DHAKA: Bangladesh has signed a deal to buy 250 megawatts of electricity from India to partly ease power shortages, as Dhaka slowly moves away from producing power using costly imported fuel, a senior official said on Tuesday.

Under the deal, state-run Bangladesh Power Development Board will receive 250 MW electricity from India's top power utility NTPC Ltd, and another 250 through competitive bidding, said Mohammed Abul Kalam Azad, secretary of the government power division.

“We will be able to add 500 MW of electricity (from India) to the national grid in the middle of next year, through a transmission line now being built with a $150 million loan from the Asian Development Bank,” he told reporters.

“The agreement would stand valid initially for 25 years but its tenure may be enhanced,” Azad said.

He said the cost of the imported electricity at consumer level will be 5.0 taka per unit against between 12 and 16 taka a unit for power generated domestically by using imported oil.

Most power plants in Bangladesh are run with natural gas, supply of which is depleting fast, forcing the government to turn to fuel despite its high price in international markets.

Currently, Bangladesh has an installed capacity of producing over 7,600 MW of electricity, which is expected to go up to 21,000 MW by 2021, officials said.

“But we can not produce at that level due to lack of natural gas and also for a number of worn out plants,” Azad said.

The country now faces a daily shortfall of up to 1,500 MW of electricity against the demand of more than 6,000 MW.