Bangladesh to reduce Oct HSFO imports on higher coal usage, cooler weather

Bangladesh will import one-fifth fewer high sulfur fuel oil in October due to a shift in power generation sources from HSFO to coal and cooler temperatures this month, Faisal Khan, the president of Bangladesh Independent Power Producers' Association, told S&P Global Commodity Insights Oct. 20.

The South Asian country is likely to import around 200,000 mt of 180 CST HSFO with 3.5% sulfur content in October, down 20% from about 250,000 mt of HSFO for September, Khan said.

Bangladesh's HSFO imports has waned since August as several new coal-fired power plants came online with the advent of the monsoon season, reducing the country's dependency on HSFO for electricity generation, he said.

Adani Group's 1,496-MW coal-fired power plant in India, the 612-MW unit-1 of SS Power's coal-fired power plant, and Barisal Electric's 307-MW coal-fired power plant are among the coal-fired plants that have started operations in recent months to supply power to Bangladesh, according to official data from state-run Bangladesh Power Development Board.

The piling up of outstanding dues of HSFO-based power plant operators from the government has also caused some HSFO importers to lower or cease imports, the BIPPA leader said.

He said the South Asian country's HSFO imports had risen sharply in August as power plant operators were paid some of their outstanding dues in dollars by the government, S&P Global reported earlier.

The October 2023 HSFO import volume will be less than half compared with the same month in 2022, when the country imported around 450,000 mt of HSFO.

Bangladesh had reduced its dependency on natural gas for electricity generation for around seven months from July 2022 as it had stopped importing LNG from the spot market due to high costs, a senior official at state-owned gas company PetroBangla said.

This time, Bangladesh will import two spot LNG cargoes in October, up from only one spot LNG cargo last month, the Petrobangla official said.

For term LNG supply, however, the country will import five cargoes in total in October, unchanged from its September inflows, the official said.

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.

HSFO is used for generating electricity in Bangladesh and the country's private sector imports the major share to run their power plants, while state-run Bangladesh Petroleum imports the remaining.

The country's overall power generation is currently hovering around 13.8 GW during peak evening demand, around 8% lower than the average peak evening generation of 14.9 GW in September, according to BPDB data.

Bangladesh's reduced HSFO imports this month comes amid weakening fundamentals for the broader Asian HSFO market. Cash differentials for benchmark FOB Singapore 180 CST HSFO cargo have slumped in recent weeks amid greater inflows from Russia and the Middle East, and as the Middle East exits its peak summer power demand season.

The 180 CST HSFO cargo differential against its Mean of Platts Singapore strip has averaged a premium of $3.82/mt month-to-date in October, down from a premium of $7.74/mt for September.