Charcoal Traders Call for Reform Amid Monopolistic Practices

New studies from the South Asian Network on Economic Modeling (Sanem) reveal significant macroeconomic effects of energy price shocks in Bangladesh. A 10% rise in coal prices leads to a 0.3% increase in inflation, while LNG prices increase inflation by 0.2%. The studies also show that such price hikes cause depreciation in the taka, with a 10% increase in crude oil prices leading to a 0.16% depreciation.

Three state-run banks—Agrani, Janata, and Rupali—exceeded their lending limits by disbursing Tk 10,579 crore to salvage a stalled coal-fired power plant project of Orion Group's subsidiary, thanks to policy relaxations by the previous government. The loans, sanctioned under the now-ousted Sheikh Hasina administration, were not disbursed as Orion Group decided to shift the project to solar power.

Four large coal-fired power plants in Bangladesh, built with foreign loans, have an estimated construction cost of Tk 1.25 lakh crore. However, experts suggest that Tk 35,000 crore could have been saved if proper processes were followed. 

The reduction in international coal prices has significantly decreased the production costs of coal-based power plants in Bangladesh. The cost of fuel in these power plants saw a massive reduction of 50% in the price of coal in the international market. This reduction has had a direct impact on the affordability of electricity generation, making it more accessible for consumers. Specifically, the average fuel cost per kilowatt of coal-based power generation has decreased to around 7 taka 30 paise. Previously, electricity prices ranged from 16 to 18 taka per kilowatt due to higher fuel costs.

The Matarbari coal-based power plant in Cox's Bazar received 65,000 tonnes of coal from Indonesia, marking the 11th shipment. Project Director Abul Kalam Azad stated that the vessel, en route since November 1, 2023, will take about a week to unload.