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Power Cell opt for market analysis of int’l fuel price

Published : Monday, 18 October, 2021 at 12:00 AM  Count : 653

Power Cell, the think tank of Power, Energy and Mineral Division, has been asked to go for 'Market Analysis' to review the international fuel price as prices of power-generated fuels are surging globally, leading to huge financial losses to the government as far as LNG import is concerned.
The situation has arisen with industrial growth pushing up electricity demand.
"We are making preparation to engage consultant to do the analysis, as we need expert's involvement in this area before going to predict anything as market is concerned," Power Cell DG Mohammad Hossain told the Daily Observer on Sunday.
Record gas prices are hitting countries such as Bangladesh hard as they typically import bigger volumes of spot cargoes than other nations in Asia, leaving us exposed to price volatility, he said.
"Prices of power-generated fuels are surging globally with industrial growth pushing up electricity demand, leading to a tightening of coal and LNG supplies.
"A rough calculation said that we need to give Tk 10,000 crore subsidy in power production for September to November.
"However, the subsidy in gas (LNG) import could not be calculated properly as it would depend on international market price," he said.
"We need to develop a mechanism to deal the seven years' highest market. The Prime Minister's Office asked for submitting a report on LNG supplies scenario and its impact on trade, business, commerce and end users' lives as global analysts say that the price of fuel would be much higher in winter," Mohammad Hossain said.
Rupantarita Prakritik Gas Company Ltd (RPGCL) paid late last week around US$36-36.50/mmBtu to trading firm Gunvor for a 24-25 October delivery, which is the highest priced cargo transaction since mid-January last year.
LNG price soared to a level near $50 per mmBtu, Energy and Mineral Resources Secretary Anisur Rahman told media that Bangladesh would not have to pay at this rate until December.
However, the Prime Minister's Office conducted several meetings in this regard during the last one week, in an attempt to control the situation through giving huge subsidy in power generation and gas supply at tolerant level.
"Now we are taking LNG from two companies of Oman and Qatar, they are supplying LNG to the Floating Storage Regasification Units or FSRUs of Accelerate Energy and Summit Power near Moheshkhali in Cox's Bazar at $6 to $10 per unit under a long-term deal. We are taking the advantage of this deal now for its low pricewe are new in LNG import business and gathering new knowledge and experiences. However, the government is planning to import more LNG under new deals to increase some price," a senior official of the Energy Division said.
The government is working on new LNG import deals with two more companies, according to the secretary. Once the deals are signed in December, the supply will begin in April or May next year.  
"We will bring more LNG, if necessary. It is not impossible for us to buy at the current price. Price is not a factor, the Prime Minister has said. We will import no matter what the price is," Anisur said.
"The government also ordered a four-hour daily pause in CNG stations to boost natural gas supply to power plants. More than half of Bangladesh's electricity comes from natural gas, due to domestic gas shortage, we are now depending on LNG although some power plants also run on heavy fuel oil and diesel," a Power Division official said.
Bangladesh bought one cargo from trader Vitol for delivery in mid-October at $35.89 per mmBtu and another from Gunvor for late October delivery at $36.95 per mmBtu.
The price of LNG per million British thermal units (mmBtu) has moved past $40 in the international market recently from $8 in early 2021 after consumption increased following the reopening of economies amid easing of the coronavirus pandemic.
Bangladesh bought LNG at $7.21 per mmBtu from Singapore-based Vitol in March. Earlier this month, Bangladesh bought two LNG cargoes for delivery in October at record prices, as low inventory in Europe boosts competition with Asia for supplies ahead of winter.SEE PAGE 2 COL 5

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