bangladesh conflict
Raghav Mathur, an analyst at consultancy Wood Mackenzie, said a similar trend could be expected in Bangladesh, where more than two-thirds of electricity generation is gas fueled.
According to Kpler, Bangladesh’s LNG imports in 2022 are set to fall 14% from the previous year, reducing power generation when demand rises.
As a result, last year Bangladesh resorted to power cuts on 85 of the 92 days ending October 30, a Reuters analysis of data from the country’s grid operator showed. This is compared to only two days of forced outages between January 2019 and July 2022.
The outage has shaken commercial operations, affecting Walmart, Gap Inc and exports of the apparel industry lucrative for customers such as H&M and Zara.
The Bangladesh Garment Manufacturers and Exporters Association wrote a letter to the government last month, demanding regular electricity and gas supplies and lower gas prices, saying “the garment industry has become difficult to sustain.”
LNG prices are unlikely to drop low enough to help Bangladesh and Pakistan, with analysts expecting a rebound in Chinese purchases to prop up prices in 2023.
Rystad Energy sees Asian prices averaging $32 per mmBtu this year, well above the $20 per mmBtu that Bangladesh’s prime minister’s energy advisor considers an acceptable spot price.
Two Petrobangla officials told Reuters the country has issued two spot tenders so far this year, the first of which was awarded to Total Energy at about $19 per mmBtu.
Officials said the South Asian nation aims to buy more in-place LNG cargoes and seeks to secure more long-term deals with Papua New Guinea and Brunei, but analysts question whether this will be achieved.
“It is not possible for them to bear the high prices for LNG,” said Woodmac’s Mathur.
Even with electricity generation from alternative fuels, businesses are concerned about the economic impact of an uncertain power supply. Royal Tag CEO Mehboob expects reduced operations during peak shopping hours to cut retail sales by 30%.
“We are concerned that there will be a negative impact on GDP, employment and tax collections, as well as disruption to the entire supply chain.”
