Bangladesh’s HSFO imports to climb in March as rising temperatures boost demand: BIPPA

Bangladesh’s high sulfur fuel oil imports are set to jump 33.3% on the month in March as rising temperatures boost power demand, Faisal Khan, president of the Bangladesh Independent Power Producers’ Association, told S&P Global Commodity Insights March 15.

Bangladesh would import around 200,000 mt of 180 CST high sulfur fuel oil with 3.5% sulfur in the current month, compared with 150,000 mt in February, Khan said.

Meanwhile, the halting of LNG regasification at one of the country’s floating storage and regasification units owned by Summit Group was also prompting an increase in HSFO imports to run power plants, sources said.

Bangladesh’s first FSRU, Excellence, which is owned by US company Excelerate Energy, restarted operations following an overhaul in late January, but the second FSRU, owned by Summit Group, is currently in dry dock for turnaround, said a senior official at the state-run national gas company PetroBangla.

A recent power tariff hike implemented by the Bangladesh government was also helping the state-run Bangladesh Power Development Board purchase more electricity from the HSFO-fired power plants, said a senior BPDB official.

The government announced a hike in power tariffs on Feb. 29, which took effect retrospectively from Feb. 1, and led to retail-level electricity tariffs going up by around 8.50% on average, while the bulk tariff increased by 5% on average.

Under the new tariff, average retail-level electricity tariffs increased to Taka 8.95/unit (8.13 cents/ unit) from the previous average rate of Taka 8.25/unit, and bulk-level tariffs increased to Taka 7.04/ unit on average from Taka 6.70/ unit, according to an official statement. The electricity tariff for irrigation saw a hike by Taka 0.43/unit.
The hike in the power tariff was beneficial for the independent power producers too, the BPDB official said.

The financial condition of the country’s independent power plant owners was improving as the government issued special bonds worth Taka 120 billion ($1.09 billion) for commercial banks in mid-January for partially settling the accumulated arrears over the last one-and-a-half years, BIPPA’s Khan said.

The country’s overall power generation is currently hovering around 12.26 GW during peak evening demand, which is lower than average peak evening generation of 14.0 GW during summer of 2023, according to BPDB data.

Bangladesh’s total generation capacity from HSFO-fired power plants was around 6.441 GWs. The country’s private sector imports the major share of fuel oil to run its power plants, while the state-run Bangladesh Petroleum imports the remainder of the overall volume.

The wider Asian HSFO market continues to struggle with a stubborn supply glut in the region, but traders were hopeful that the market would garner some support from firmer Chinese demand for high sulfur straight run fuel oil and from the upcoming summer power generation demand from South Asian countries.

Bangladesh, a regular buyer of 180 CST fuel oil from Singapore, imported about 55,566 mt of HSFO from the city-state in the four weeks between Feb. 21-March 13, more than double the volume imported in the preceding four weeks, latest Enterprise Singapore data showed.

Platts assessed the Singapore 380 CST high sulfur fuel oil cargo’s cash differential to the MOPS 380 CST HSFO assessment at a discount of $2.47/mt March 15, posting a weekly decline of nearly 10%, S&P Global data showed. The Singapore 180 CST HSFO cash differential to the MOPS 380 CST HSFO assessment, which was assessed at a discount of $4.15/mt March 15, also weakened about 10% on the week.
Source: Platts