Prime Minister Tarique Rahman has instructed the authorities to increase electricity generation from coal-fired power plants to reduce pressure on gas supplies and make more gas available to industries amid the country’s ongoing energy shortage.

He has also directed the Ministry of Power, Energy and Mineral Resources to ensure timely imports of liquefied natural gas (LNG), while avoiding direct procurement as far as possible. The government is also preparing a medium-term energy plan up to 2029 and a longer-term strategy extending to 2035.

The directives came at a meeting on Thursday with the ministry’s minister, secretary and senior officials, where the current electricity and energy supply situation was reviewed in detail. The Energy and Mineral Resources Division presented a comparison between the situation when the Bangladesh Nationalist Party government assumed office and the present position, alongside plans for improving energy security over the coming years.

The meeting examined demand and supply for natural gas, fuel oil, coal and furnace oil, as well as electricity demand and the contribution of different fuels to power generation.

The Prime Minister’s Economic Affairs Adviser, Dr Rashed Al Mahmud Titumir, told journalists on Thursday that the gas supply situation for industries was expected to improve by the coming winter, while visible progress in both gas and electricity supply was expected by the following summer.

The government is also seeking a detailed roadmap showing how the country’s energy supply situation will develop in stages through 2029. The objective is to give investors a clearer and more predictable understanding of future energy availability.

Fuel oil reserves expected to reach 57 days

The government is working towards building a 90-day fuel oil reserve. According to the energy authorities, if shipments covered by letters of credit opened for imports through 30 August arrive on schedule, the country’s reserve could reach 57 days.

That would represent a significant improvement from the 14-day fuel oil stock inherited when the current government took office.

The immediate scope for resolving the gas shortage, however, remains limited. Against this backdrop, the Prime Minister has stressed the need to use the full capacity of the country’s two existing floating storage and regasification units (FSRUs) and ensure regular LNG imports.

He has also discouraged the use of the direct procurement method, known as DPM, for LNG purchases.

Bangladesh recently failed to receive six LNG cargoes ordered through the DPM process. According to officials, foreign suppliers subsequently sold those cargoes to other countries at higher prices.

A government official told The Business Standard that the Prime Minister had instructed the authorities to avoid DPM procurement for LNG as far as possible, citing uncertainty over securing cargoes as well as the potential for corruption.

Coal-fired plants to free up gas for industries

The government is seeking to reduce the amount of gas used for power generation in the short term by increasing electricity production from coal-fired plants. The aim is to release more gas for industrial consumers.

The Energy Division has recommended accepting somewhat higher electricity generation costs, and potentially higher subsidies, if necessary to ensure a more reliable gas supply for industries.

Coal-fired power generation is generally more expensive than gas-based generation, according to the ministry’s assessment. Even so, officials believe the additional cost may be justified if it helps ease the pressure on industrial gas supplies.

The Energy Division has also advised increasing solar power generation as part of efforts to diversify the electricity mix.

Officials told the Prime Minister that the first unit of the Rooppur Nuclear Power Plant could be connected to the national grid between September and October. Once operational, the unit is expected to reduce some of the pressure on gas-fired power generation and contribute to an improvement in overall electricity supply.

Plan to bring Bhola gas into national grid

The government is planning to connect gas discovered in Bhola to the national gas grid as part of its efforts to improve energy supplies by 2029.

A feasibility study for the proposed pipeline has already been completed, with the project expected to cost around Tk500 crore.

The Energy Division says Bangladesh currently has to purchase LNG from international markets at relatively high prices, with each cargo costing around Tk730-750 crore. Against that backdrop, officials consider the proposed pipeline investment economically viable because it would enable the country to utilise domestically produced gas.

The government is also placing greater emphasis on drilling and re-drilling around 150 gas wells.

The Energy Division has presented a plan to increase gas supplies from domestic sources by an additional 1,750 million cubic feet per day by 2029. The Prime Minister has instructed the division to intensify efforts to raise domestic production.

Seeking long-term LNG deals beyond Middle East

The government does not want to rely entirely on the Middle East for LNG supplies. It is therefore holding discussions with suppliers in other countries over long-term agreements.

Talks are also under way with one or two additional US companies regarding long-term LNG supply arrangements.

The Energy Division informed the Prime Minister that approved gas allocations across the country currently total 5,200 million cubic feet per day. Officials estimate that if 3,200 million cubic feet per day can be supplied regularly, most sectors would be able to operate relatively normally. A supply of 3,800 million cubic feet per day, they said, would eliminate the existing shortage.

At present, however, the country can supply only around 2,600-2,750 million cubic feet of gas per day.

Of that amount, approximately 1,585 million cubic feet is used for electricity generation, accounting for about 62 per cent of total gas supplies. Power plants consume around 1,000 million cubic feet per day, while captive power generation by various industrial establishments accounts for another 585 million cubic feet.

The remaining 38 per cent is distributed among industries, commercial users, transport and households.

Domestic gas output has declined since 2018

Bangladesh began importing LNG in 2018 after rising domestic demand increasingly outpaced the country’s own gas production.

Before LNG imports began, domestic gas fields were sufficient to meet the country’s internal requirements. In 2018, domestic fields could supply around 2,000-2,100 million cubic feet of gas per day.

Production from domestic wells, however, did not increase in line with demand. Instead, output gradually declined. Current domestic production is estimated at around 1,600 million cubic feet per day.

The widening gap between domestic production and demand has increased Bangladesh’s dependence on imported LNG, exposing the energy system to international market conditions and the cost of imported cargoes.

To address the longer-term shortage, the government is planning to establish three additional floating storage and regasification units by 2029. The new terminals are intended to increase the country’s capacity to receive and regasify imported LNG.

The government’s broader energy strategy therefore combines several approaches: increasing coal-fired and solar power generation to reduce gas consumption in the electricity sector, raising domestic gas production through new drilling and re-drilling, connecting Bhola’s gas resources to the national grid, diversifying long-term LNG suppliers and expanding LNG import infrastructure.

The immediate priority remains easing the gas shortage faced by industries, while the longer-term objective is to establish a more dependable energy supply system capable of supporting the government’s 2029 manufacturing ambitions and its wider energy-security goals through 2035.