The ongoing armed conflict and intense tension between Iran and the United States in the Middle East have begun to impact the global economy. Due to military instability around the strategically vital Strait of Hormuz, crude oil prices in the international market are surging uncontrollably. Recently, the price of Brent crude oil reached $96.63 per barrel. The direct blow of this global conflict has hit Bangladesh's power and energy sector. With abnormal price hikes in the global market and soaring import expenses, the Bangladesh Power Development Board (BPDB) is facing a severe crisis. Buying fuel at high prices and supplying electricity at lower rates has put the organization at risk of bankruptcy.

PDB, BPC, and Petrobangla Face Record Losses

According to economic analysis, the potential loss in the power sector for the current fiscal year was initially estimated at 45,000 crore BDT. However, as the intensity of the Middle East war escalates, BPDB fears its total losses this fiscal year will exceed 60,000 crore BDT. Alongside BPDB, other state-owned enterprises in the energy sector are also facing massive losses. Due to purchasing oil at higher prices and selling it at relatively lower rates amid the Middle East war, the loss of the Bangladesh Petroleum Corporation (BPC) exceeded 22,000 crore BDT up to August. Meanwhile, importing Liquefied Natural Gas (LNG) at high prices from the international spot market has cost Petrobangla nearly 14,400 crore BDT over the past six months. Total losses in the oil and gas sectors alone have reached 36,400 crore BDT, which is feared to rise further in the current month of September.

Coal and Furnace Oil Markets Heat Up: Production Costs Rise

The global market for coal and furnace oil—key raw materials for power generation—is also volatile. Bangladesh typically imports around 15 million metric tons of coal annually from Indonesia for its power plants. However, as Indonesia recently cut coal extraction by 25 percent and ocean freight charges surged due to the war, the price per ton of coal jumped from $110 to $140. As a result, electricity generation costs in the country's coal-fired power plants have multiplied. On the other hand, facing a severe domestic gas shortage, the government was forced to generate nearly 4,000 megawatts of electricity from furnace oil-based plants, driving production costs even higher. Although power tariffs were raised by up to 20 percent last June, efforts to offset losses are failing due to excessive fuel import costs.

Government Initiatives and Close Monitoring to Address the Crisis

To manage this multifaceted crisis, the government and the Power Division have intensified round-the-clock monitoring. Various alternative measures are being taken under the direct instruction and strict oversight of Prime Minister Tarique Rahman. Relevant authorities expect that if the global situation and war do not escalate further, the supply chain may show some improvement within the next week or two.

Expert Opinion: Austerity Measures and Load-Shedding Management

Highlighting the severity of the situation, energy expert and former BUET professor Dr. Ijaz Hossain stated that given the current global reality, there is no alternative to adopting nationwide austerity measures. Even though pressure on foreign exchange reserves is mounting, maintaining the supply of oil and LNG to industrial plants is crucial to keeping the economic wheel turning. However, since power demand drops during the upcoming winter season, fuel and money could be saved by slightly increasing load-shedding. In addition to government initiatives, public awareness and cooperation are essential to overcome a national crisis of this scale.

Author: Dr. Abul Hasnat Milton, Journalist, Political Analyst, and Editor-in-Chief, The Source News Bangla