the existing floating storage and re-gasification unit can effectively convert and pump the gas to national gas grid.

Although the government initiatives earlier managed to install sufficient (with a large reserve margin) power generation capacities in the country, transmission and distribution system improvement remained inadequate. Moreover, primary energy supply chain continues to struggle and the country now depends heavily on import of primary energy supply sources (nearly 66 per cent). Among others, the foreign currency shortages restrict import of primary energy. The foreign currency supply shortage has been limiting fuel import and outstanding dues to independent power producers.

FBCCI leaders identified that the adequate power supply situation can be ensured if the primary energy supply chain functions seamless, transmission and distribution systems are tuned properly and financial sustainability of macro-management in the energy sector is ensured. It may be considered that coal contributes the least cost (at present price approximately US $7/MMBTU) from available primary fuels sources for the power plants. For comparative analysis, LNG (converted) costs approximately US$ 13-14/MMBTU: furnace oil costs approximately $20/MMBTU and diesel costs approximately $ 30/MMBTU. Therefore, while using imported fuel for power generation, effort should be there to avoid or minimise to run liquid fuel based power generation (currently approximately 2,000 MW electricity is generated from liquid fuel based power plants. On the contrary, the installed coal fired power plants capacity utilisation remain partial due to shortages of coal supply, mechanical problems accompanied by power evacuation capacity limitations).

Statistical analysis reveals that the country's dependency on imported fuel based energy has been increasing steadily. The domestic natural gas exploration initiatives remained inadequate (since 2021, approximately 300-400 mmcfd gas supply has been reduced from the domestic gas fields) and the limited gas exploration plans under implementation remain unrealistic. Assessment of the energy sector development and its trends for last several years made it clear that there is an urgent need for forecasting (short and long term) real demand growth for electricity in the country. BPDB needs to put efforts to reduce system loss (present system loss stands at nearly 8 per cent) and promote efficiency in power sector.  The necessary investment roadmaps for coordinated development of generation, transmission and distribution capacity is equally important for sustainable growth of the sector.

Mushfiqur Rahman  is a mining engineer. He writes on energy and environment issues.