Strategic supply chain management of electricity in Bangladesh: challenges

and sustainability

Electricity supply chain management in Bangladesh involves the coordination of various activities and
processes that are essential for the reliable and efficient delivery of electricity to customers. The
electricity supply chain can be broadly divided into three stages: generation, transmission, and
distribution.

Generation: The first stage in the supply chain is electricity generation. In Bangladesh, electricity is
generated by both public and private sector companies, including the Bangladesh Power Development
Board (BPDB) and private independent power producers (IPPs). The electricity generated is typically
transmitted to a grid network, which is managed by the Bangladesh Power Grid Company Limited
(PGCB).

Transmission: The next stage is the transmission of electricity from the generation plants to the
distribution networks. The transmission network in Bangladesh is primarily managed by the PGCB,
which is responsible for the planning, construction, and maintenance of the high-voltage transmission
lines and substations.

Distribution: The final stage of the supply chain is the distribution of electricity to customers. In
Bangladesh, the distribution of electricity is managed by the Bangladesh Rural Electrification Board
(BREB) and the Dhaka Electric Supply Company Limited (DESCO), which serve rural and urban areas,
respectively. The distribution companies are responsible for maintaining and upgrading the
distribution networks, managing customer connections and billing, and responding to power outages
and other emergencies. (ChatGPT)

The news!

Prime minister: One kilowatt of electricity costs 12 taka, there we are taking only 6 taka. That's why
we hear a lot of shouting. Gas-electricity supply can be provided if everyone is willing to pay whatever
the purchase price is. Then it can be given. Moreover, how much subsidy can be given? Pointing out
that the price of electricity has been increased by 150 percent in the UK, the Prime Minister also said,
"But we have not reached that level yet." But I would say again that gas-electricity supply can be
provided, if the purchase price is what it is.

Digging gold

According to data from globalpetrolprices.com as of June 2022, the price of electricity for households
in Bhutan is $0.015 per unit or 1.61 Bangladeshi taka. 3.5tk for business establishments. Electricity
price in Nepal, another country of South Asia, is 4.71 rupees, in Pakistan it is 3.72 rupees. Even in
bankrupt Sri Lanka electricity price per unit is Rs 4.79. At the same time, the price of electricity for
households in Bangladesh is Tk 5.61 per unit.

Government approved oil and gas based rental, quick rental power plants, as per the contract, a fixed
charge is to be paid if power is not purchased from them. This is the capacity charge. At present in
Bangladesh it is about nine thousand crore taka per year. Currently, another 35 new private power
plants are expected to come on stream by 2026. Three more LNG-based power plants of Summit,
Unique and Reliance Group are going to be added to the list of paying capacity charges.
Currently, Bangladesh is importing 1,160 MW of electricity from India. With this, imported electricity
from India's Adani Group is going to be added. Bangladesh will purchase 1,496 MW of electricity from
Adani Group's coal-fired power plant located at Godda in Jharkhand for the next 25 years. According
to this agreement, Bangladesh will have to spend an additional 70 thousand crores of taka in 25 years
to buy electricity from Adani Group of India.

Demand, supply and sources

According to the information of the Electricity Department on 28 June 2022, the power generation
capacity of the country is 25 thousand 566 MW. There is a demand of 13-14 thousand megawatts of
electricity. And regular production is 12-13 thousand MW. But, the transmission capacity is only 7-8
thousand MW.

The main sources of energy are gas, coal, oil, nuclear reactor, solar. Besides, energy is being produced
from water and wind. About 62.9% of Bangladesh's electricity is produced from natural gas, 10% from
diesel, 5% from coal, 3% from oil and 3.3% from renewable sources.

Half of the total power generation comes from gas based plants. And in the last two and a half decades,
63 percent of the existing gas production has gone into the hands of foreign companies, whereas until
1998, 100 percent of the production was done by domestic companies.

PDB procures gas from six distribution companies under Petrobangla. The country's current gas
demand is 3,800 million cubic feet per day and Petrobangla can supply a maximum of 3,100 million
cubic feet. According to PDB sources, the price of gas has increased by Rs. 9 per unit. That means the
cost of power generation per unit from gas-based power plants will increase by more than two taka
on an average. At the newly announced price (Tk. 14 per cubic meter), PDB's annual gas bill will be
over Tk. 14,400 crores.

Apart from this, we have to rely on LNG imports to meet the gas shortage. Bangladesh usually buys
LNG from the spot market. LNG prices rose from $3 to $14 last year as Europe turned to LNG as a fuel
due to Russian sanctions. Due to lack of fuel, the government had to announce load shedding from
July last year. At that time, the government stopped buying liquefied natural gas (LNG) from the open
market due to the increase in the price in the global market. It is not yet launched. The government
hiked gas prices at a record rate (82 percent on average) in January this year by increasing LNG
imports. The price of gas used in the electricity sector has been increased by a maximum of 179
percent.

Supply chain management is essential for ensuring a reliable and efficient supply of electricity to
customers in Bangladesh. This requires coordination and collaboration between the various
organizations involved in the supply chain, as well as investments in infrastructure and technology to
improve the efficiency and reliability of the system.

Your tasks

1. Analyses the supply chain of electricity of Bangladesh (Demand and supply analysis, implied demand
uncertainty, supply uncertainty, sources of energy, distribution).

2. Prepare a strategic supply chain for the electricity of Bangladesh (planning, sourcing raw materials,
manufacturing, distribution). Political and environmental issues should be considered for
sustainability.