Bangladesh Losing Money From Oil-Based Power Generation

As Bangladesh’s government increasingly utilizes costly imported fuel oil for generating power, state-owned Bangladesh Power Development Board is facing mounting power bills for imported fuel.
 
While natural gas generated more than 90 percent of Bangladesh’s power up to a couple of years ago the natural gas share in the country’s power production has slumped below 76 percent despite natural gas being Bangladesh’s cheapest source of power generation. This was due to natural gas being short supply in Bangladesh for the past several years, which compelled the government to turn to imported fuel oil as a short term solution.

The Bangladesh Power Development Board bulk electrical power sales rate is way below the electricity’s generation cost, forcing the government to heavily subsidize the Power Development Board to cover the losses, The Daily Star reported.

To alleviate the country’s chronic power shortages the Bangladesh Power Development Board is setting up several large-scale coal and natural gas fired power plants. The fuel oil fired costly power plants will subsequently be phased out by 2015, with the cheaper coal and natural plants filling the gap. Bangladesh Power Development Board chairman Alamgir Kabir said, "We believe by the end of 2014, our power generation cost will start reducing."

By. Charles Kennedy, Deputy Editor OilPrice.com