Bangladesh oil import bill to soar to $6 billion

Wednesday, 25 May 2011 00:00 -     - {{hitsCtrl.values.hits}}

DHAKA, (AFP) - Energy-starved Bangladesh’s fuel import bill will rise by a third in the next financial year to a record $6 billion as domestic gas supplies fail to keep pace with demand, an official said Tuesday.

Bangladesh Petroleum Corp (BPC) has been forced to increase imports as agriculture and industry turn to diesel generators to replace unreliable mains electricity, Muktadir Ali, chairman of the state-owned oil company, told AFP.

“Import costs will be a record $6 billion next year as the economy roars ahead,” said Ali, who added that the bill in 2010-2011 was $4 billion.

Bangladesh suffers from a daily power shortfall of 1,000 megawatts of power, with daily demand at 6,000 megawatts against supply of around 5,000 megawatts.

Several new power plants are set to come online this year but due to a lack of new finds in Bangladesh’s gas fields, most will use diesel to generate electricity and so further push up import costs, Ali said.

Bangladeshi gas fields used to provide more than 95 percent of the country’s electricity but now generate only 80 percent said power department spokesman Saiful Islam.

According to the state-owned Petrobangla, Bangladesh’s daily gas demand has risen to 2,500 million cubic feet, 500 million cubic feet more than it can supply.

The World Bank has criticised the government’s reliance on new diesel and furnace oil power plants, saying such short-term solutions would widen the fiscal deficit and cost the country more in the long run.

BPC is losing 16 billion taka ($222 million) a month due to government fuel subsidies, Ali said.

“If fuel prices are not increased locally in the coming months, the losses will mount, as global crude prices remain volatile,” Ali said.

Bangladesh is one of the world’s poorest countries, with nearly 40 percent of its 150 million population surviving on less than a dollar a day.

Street protests routinely break out whenever gas, electricity or transport costs rise, with dozens of small protests erupting this week in Dhaka over a 30 percent ticket price hike on natural-gas run buses.