Economy
Bangladesh Grapples with Coal Dependency, Says Global Study
Bangladesh is facing a complex transition from coal-based energy, according to the Global Energy Monitor in its Boom and Bust Coal 2024 report published on April 11.
The report, released worldwide, illuminates Bangladesh’s coal energy landscape and stresses the importance of transitioning to renewable energy. It advocates for a shift away from coal-based energy toward renewable sources.
Highlighting Bangladesh’s economic strain due to heavy reliance on imported coal amid fluctuations in foreign exchange rates, the report mirrors similar challenges faced by countries worldwide.
The document further examines coal usage in Bangladesh, noting “a surge of coal plant commissionings marked the final months of 2023 in Bangladesh.”
“1.9 GW of coal capacity came online, a historic high since the country’s inaugural coal-fired power station commenced operations in 2006,” the report states.
“Bangladesh’s coal plants rely heavily on imported coal… and much of its installed capacity remained underutilized throughout the year as several power stations experienced recurrent shutdowns due to fuel shortages,” it adds.
Additionally, the report indicates Bangladesh’s trend of diminishing proposed coal capacity since 2019, suggesting a gradual shift toward cleaner energy sources.
“In 2023, little progress was made on coal proposals, which have steadily dwindled since 2019 and now seem increasingly improbable. The lone project that progressed was the government-backed Maheshkhali power station, which initiated pre-feasibility studies but faced repeated delays in its anticipated commencement,” notes the Global Energy Monitor report.
Flora Champenois, coal program director at Global Energy Monitor, remarked, “Coal’s prospects this year deviate from the norm, as indications point to a reversal of this rapid expansion. However, countries with coal plants slated for decommissioning must expedite the process, and those with plans for new coal plants must ensure they are never realized.
“Otherwise, meeting our targets under the Paris Agreement and reaping the benefits of a swift transition to clean energy will remain out of reach,” she emphasizes.
Sharif Jamil, member secretary of Dhoritri Rokhhay Amra (Dhora) and coordinator of Waterkeepers Bangladesh, stated, “Bangladesh’s economy bears a significant burden from financing, fuel costs, and currency fluctuations associated with current coal-based power plant operations.
“Even operating existing coal plants at full capacity poses challenges for Bangladesh. Proposing new coal plants or continuing with existing ones heightens public health risks and exacerbates climate disruptions, which is fundamentally irrational,” he concluded.
In addition to Global Energy Monitor, the report’s co-authors include the Centre for Research on Energy and Clean Air (CREA), E3G, Reclaim Finance, Sierra Club, Solutions for Our Climate, Kiko Network, Climate Action Network (Can) Europe, Bangladesh Working Group on External Debt (BWGED), Coastal Livelihood and Environmental Action Network (Clean), Waterkeepers Bangladesh, Dhoritri Rokhhay Amra (Dhora), Trend Asia, Alliance for Climate Justice and Clean Energy, Chile Sustentable, Polen Transiciones Justas, Iniciativa Climatica de Mexico, and Arayara.
Beyond Fossil Fuels also contributed to the Turkish version of the report.
During the eleventh month of the current fiscal year, the country’s foreign currency reserves have fallen below $19 billion for the first time. After paying off some import bills, the reserves have now stood at $18.26 billion on Sunday.
According to the International Monetary Fund (IMF), as of May 8, the total foreign currency reserves of the country were $19.82 billion.
Mohammad Mezbauul Haque, the spokesperson of Bangladesh Bank, informed that through the Asian Clearing Union (ACU), the central bank has paid off import bills totaling $1.63 billion over the past two months.
However, Bangladesh Bank maintains that after paying off the import bills, the foreign currency reserves now stand at $23.71 billion.
According to the Central Bank’s accounts, the reserves were $25.27 billion on May 8.
The Dhaka Stock Exchange (DSE) and the DSE Brokers Association (DBA) have expressed gratitude towards Prime Minister Sheikh Hasina for her directive to list government companies in the capital market, a move hailed as timely and positive.
The directive was issued during the recent meeting of the Executive Committee of the National Economic Council (Ecnec) last Thursday.
Dr. Hafiz Muhammad Hasan Babu, Chairman of DSE, described the directive as a significant step towards enhancing the dynamics of the capital market. He emphasized that besides invigorating the capital market, this move would also attract foreign investment and promote sustainable development.
Despite previous efforts, government institutions had not been listed in the stock exchange, according to a notification issued by the DSE. The Prime Minister’s directive is seen as a pivotal step towards revitalizing and expanding the economy.
Dr. Babu further remarked, “The listing of reputable companies in the capital market, as directed by the Prime Minister, will greatly benefit the country’s economy. It will also enhance investor confidence.”
Similarly, the DBA released a notification applauding the Prime Minister’s directive, terming it as positive and timely for the capital market.
Saiful Islam, President of DBA, expressed optimism about the directive’s potential to accelerate the country’s capital market and overall economy. He pledged support to relevant government departments and regulatory bodies in implementing the directive, ensuring its positive impact on the economy, including the capital market.
India has expressed interest in financing Bangladesh’s Teesta project, announced Foreign Minister Hasan Mahmud. Speaking to reporters after a meeting with Indian Foreign Secretary Vinay Mohan Kwatra, Mahmud stressed the importance of aligning the project with Bangladesh’s needs. He confirmed discussions on the Teesta issue during the meeting. Mahmud also affirmed Prime Minister Sheikh Hasina’s upcoming visit to New Delhi, indicating that the finalization of the date would depend on the formation of the new Indian government following ongoing elections.
Meanwhile, the IMF has approved a $1.15 billion staff-level loan for Bangladesh in its third tranche. Mahmud noted the ongoing elections in India and the subsequent formation of the new government as factors influencing the scheduling of PM Hasina’s visit.
When asked about the sequence of visits to India and China, Mahmud suggested Delhi’s geographical proximity to Bangladesh. Diplomatic sources suggest PM Hasina’s visit to India is planned for early July, following India’s elections.
Pre-election surveys indicate strong prospects for Indian Prime Minister Narendra Modi’s re-election. Modi previously congratulated PM Hasina on her electoral victory in January, expressing optimism about strengthening ties between the two nations.
The last bilateral engagement between the prime ministers occurred during the G-20 Leaders Summit in September 2023. Modi is expected to invite South Asian and BIMSTEC leaders to his swearing-in ceremony, fostering regional cooperation.
Addressing border killings, Mahmud emphasized the government’s commitment to ending such incidents and promoting the use of non-lethal weapons by border forces. Discussions also covered enhancing physical and people-to-people connectivity, including cooperation with India to import hydropower from Nepal and Bhutan through India. Mahmud highlighted the need to further ease visa restrictions to strengthen people-to-people relations.
