Bangladesh to Pay $960 Million Monthly to Clear Energy Dues

Black_cats · Jul 29, 2023

Bangladesh to Pay $960 Million Monthly to Clear Energy Dues

ByTerence West

JUL 28, 2023

Bangladesh to Pay $960 Million Monthly to Clear Energy Dues

Bangladesh has announced that it will pay approximately $960 million per month starting from July to clear its outstanding payments to LNG suppliers, international oil companies (IOCs), and local and foreign power plant owners. The decision was made following a directive from Prime Minister Sheikh Hasina. Of the total amount paid each week, $160 million will go to the power division under the Ministry of Power, Energy and Mineral Resources (MPEMR) to clear debt with power plant owners, while $80 million will be allocated to the Energy and Mineral Resources Division (EMRD) for payments to LNG suppliers and IOCs.

To ensure uninterrupted natural gas supplies, state-run Petrobangla Chairman Zanendra Nath Sarker emphasized the need to clear debt 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 uninterrupted electricity supply.

Despite 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 in talks to borrow around $500 million from the Islamic Trade Finance Corporation. As of June, the government owed around $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 steps to attract foreign investors. The cabinet committee on economic affairs recently approved the country’s first-ever Brent crude-linked model production sharing contract. The new model is based on a profit-sharing formula, offering enhanced output shares to investors and allowing 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. Deepwater exploration efforts in Bangladesh have faced setbacks in the past, but the government remains committed to developing its energy sector.