The power and energy sector in Bangladesh is currently facing a significant challenge as it struggles to cope with a substantial debt burden, further exacerbated by the ongoing dollar and taka crisis.
According to reports, the Power Development Board (PDB) owes Tk 250 billion to private power plants and an additional Tk 80 billion as a gas bill to Bangladesh Oil, Gas and Mineral Corporation (Petrobangla). Furthermore, outstanding debts to foreign companies include approximately USD 500 million to Adani of India, USD 270 million to fuel oil importing organization Bangladesh Petroleum Corporation (BPC), and USD 200 million to gas-extracting US company Chevron.
The situation has raised concerns among experts, who point out that the increasing outstanding dues may erode the trust of energy suppliers, potentially affecting long-term agreements and leading to delays in fuel supply. As per existing agreements, fines are applicable for delayed outstanding dues payments, and banks may increase fees for opening new Letters of Credit (LCs) for imports.
With the impending arrival of summer in March, there is a heightened need for additional fuel to operate power plants. However, the crisis in dollars and taka raises uncertainties about the timely import of essential fuels like gas, coal, and fuel oil. This is reminiscent of the challenges faced in the previous year when power plants could not operate effectively due to energy shortages during the summer.
Speaking to Prothom Alo, State Minister for Power, Energy, and Mineral Resources Nasrul Hamid acknowledged the existing problems and assured that efforts are underway to address them. He mentioned ongoing efforts to receive some dollars and make payments toward outstanding dues. Additionally, the government has initiated steps to settle dues of private plants through bonds, emphasizing the need for dollars to address foreign debts.
Experts attribute the crisis to the country’s dependency on imports, suggesting a need for a shift in focus towards gas extraction rather than relying heavily on imported energy sources. The situation is further complicated by the financial strain in the sector, as the government sells electricity below the cost of production, leading to increased subsidy requirements. The finance division’s discontent over the rising subsidy amount, coupled with the challenges in providing timely subsidies, has created a complex financial scenario.
As the power and energy sector grapples with these challenges, stakeholders are closely monitoring developments, including the government’s efforts to manage outstanding dues through bonds and address the financial strain in the sector. Stay tuned for further updates on this evolving situation.
