Published : 31 Aug 2026, 07:36 AM
Updated : 08 Sep 2026, 09:37 AM
Buying Time at Sixfold Cost
Cost surge: Oil-fired power costs Tk 20.69 per unit in fuel alone, compared with just Tk 3.45 for gas
The 4,000MW Target: PDB aims to scale up oil power to free 500mmcfd of scarce gas for starving factories
Debt drains fuel supply: Producers cannot import furnace oil as unpaid government bills stall plant operation
Bangladesh is preparing to burn much more furnace oil for electricity, at roughly six times the fuel cost of gas-fired power, in an attempt to free up scarce gas for factories.
The Power Development Board (PDB) has set a target of generating around 4,000MW from oil-fired plants by reducing the amount of gas used in power generation.
There is one immediate problem, though. Many private furnace oil plants do not have enough fuel to run anywhere near full capacity.
An analysis of National Load Dispatch Centre (NLDC) data from Aug 24 to 30 shows that 39 private HFO-fired plants and units had a combined available capacity of around 4,328MW.
At the evening peak on Aug 23, 36 operating plants generated around 2,913MW. Output then declined, reaching about 2,570MW on Aug 29.
In many cases, the NLDC cited “liquid fuel shortage” as the reason for low generation.
On Aug 24, the 102MW Gognagar plant, the 104MW OPCL plant at Meghnaghat and the 105MW Rupsha plant produced no electricity during evening peak demand.
The NLDC blamed fuel shortages on all three.
The 300MW Anwara plant produced only 16MW at the same time, while a 110MW plant in Barishal supplied 32MW.
PDB Chairman Rezaul Karim said the board still intended to reach its target, although securing enough fuel would take time.
“Our target this time is to generate 4,000MW from oil,” he told bdnews24.com.
Bangladesh has 54 public and private HFO-fired power plants with a total installed capacity of 5,630MW.
But bringing a much larger share of that capacity online will require more fuel and, for private plants, money to buy it.
Bills Hold Back Fuel Purchases
Rezaul said PDB was also working to clear outstanding payments owed to private producers.
Arrangements had been discussed with the plants to ensure fuel supplies so that they could maintain generation, he said, while arrears were being paid gradually.
David Hasnat, president of the Bangladesh Independent Power Producers’ Association, or BIPPA, said PDB had formally asked private producers to supply around 4,000MW.
But unpaid electricity bills have left many operators without enough cash to buy furnace oil, he said.
If part of the arrears is cleared, they will be able to import fresh fuel and increase production.
Hasnat estimates that the government immediately wants about another 1,500MW from private oil-fired plants.
On Aug 28, those plants generated around 2,524MW. Reaching 4,000MW would therefore require another 1,476MW.
Hasnat said the private sector could, if needed, supply around 2,500MW more oil-fired electricity than it is producing now.
That, he argues, could free a sizeable volume of gas for industry.
If around 2,500MW of gas-fired generation were replaced with oil-fired power, about 500 million cubic feet of gas a day, or mmcfd, could potentially be diverted from power stations to factories, according to BIPPA calculations.
“We did the calculation and submitted it to the government,” Hasnat said.
BIPPA estimates that every 1,000MW of gas-fired electricity requires around 200mmcfd of gas.
Gas Costs Below Tk 3.50, Oil Above Tk 20
The biggest drawback is cost.
NLDC data show that producing 57.83 million units of electricity from HFO on Aug 25 cost around Tk 1.19 billion in fuel.
On the same day, gas-fired plants produced 124.37 million units, which is more than twice as much electricity, at a fuel cost of around Tk 429.4 million.
The pattern was similar on Aug 26.
HFO plants produced 54.70 million units at a fuel cost of about Tk 1.14 billion, while 122.81 million units from gas cost around Tk 422.2 million.
An analysis of five days from Aug 24 to Aug 28 puts the average fuel cost of gas-fired electricity at around Tk 3.45 per unit.
For HFO-fired power, the figure was about Tk 20.69.
In other words, fuel alone makes electricity from furnace oil around six times as expensive as power generated from gas.
The difference becomes even clearer when measured against its contribution to supply.
On Aug 25, HFO accounted for about 16 percent of electricity generation but more than 41 percent of total generation fuel costs.
The PDB chairman describes the extra expense as part of managing the current emergency.
“Sometimes the government has to do crisis management,” Rezaul said.
Gas supplies have fallen further because one floating storage and regasification unit (FSRU) has gone into maintenance, he said.
In such circumstances, the government has little choice but to consider greater oil-fired generation.
Less Gas for Power
The push comes as gas supplies to power plants are already falling.
Petrobangla data show total gas supply at 2,379.3mmcfd during the 24 hours from Aug 25 to Aug 26, including 751.9mmcfd from imported LNG.
Total supply slipped to 2,366mmcfd over the following 24 hours, with power plants receiving 880.4mmcfd.
A day later, overall supply fell again to 2,360mmcfd, while power stations received 873.2mmcfd.
Domestic gas production changed little over the period. Most of the decline came from reduced LNG supply.
At the same time, electricity shortages worsened.
Peak load-shedding or power outage stood at 912MW on Aug 24. It nearly doubled to 1,808MW the next day.
The shortage was 1,474MW on Aug 26 before surging to 2,837MW on Aug 27.
The squeeze on industrial gas supplies was also discussed at Prime Minister Tarique Rahman’s meeting with private-sector entrepreneurs on Aug 1.
Among the options considered was dividing CNG station supply hours to make more gas available elsewhere.
The government also decided that private businesses seeking to transport gas from Bhola by truck would be given the necessary approvals.
BIPPS chief Hasnat says shifting more electricity generation from gas to oil could serve as a stopgap until Bangladesh’s third FSRU begins operations.
The equation is straightforward but expensive.
Burn more furnace oil to release gas for factories and accept a sharply higher power bill in return.
