Bangladesh's Power Crisis Exposed: Fuel Shortages Meet Financial Woes
The recent power crisis in Bangladesh has led to widespread load shedding and electricity shortages. According to Mamun Rashid, former Head of Corporate and Institutional Banking at Standard Chartered Bank and Country Head-Bangladesh for Citibank N.A., the primary fuel shortage is not the only reason behind this crisis.
The fire break-out at Moheshkhali FSRU on July 21 has reduced gas supply, affecting electricity generation. However, this shortage accounts for around 60-65% of total natural gas being used to generate electricity. The liquid fuel shortage due to the Middle East war is another factor.
The country's energy mix has undergone a significant shift since the Quick Enhancement of Electricity and Energy Supply (Special Provisions) Act was enacted in 2010. The grid-connected installed capacity increased from 6,300 MW to 29,593 MW during this period. Gas-based generation capacity decreased from 83% to 42%, while coal-based generation rose from around 4% to 28%. Cross-border electricity import also increased from 0% to less than 4%.
The country has achieved fuel diversification but relies heavily on imported energy, with natural gas and a small amount of coal being the primary domestic fuels. Domestic natural gas extraction peaked in 2016-17 and has been decreasing since then. Bangladesh also imports LNG, which accounts for around 25% of total gas supply.
The shortage of primary fuel is not the only reason behind the electricity crisis. The existing power shortage is approximately 5,000 MW per day. Even with the disruption in liquid-fuel supply, the total shortfall remains below this figure.