Bangladesh has taken significant steps to clear its outstanding energy payments to LNG suppliers, international oil companies (IOCs), and power plant owners. To ensure smooth transactions and avoid disruptions before the upcoming elections in the country, Prime Minister Sheikh Hasina directed the payment of approximately $960 million per month starting in July.
The payment structure involves allocating $160 million weekly to the Power Division under the Ministry of Power, Energy and Mineral Resources (MPEMR) for settling debts with power plant owners. Additionally, $80 million will be allotted to the Energy and Mineral Resources Division (EMRD) to make payments to LNG suppliers and IOCs.
Clearing debts with LNG suppliers and IOCs is vital for uninterrupted natural gas supplies, as emphasized by Petrobangla Chairman Zanendra Nath Sarker. Moreover, the MPEMR’s Power Division has requested around $5.921 billion for the fiscal year 2023-24 to ensure continuous electricity supply.
To overcome financial challenges, Bangladesh seeks assistance from global lenders to settle its energy bills and avoid disruptions leading up to the general election in January 2024. One such initiative involves discussions with the Islamic Trade Finance Corporation to borrow approximately $500 million.
The outstanding debts include $2.4 billion owed to private independent power producers, $475 million for electricity imports from India, $350 million to gas companies, and $320 million to LNG suppliers.
In parallel, Bangladesh is working on attracting foreign investors by adopting its first-ever Brent crude-linked model production sharing contract. This innovative model, based on a profit-sharing formula, offers attractive output shares to investors and allows companies to export natural gas after fulfilling domestic demand. The contract’s hydrocarbon price is linked to the same benchmark used for purchasing LNG.
Despite previous setbacks in deep-water exploration efforts, Prime Minister Sheikh Hasina’s government remains steadfast in its commitment to achieving breakthroughs in developing the energy sector. These initiatives demonstrate Bangladesh’s dedication to resolving outstanding payments and fostering an investor-friendly environment.
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