Bangladeshi fossil fuel imports will double to 32 million tonnes of oil equivalent (Mtoe) between 2020 and 2030, according to Wood Mackenzie. Total energy demand in Bangladesh is expected to rise 27 per cent to 55 Mtoe in the 2020 – 2030 period.

It said electrification needs in the power, export-driven textile and jute, and fertiliser industries will drive the country’s energy demand growth, and a growing working age population, urbanisation and rising income levels continue to spur domestic demand.

Wood Mackenzie Asia Pacific Head of Markets and Transitions, Prakash Sharma, said: “Bangladesh needs a reliable base load capacity for its electrification needs. Coal and LNG imports are thus important to support this as domestic coal struggles with the economics of quality production, while domestic gas is on a steep decline. LNG and coal account for most of the incremental fossil fuel imports between 2020 and 2030.”

Wood Mackenzie said power demand has grown 6 per cent annually in the last decade, which is higher than average GDP. The trend is likely to continue in the future due to low per capita electricity consumption.

Sharma added: “At the moment, about 60% of power generation in Bangladesh comes from domestic gas supply, which is depleting. To meet this gap, additional capacity will be required as early as 2022.”

As a result, gas prices in the country increased by 35-40 per cent in 2019 year-on-year “to reflect the cost of supply amid rising LNG demand. Wholesale power prices also hiked in Q1 this year. Hence, prospects of Bangladesh securing low-priced spot LNG in H2 2020 is good news for the gas and power sector.”

It said coal demand, on the other hand, is set to rise over fourfold to 12 Mtoe between 2020 and 2030. The government is adding import-based coal capacity to lower power generation cost and increase reliability. Indonesia and Australia will be key suppliers of thermal coal to power projects in Bangladesh.

But the renewables target of 10 per cent of total electricity generation by 2020 will not be met, although Sharma did acknowledge the country’s efforts in reducing air pollution and carbon emissions: “We expect renewables to make up about 2% of total electricity generation this year, 6% by 2030 and 16% by 2040. It has recently launched the Green Transmission Fund which aims to finance green businesses including renewable energy. This should provide upside to investments in the renewables sector.”

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15th May 2020