Power Producers Seek Bonds to Avert Blackouts

The Bangladesh Independent Power Producers Association (BIPPA) has issued a stark warning regarding the country’s looming energy security crisis. In a high-level press conference held at a Dhaka hotel on Monday, private power plant owners demanded the immediate settlement of outstanding dues, suggesting that the government issue sovereign bonds if cash reserves are insufficient.

The association argued that without these funds, they will be unable to open the Letters of Credit (LCs) necessary to import the furnace oil and diesel required to keep turbines spinning during the upcoming peak summer season.

The Debt Dilemma and Operational Hurdits

According to BIPPA, while contracts mandate that bills be settled within 30 days, payments are currently lagging by 180 to 270 days. With outstanding arrears reportedly reaching 14,000 crore BDT, private producers find themselves in a liquidity trap.

“We cannot sustain production while carrying such massive debts,” a spokesperson noted. The association highlighted that the previous interim administration successfully averted load-shedding by releasing a 5,000 crore BDT bond to settle arrears. They are now calling for a similar intervention to allow them to clear bank loans and secure fresh fuel shipments.

Capacity vs. Reality: The Summer Outlook

While Bangladesh boasts an installed capacity exceeding 28,000 MW, the “effective” capacity is significantly lower due to fuel shortages and maintenance cycles. BIPPA provided a detailed breakdown of the current operational landscape:

Rising Costs and Subsidy Burdens

The financial strain is exacerbated by a global surge in energy prices. Over the last six years, fuel costs for power generation have spiked by 95%, while operational expenses have risen by 55%. Conversely, retail electricity prices for high-end consumers have only increased by 54%, leaving a widening gap that the government must fill with subsidies.

To mitigate these costs, BIPPA has proposed a temporary suspension of import duties:

34% duty on furnace oil.

22% duty on Liquefied Natural Gas (LNG).

Fuel Depletion Warnings

Former BIPPA President Imran Karim warned that current fuel stocks are critically low. Most oil-based plants only have enough reserves to last until 7–10 April. “If these plants go offline due to lack of fuel, the national grid will face an unmanageable deficit,” he cautioned. Current President K.M. Rezaul Hasnat added that 23% of plants are already idle due to the gas crisis, and with limited infrastructure to increase LNG imports, oil remains the only viable short-term bridge.