Formula to ease gas and power crisis within 30 days
BGMEA President Mahmud Hasan Khan
As people struggle with the severe gas and power crisis that has continued for more than a month, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Mahmud Hasan Khan has proposed a quick formula to ease the situation.
He said the crisis could be significantly reduced within just 30 days if the government plays all the “cards” available to it for power generation at the same time. For this, furnace oil-based power plants that are closed or operating at reduced capacity must be brought back online quickly. This would reduce pressure on gas fired power plants and allow the gas to be supplied to industrial facilities.
The industrial sector has come under the greatest pressure during the current crisis. Gas supplies to industries have been reduced to maintain power generation. As a result, production has been disrupted at many factories and some have had to suspend operations. Especially after a malfunction occurred at an LNG terminal on July 21 and LNG supplies were disrupted afterward, industries have been receiving around 250 to 300 million cubic feet less gas per day. The prolonged situation is deepening the crisis in the industrial sector.
Against this backdrop, Mahmud Hasan Khan’s proposal is to reduce the use of gas for power generation and return that gas to industries. He told Agamir Somoy that the current government is trying in various ways to manage the gas and power crisis. However, he said more “aggressive” decisions are needed in some areas. In his words, all the options available to the government must now be used at the same time.
He said the country has a total capacity of around 6,500 megawatts from furnace oil-based power plants. However, these plants are currently generating around 2,500 megawatts. One of the main reasons is the huge amount of money owed to private sector power plant owners. The government owes them around Tk 14,000 crore.
According to Mahmud Hasan Khan, the situation could change if part of these outstanding payments is made or power plant owners are called in and given assurances that they can quickly resume generation. They could be told to open letters of credit to import the necessary oil and that their bills would be paid. However, all plants must be brought into operation within one month. This is because importing furnace oil takes around three weeks. The remaining week could then be used to restart the closed plants.
Stating that he does not own any power plant and has no involvement with any power plant, the BGMEA president said that if oil-based power plants can be brought into operation now, it would be possible to address both the gas and power crises simultaneously.
According to his calculation, if an additional 3,000 megawatts of oil-based power generation can be brought online within one month, relatively less efficient gas fired power plants with equivalent capacity could be kept offline. This would reduce daily gas consumption in the power sector by around 350 million cubic feet. The gas could then be supplied through pipelines to industries, CNG stations, residential users and other sectors. He said the government must take such a bold decision during the crisis.
According to data from the Bangladesh Power Development Board (PDB), the country has a total power generation capacity of around 29,000 megawatts. Average power demand is currently between 16,000 and 16,500 megawatts. However, a large portion of the capacity cannot be used because of the fuel crisis. As a result, average load shedding is between 2,500 and 3,000 megawatts. However, load shedding decreases somewhat when temperatures fall and power demand declines.
The country currently has around 6,400 megawatts of total oil-based power generation capacity. These plants are generating an average of 2,000 to 2,500 megawatts. When load shedding increases, especially at night, generation from these plants is increased. However, because furnace oil-based power generation is expensive, increasing production raises PDB’s losses and puts additional pressure on government subsidies.
This cost is at the center of the debate over the proposal to increase oil-based power generation. According to the latest Bangladesh Bank data, Bangladesh spent $10.63 billion on imports of crude oil and petroleum products in the last fiscal year. In the previous fiscal year of 2024 to 2025, spending in this sector was $5.14 billion. This means fuel import costs increased by $5.49 billion or around 107 percent in just one year.
However, given the current situation, the government is planning to further increase power generation from furnace oil. PDB Chairman Engineer Md. Rezaul Karim told Agamir Somoy that power demand has increased due to rising temperatures. In this situation, plans have been made to further increase generation from furnace oil based power plants. The aim is to increase gas supplies to industries.
The BGMEA president has also proposed reducing the cost of furnace oil based power generation. According to him, the current import duty on furnace oil is 30 percent while the duty on LNG imports is only 5 percent. As a result, the government is charging a high duty on furnace oil while also importing expensive fuel and providing subsidies to the power sector.
His proposal is to reduce the import duty on furnace oil from 30 percent to 5 percent for the next six months or one year. The duty was lower two or three years ago as well. He claimed that reducing the duty could bring the cost of furnace oil-based power generation close to the cost of LNG based generation.
The total capacity of gas fired power plants in the country is now 12,154 megawatts. Around 2.5 billion cubic feet of gas is required daily to use the full capacity. However, it is never possible to supply that much gas to power plants. Currently, an average of 900 to 950 million cubic feet of gas is being supplied. This is being used to generate around 5,000 megawatts of electricity.
Meanwhile, if another 200 to 250 million cubic feet of gas is reduced from power plants and supplied to industries, gas-based power generation would fall to around 4,000 megawatts. However, both LNG terminals are now operational. If LNG supplies can be kept normal, there is an opportunity to increase gas supplies to the power sector and raise generation.
Those concerned say there are alternatives to increasing power supplies without harming industrial facilities. Generating every 1,000 megawatts of electricity from furnace oil would cost around Tk 50 to Tk 55 crore per day in fuel expenses. This cost could be reduced if the duty is lowered.
Independent University Bangladesh Vice Chancellor and energy expert Professor M Tamim also believes that for now, maximum use of coal-based power plants can be ensured while increasing generation from furnace oil-based plants. According to him, saving the industrial sector is essential at this moment. Otherwise, it could cause major damage to the country’s economy.
However, Professor Dr. M Shamsul Alam, energy adviser to the Consumers Association of Bangladesh (CAB), disagrees. He said addressing the crisis in the industrial sector is certainly urgent. Otherwise, government revenue will decline and the overall economy will also be negatively affected. However, increasing dependence on expensive furnace oil-based electricity is not a long-term solution to the crisis.
According to him, it is essential at this moment to increase the use of solar power and start power generation at the Rooppur Nuclear Power Plant as soon as possible. At the same time, if expensive furnace oil-based power plants can be scrapped, around Tk 42,000 crore could be saved. According to his calculation, this money could be used to import 20 million tonnes of coal annually. Electricity could then be generated from coal-based power plants at a comparatively lower cost.
Dr. Shamsul Alam also said that the predatory, unfair and inconsistent costs that have been added to the power and energy sectors over the past 15 to 20 years must be reviewed and eliminated quickly. He believes this could save around Tk 40,000 crore in the power sector alone. He claimed that the initiative could be implemented within three to six months. If that happens, the need for large new subsidies would also decrease significantly.
