Dhaka:The Institute for Energy Economics and Financial Analysis (IEEFA) has recommended that Bangladesh accelerate the expansion of renewable energy sources, improve energy efficiency, and enhance domestic gas usage to mitigate the pressures from high imported fuel costs and increasing subsidy burdens on its energy sector.
According to Bangladesh Sangbad Sangstha, Shafiqul Alam, IEEFA Bangladesh Lead Energy Analyst, highlighted the rising international prices of liquefied natural gas (LNG) as a significant factor increasing subsidy pressure on the energy sector. Alam noted the financial risks associated with LNG-based power plants and import terminal projects, advocating for a shift towards domestic gas resources and renewable energy.
The IEEFA's report, titled "LNG-to-Power in Emerging Asia A Five-Year Review of Project Outcomes," underscores the challenges faced due to fluctuating LNG prices, particularly for import-dependent economies like Bangladesh. The report reveals that when LNG prices hit $20 per million British thermal units, the government must subsidize over Tk. 60 per cubic metre of gas.
The report reviews developments over the past five years in LNG-based power plants and import terminals in Bangladesh, the Philippines, Vietnam, and Thailand, finding that more than half of proposed projects were either canceled or made little progress due to high costs and financing difficulties. The assessment covered 92 LNG-based power plants requiring $109.2 billion and 44 LNG import terminals costing $21 billion. Between 2021 and 2026, projects worth $67.8 billion were canceled or stalled, with only a small fraction becoming operational.
Christopher Doleman, IEEFA Asia LNG and Gas Specialist, cautioned that risks could inflate the lifetime cost of electricity from LNG-based power plants by up to 130 percent compared to initial estimates. The report noted that LNG prices in Asia's spot market reached $27.5 per MMBtu in September, nearly triple their pre-conflict levels, while renewable energy costs, particularly for solar and wind, are declining.
Lastly, Shafiqul Alam emphasized the need for Bangladesh to focus on demand-side electrification and expanding renewable energy capacity to alleviate pressure on the energy sector.