The import of liquefied natural gas (LNG) between 2022 and 2024 could cost Bangladesh $11 billion, revealed an analysis released on Thursday by Ember, a London-based energy thinktank.
The calculation of the import cost has been made based on the actual LNG spot price and the future LNG price as predicted by the Japan/Korea marker, said a press release issued by the thinktank.
Based on the targeted LNG spot consumption in 2022, which is approximately 4.14 million cubic metres, the analysis held that Bangladesh would import 12.42mcm until 2024, given that the demand would remain stable over the time period.
The analysis said that the cost of LNG import from the spot market could be even higher if the spot LNG import increased.
The analysis saw high potential of Bangladesh’s spot LNG import increasing because of depleting domestic gas reserve and long-term LNG suppliers from abroad keeping their supplies at lowest possible level for higher profit from selling their gas elsewhere.
Citing Global Energy Monitor data, the analysis said that Bangladesh was building 4.7 GW of new gas-fired power plants as of July 2022, with a further 23.6 GW in the pipeline.
‘With global LNG prices expected to remain high and volatile, such a step-up will not only further deteriorate Bangladesh’s energy security but also lock-in excess capacity, investment and policies,’ read a line of the analysis.
Had Bangladesh fully implemented its Mujib Climate Prosperity Plan, additional solar generation could have reduced LNG imports by 25 per cent between 2022 and 2024, saving about $2.7 billion, the analysis said.
Bangladesh’s electricity demand grew on average at 8pc annually in the past decade, the analysis said, adding that about 62pc of the demand was met through gas power.
The high reliance on gas power compelled Bangladesh to begin natural gas import in 2018, eventually leading to spot LNG import in 2020.
Citing data from the government’s Energy and Mineral Resources Division, the analysis said that LNG imports accounted for 22pc of the country’s total gas requirement in the financial year 2022.
The high price already forced Bangladesh to stop spot LNG import, leading to rolling power cuts.
The Bloomberg New Energy Finance already predicted that Bangladesh was likely to see gas shortages till 2026.
Bangladesh’s current installed capacity is 25730MW. Renewable energy accounts for less than 3 per cent of the installed capacity, according to data released by the Power Development Board.
‘Bangladesh can turn the current power crisis caused by the spiralling gas prices into an opportunity. Redirecting its efforts to ramp up renewable energy capacity and grid augmentation investments now can solve so many problems,’ the press release quoted Aditya Lolla, senior electricity policy analyst, Ember, Asia.