Power subsidy to rise by Tk 165bn

The government may need to increase subsidy by an additional sum of Tk 165 billion in the power sector during the current fiscal year.

The extra subsidy will be necessary as the gas-based power plants are suffering shortage in gas supply which forces the government to depend on costly diesel to mitigate the crisis, said officials.

"The subsidy will be needed only for generating power from diesel," BPDB chairman Engineer Belayet Hossain said.

According to him, the gas-based plants are currently receiving gas supplies of 1250-1350 mmcfd against the demand of 1500 mmcfd.

Bangladesh Power Development Board (BPDB) has already informed the Energy and Mineral Resources Division (EMRD) about the matter through the Power Division.

Earlier, the government endorsed Tk 85 billion as subsidy for the current fiscal year as a budgetary support to cover the losses.

The power sector suffered losses from the purchase of costly power and supply it to the consumers at subsidised tariffs.

BPDB has a capacity to generate 13,792MW of gas-fired electricity in the current fiscal year.

In a meeting recently, the Power Division said it will need Tk 1.68 billion additional subsidy in the FY2021-22 to generate 500MW electricity from dieselfor at least six hours daily.

With this amount, the total subsidy for the diesel-based 1200MW power daily will reach Tk 4.02 billion subsidy from diesel fired 1200MW power plants.

“The subsidy will increase by Tk 165 billion for fuel purchase, tariff and other factors due to the gas supply crisis,” said an official concernedon the condition of anonymity.

“The ministry has already instructed us to conduct a feasibility study on increasing electricity generation from diesel and from furnace oil-based plants,” he added.

The official said, after the instruction, the BPDB has found the fund constraints for additional power using diesel and furnace oil.

Last month, EMRD proposed to shut the CNG stations during the peak hours of electricity use.

In June, the ministry formed a high-powered committee led by Additional Secretary AKM Fazlul Haque to feed the power plants with sufficient gas for power generation.

The committee submitted its report before a meeting on July 7, 2021.

The demand of natural gas for electricity generation was 1500mmcfd from March to June in 2021.

This came down to 1400 mmcfd from July. The fall will continue until February 2022.

“The gas distribution companies are expected to supply 1300mmcfd from July 2021 to February 2022 if the CNG stations are closed during peak hours of electricity demand,” EMRD said.

It said the government will save around 74mmcfd of natural gas if the recommendations are implemented.

EMRD senior secretary MdAnisur Rahman said the government has the top priority to supply more gas to power plants.

The government is now able to supply 3107 mmcfd gas against the demand of around 4000 mmcfd to different sectors.