Bangladesh to settle hundreds of millions in power bills ahead of national elections
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Bangladesh's Sheikh Hasina's government has said that $160 million will be allocated to the Power Division under the Ministry of Power, Energy and Mineral Resources (MPEMR) to settle debts with power plant owners.
Bangladesh is set to clear its outstanding payments to LNG suppliers, international oil companies (IOCs), and power plant owners by paying approximately $960 million per month starting from July. The decision was made following a directive from Prime Minister Sheikh Hasina ahead of the scheduled elections in the country next year.
Bangladesh power bill row: What is payment structure like?
Each week, $160 million will be allocated to the Power Division under the Ministry of Power, Energy and Mineral Resources (MPEMR) to settle debts with power plant owners, while $80 million will go to the Energy and Mineral Resources Division (EMRD) for payments to LNG suppliers and IOCs.
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Also watch | Bangladesh to see more power cuts as demand soars
To ensure uninterrupted natural gas supplies, Petrobangla Chairman Zanendra Nath Sarker highlighted the need to clear debts to LNG suppliers and IOCs. The MPEMR's Power Division has also requested around $5.921 billion for the fiscal year 2023-24 to ensure continuous electricity supply.
Bangladesh seeks support from international lenders
Despite facing financial challenges, Bangladesh aims to settle its energy bills with the support of global lenders to avoid disruptions ahead of the next general election in January 2024.
Petrobangla is currently in discussions to borrow around $500 million from the Islamic Trade Finance Corporation.
As of June, the government owed approximately $2.4 billion to private independent power producers, $475 million for electricity imports from India, $350 million to gas companies, and $320 million to LNG suppliers.
In addition to addressing outstanding payments, Bangladesh is taking measures to attract foreign investors.
The cabinet committee on economic affairs recently approved the country's first-ever Brent crude-linked model production sharing contract.
This new model, based on a profit-sharing formula, offers enhanced output shares to investors and allows companies to export natural gas after meeting domestic demand. The hydrocarbon price in the model contract is linked to the same benchmark used to purchase LNG.
Despite past setbacks in deep water exploration efforts, Prime Minister Sheikh Hasina’s government remains focused to achieve breakthroughs towards developing the energy sector.
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