Private power producers in Bangladesh have sought $1 billion of foreign currency from the country’s central bank to import heavy fuel oil to avert a looming energy crisis this summer.
The companies are seeking the greenback supply to banks to allow opening letters of credit for purchasing the fuel from overseas, the Bangladesh Independent Power Producers’ Association, the industry lobbying group, said in a letter to the central bank Monday. The private generators would need about $250 million a month from March to June to pay for the shipments.
The demand comes amid an early onset of summer in several parts of the region forcing governments and industry bodies to swing into action to avoid blackouts when temperatures peak. Heavy fuel oil, also called bunker fuel, is the South Asian nation’s second largest source of power after natural gas and accounts for a quarter of its electricity output.
High fuel prices and dependence on imports have added to Bangladesh’s economic troubles, while weighing on its energy security. Adequate power supplies would be crucial to irrigating the rice fields during the dry season, helping ensure availability of the country’s main staple grain.
Private electricity producers, which account for as much as 45% of the nation’s electricity generation, need to import about 2.12 million tons of the fuel over the four summer months, the group said.
The need to place shipment orders is urgent as cargoes would take 40-45 days to arrive, Faisal Khan, president of the 46-member association, said in a phone interview.
Besides irrigation, high temperatures are also expected to spur demand for electricity as citizens and businesses increase use of cooling appliances.
“Bangladesh Bank is injecting dollars into the market almost every day as needed. The central bank will review the power producers’ letter and assess if their demand is in line with the government’s priority at this moment,” the central bank spokesman Mezbaul Haque said in a phone interview.
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