The Bangladesh Power Development Board (BPDB) has not placed any additional requirements for furnace oil (HFO) imports to meet the needs of private power plants ahead of Ramadan and the hot summer season, an official confirmed.
“We are prepared to import 150,000 tonnes of furnace oil to meet the demands of power plants,” said BPC Chairman Amin Ul Ahsan told the Just Energy News on Sunday.
He further mentioned that approximately 70,000-80,000 tonnes of furnace oil have already been stored to supply power plants for the upcoming Ramadan.
“We have not received any additional furnace oil import requirements from BPDB to supply private sector power plants,” he added.
According to the BPC chairman, the Bangladesh Petroleum Corporation (BPC) would need a maximum of 45 days to meet any new fuel requirements. However, he emphasised that BPDB must also consider the limited storage capacity for HFO.
Private power producers are expected to require around four million tonnes of fuel to generate 5,500MW of electricity daily.
As of now, United Power Generation and Distribution Company Ltd. and Orion Power have sought approval to import HFO for their electricity generation needs.
Government Cuts HFO Import Incentives
In another development, the government has reduced import incentives for Heavy Fuel Oil (HFO) for Independent Power Producers (IPPs) from 9 percent to 5 percent.
Officials state that this measure is expected to save approximately Tk 470 crore annually while generating 5,500MW of electricity in the private sector as part of broader austerity efforts.
On February 14, BPDB issued a letter notifying this change to 48 HFO-based private power plants. The letter, signed by BPDB Secretary Md Rashedul Hoque, stated, “It is hereby informed that the service charge for fuel oil (HFO) imports by HFO-based power companies importing under their own arrangement has been reduced to 5 percent from the previous 9 percent.”
BIPPA President David Hasnat commented that private power producers will be able to import fuel at a 6 percent service charge if payment is made within 45 days.
However, he urged the government to reconsider, advocating for an increase in the service charge to between 9 and 12 percent under the power purchase agreement, citing economic changes and payment delays.
In a letter dated February 11, 2025, Hasnat highlighted the financial strain on IPPs, noting, “The increased costs associated with letters of credit (LCs) alone contribute significantly to the gap between current operational costs and the 9 percent service charge.”
He warned that IPPs could no longer absorb these added expenses, jeopardising their financial stability and operational reliability.
Experts have raised concerns that delays in HFO imports through the public sector could disrupt liquid fuel-based electricity generation, potentially leading to power shortages.
What Do Policymakers Think?
We have placed less priority on generating electricity from oil-based power plants in order to secure $6 billion for the power sector in the coming days from the IMF, an official of the Power Division confirmed to the Just Energy News on the condition of anonymity.
“We have already pledged to the IMF to address nine sectors to reduce subsidies in the power sector. However, we are also trying to comply in order to address the issue,” he added.
Speaking about the issues, BPDB Chairman Engr. Rezaul Karim, however, mentioned that some private power sponsors have contacted us to request their fuel requirements from the state-owned BPC.
“But they have not provided the required fuel. Therefore, we have not yet submitted the latest demand to BPC,” he added.
He also stated that the government has no other option but to produce electricity from liquid fuel due to technical issues with several units of coal-based power plants.
Bangladesh is expected to experience load shedding ranging from 700 megawatts to a maximum of 1,400 megawatts (MW) during the upcoming Ramadan and summer, according to Power, Energy, and Mineral Resources Adviser Muhammad Fauzul Kabir Khan.
The estimated electricity demand for summer has been set at 18,000 MW.
However, he assured that efforts will be made to keep Ramadan free from power cuts, with an anticipated electricity demand of 15,700 MW during the holy month.
