Bangladesh bans importation of oil-fired power plants

Bangladesh has banned the importation of new oil-fired turn-key electricity generators.

The decision was based on foreign exchange concerns and reversing a policy to allow independent power producers to setup mini plants to meet chronic power shortages.

Bangladesh had planned to host 49 so-called quick rental power plants, mostly fuel-oil powered generating units shipped into the country to help cover a daily electricity demand shortfall of 1,500 megawatts.

But the energy adviser to Prime Minister Sheikh Hasina said that no more new oil-generating units can be imported.

"The government will not allow more oil-fired power plants on a quick rental basis to ease pressure on foreign exchange reserves and also make the Bangladeshi taka stronger against the U.S. currency," Tawfiq-e-Elahi Chowdhury told Reuters.

Chowdhury said Bangladesh's economy was under pressure because the oil imported to run the plants had drastically increased demand for dollars.

Soaring import costs and weaker demand for exports such as textiles have weakened the taka 15 percent against the dollar in 2011.

Bangladesh's foreign exchange reserves fell nearly 10 percent to $9.38 billion at the end of January compared with $10.38 billion in the same month in previous year and hit a record $11.32 billion in April last year.

Bangladesh will spend $6.17 billion on importing oil in the 2011-12 fiscal year, more than double the previous year.

For the source of this story, click here.