Bangladesh's HSFO imports to plunge further in 2024 amid fund crunch, alternate fuels

Bangladesh's imports of high sulfur fuel oil are likely to plunge in 2024, after dropping about 11.5% on the year in 2023, pressured by a persistent scarcity of funds and substantial payments outstanding from the government to importers, industry sources said.

The South Asian country is likely to import around 3.5 million mt of 180 CST HSFO in 2024, down about 9% from 2023, when the nation's private sector imported around 3.25 million mt of HSFO and the state-run Bangladesh Petroleum Corp. (BPC) imported 600,000 mt, the immediate past president of Bangladesh Independent Power Producers' Association (BIPPA) Imran Karim told S&P Global Commodity Insights.

Of the total import estimates for 2024, the country's private sector is expected to import around 3 million mt, while BPC is expected to import around 500,000 mt of HSFO, Karim, who owns Confidence Group in Bangladesh and is also a leading HSFO importer, added.

The 2024 projection is nearly 20% lesser compared with 2022, when Bangladesh had imported around 4.35 million mt of HSFO, of which the BPC's share was around 350,000 mt, Karim said.

HSFO imports by the BPC, however, soared by around 71% on the year in 2023 as many private HSFO-fired power plants relied on the state-run company, instead of importing themselves due to shortage of funds, a senior BPC official told S&P Global Dec. 27.

The fund crunch was the main reason behind lesser HSFO imports by the private sector this year, compared with 2022, when the government had banked more on HSFO for power generation as it halted spot LNG imports for seven months between July 2022 and January 2023 due to higher prices.

"The private-sector power plant owners are also not getting sufficient US dollars from the central bank to import HSFO since September 2022," said Faisal Khan, the current BIPPA president told S&P Global Dec. 27.

The state-run Bangladesh Power Development Board (BPDB) currently owes around Taka 250 billion (around $2.27 billion) to private power plant owners, an amount equivalent to six months' dues, Khan added. BPDB is the main buyer of electricity from privately owned HSFO-fired power plants in Bangladesh.

The wider Asian HSFO market remains under pressure due to sluggish utility demand across South Asia and persistently more than adequate supplies from the Middle East and Russia.

The FOB Singapore cargo price for 180 CST HSFO, which has dropped nearly 17% in the last three months, have averaged $456.56/mt so far in 2023, down from an average of $521.63/mt in 2022, S&P Global data showed.

Alternate fuels squeeze HSFO imports

A number coal-fired power plants including Adani Power's 1,496 MW coal-fired power plant of India, 612 MW Unit-1 of SS Power coal-fired power plant, 1,320-MW Rampal coal-fired power plant, and Barisal Electric's 307 MW coal-fired power plant came into operations in 2023, which also helped reducing HSFO consumption for power generation, a senior BPDP official said.

Another 1,320 MW Matarbari coal-fired power plant is also set to start up in 2024 which may further trim HSFO consumption, he added.

Bangladesh also plans to ramp up its spot LNG imports in 2024, while several new solar power plants were set to come on stream in the coming year, further dampening HSFO usage for utilities.

Bangladesh may import a total of 24 spot LNG cargoes in 2024, compared to 23 in 2023, said a senior official of state-run Petrobangla.

Bangladesh's total generation capacity from oil-fired power plants is around 7.482 GW, of which 6.441 GWs are HSFO-fired and 1.041 GWs are diesel or 0.005% sulfur gasoil-fired plants. They account for around 31% of the aggregate installed capacity of 24.143 GW, according to data from state-run BPDB.