Coal prices are rising on global markets, tracking gains in oil and liquefied natural gas. The Indonesian Coal Index now stands at close to $73 per tonne — an almost 9 percent increase from $67 before the Middle East conflict escalated three weeks ago. Freight rates for vessels have also climbed by as much as 40 percent, alongside higher premium charges.

Coal-fired power plants account for 26 percent of Bangladesh’s electricity generation capacity, and rely almost entirely on imported fuel. Analysts expect the higher import costs to push up generation costs at those plants.

Bangladesh relies heavily on Indonesian coal. The ultra-super-critical units currently operating in the country use 5,000 kcal/kg coal. According to the ICI-3 index for that grade, the price stands at $72 per tonne, compared with $67 in February and $67.60 prior to the recent escalation in the Middle East.

Plant officials said, however, that while the Indonesian price index had been softening, it has started to rise over the past week. The increase, coupled with higher shipping freight rates and premium charges, means the delivered cost now stands at $90–95 per tonne.

In the futures market, the Australian Newcastle index price has risen 20.87 percent to $131.75 a tonne as of yesterday, up from $109 in January and marking a $22 jump in a month and a half.

According to Bangladesh Power Development Board (BPDB) data, the country’s coal-fired generation capacity currently stands at 7,769 MW, accounting for nearly 27 percent of the total power generation capacity of 28,919 MW from gas, coal, furnace oil and renewables.

BPDB calculations show that the maximum cost of generation at coal-fired plants now averages around BDT 11.5 a unit. Total coal stockpiles at seven such plants amount to 1.16 million tonnes, including 116,000 tonnes from local mines for the Barapukuria plant.

The country’s daily power demand is currently between 12,500 MW and 14,500 MW and coal-fired plants are generating more than 4,500 MW of this. Including supplies from India’s Adani, the average contribution from coal-fired plants reaches nearly 6,000 MW. The plants are being run more intensively to ease pressure on gas- and LNG-fired capacity, and BPDB has plans for how to keep them operating in the coming days.

A senior BPDB official told Bonik Barta anonymously that plans were made in advance to run the coal-fired plants continuously during the summer and irrigation season. Instructions were issued to build up stocks accordingly, and no disruptions to supply have emerged so far. However, he expressed concern that the sustained increase in coal prices could feed through to electricity tariffs.

BPDB data showed that the 1,320 MW coal-fired thermal power plant in Patuakhali has stockpiled 534,000 tonnes of coal, sufficient for 61 days of operation at an 80 percent plant load factor. The Rampal thermal plant holds 265,000 tonnes (39 days) of coal, while the 1,200 MW Matarbari plant has reserves of 87,917 tonnes (10 days). Banshkhali’s SS Power plant has 180,000 tonnes in stock (42 days), and the 307 MW Barisal plant holds 56,000 tonnes. The Patuakhali RNPL plant has a stockpile of 35,000 tonnes, with a tender process underway for further supplies. Dinajpur’s Barapukuria plant meanwhile holds 615,000 tonnes of coal.

The Middle East conflict has disrupted oil and LNG supplies and prompted countries to increase their coal use. As Bangladesh relies heavily on imported fuel, energy experts say a rise in global coal prices will inevitably affect domestic power generation.

Professor M Tamim, an energy expert and vice-chancellor of Independent University, told Bonik Barta: “It’s only natural for prices of all fuel products to rise when global energy costs increase. LNG is the reason behind the surge in coal prices as increased LNG prices has led many countries to restart or increase output at their coal-fired plants. This has put additional pressure on coal, pushing up prices. A rise in fuel costs will inevitably push up generation costs.”

That pressure is reflected in import figures. London-based energy data firm Argus Media estimates Bangladesh’s total coal imports in March are on course to rise by nearly 7 percent to 1.5 million tonnes. The country typically sources coal from Indonesia, though it has recently made some purchases from South Africa as well. So far this month, approximately 608,000 tonnes of Indonesian coal and 55,000 tonnes of South African coal have arrived, with a further 837,000 tonnes of Indonesian shipments expected for the remainder of March.

Plant officials said that while Indonesian coal prices have not yet risen sharply, freight and premium charges have increased significantly. Vessels for coal imports are also becoming scarce, they added.

A senior official at a state-run coal-fired plant, speaking on condition of anonymity, told Bonik Barta that Indonesian coal prices are beginning to climb. “The freight rate for coal imports is rising at an abnormal rate,” he said. “A month ago, the freight rate was $15 a tonne; now we have to negotiate at $21 a tonne. With premiums added, costs will rise and impact power generation.”

Energy volatility is driving a significant shift in power generation across Asia. Disrupted supplies and soaring prices for LNG have prompted multiple countries to ramp up coal-fired electricity output, a trend with direct implications for South Asia.

International news agency Reuters has reported that Bangladesh increased both its coal-fired generation and coal imports in March. In another report, the outlet said Pakistan is also planning to increase generation from domestic resources. The country’s power minister said reducing reliance on LNG would allow local coal-fired plants to raise output during off-peak periods.

Southeast Asia is following suit. The Philippines is increasing coal generation and reducing its reliance on LNG. Vietnam’s state-owned Vietnam Electricity is in talks over coal supplies. Thailand is raising output from its largest coal-fired plant to conserve LNG.

In East Asia, South Korea plans to scrap caps on coal-fired generation while seeking to expand nuclear power. Japan’s biggest power generator JERA has said it will maintain high levels of coal-fired output.

On coal imports, BPDB Chairman Md Rezaul Karim told Bonik Barta: “Global coal prices haven’t yet risen significantly. But freight and premium charges have increased sharply. We’ll discuss these issues with the Power Division after the Eid holiday and then make a decision.”

He added, “With summer and irrigation in mind, we had previously instructed the plants to increase their stocks. They have done so. However, if they could increase stocks at one or two more plants, BPDB would be in an even stronger position for power generation.”