It is now obvious that the gas resources are depleting fast and the country will be more and more reliant on imported gas. As of now, 26 gas fields in the country are sources for power generation, fertilizer factories, other industrial and commercial infrastructures, CNG supply facilities for automobiles and domestic consumers. There is approximately 1000 mmcfd gas supply shortage in the country despite the daily production of gas resources reaching 2700 mmcfd.
The government has inked two contracts and Prime Minister Sheikh Hasina laid foundation stones for setting up Floating LNG terminals for imported natural gas in Cox's Bazar on May 06, 2017. Petrobangla expects that within April 2018, the first floating storage and regasification units (FSRU) will be completed, and by October 2018 the second FSRU will be ready to supply natural gas from imported LNG. Approximately 1000 mmcfd gas would flow to the national gas grid through the two floating storage and regasification units (FSRU) or LNG terminals. Thus the gas demand and supply gaps will be largely minimised. Additionally, the government has been considering for a few other land based LNG terminal installations to import more gas into the stream to match future gas demand.
Bangladesh aspires to graduate from the present least developed countries (LDC) group to Middle-Income Country (MIC) within 2021. One of the requirements for delisting from LDC group and to graduate to MIC is to maintain steady gross domestic product (GDP) growth for some years at a rate above 7.0 per cent. Industry sector's contribution requires to be increased from the present 29 per cent to 32 per cent.
In view of the above, policymakers have been trying to attract Foreign Direct Investment, increase of domestic investment for establishment of industries and improve infrastructure. Already, the government has decided to establish 100 special economic zones for facilitating rapid industrial growth in the country. But primary energy and power supply remain a concern for sustainable industrial growth.
The existing industries, including the export-oriented ones, have been raising concern over the state of unreliable power and gas supply situation. Also the industry and business leaders have been expressing concerns that the energy supply situation, if not improved radically, new investors may not feel encouraged for investment in industries. If the government can secure quality power supply at a competitive price from the grid lines, industries will not opt for development of captive power facilities. Similarly, entrepreneurs need to know at what price the government can supply gas. At this stage, due to unreliable power supply, industries depend both on grid power and captive power generation. Also, cost of gas supply for industries and captive power generation has been increasing at regular intervals.
Bangladesh Energy Regulatory Commission (BERC) sources suggest that the present capacity of gas and oil-based captive power generation in the country is 3000 MW. Since 1998, the government has been offering tax incentives for importing captive power generation plants and machineries to support industrial growth. At the same time special rates for gas supply for captive power generation has been offered to industries. Although government agencies did not admit the looming gas crisis until 2006, industries took the advantages of lower gas tariff and tax incentives for captive power generation facilities to get secure power supply. As per published reports, gas price for captive power producers was US$ 1.80 per unit in 1998. But gas price for captive power generation units has been raised in March 2017 to US$ 3.18 per unit. The Energy & Power Magazine reports that the cost of fuel for textile industries rose to 8.0 per cent following the gas price hike. For plastic industries, fuel cost has increased by 15-18 per cent. Industry sources suggest that the LNG import and blending with locally produced gas will enhance gas prices for industries from its present level to US$ 5.0 per unit.
President of Bangladesh Textile Mills Association and former Energy Adviser to the last Caretaker Government Mr. Tapan Chowdhury told the media that industry owners have taken initiatives to introduce efficient plants and equipment in the textiles sector for reducing fuel costs. However, he was not sure if the increased fuel gas prices could secure competitive prices for their industry products.
Energy Adviser to the Prime Minister Dr. Tawfiq-E-Elahi Chowdhury stated to the media that there was no alternative to increasing gas prices for captive power generating units in the backdrop of rapidly depleting gas resources in the country. He further suggested that the captive power generation units must introduce co-generation for increasing plant efficiency.
But industry owners claim that the industries which need to rely on captive power generation face the threat of losing market competitiveness due to increased gas price. Former Vice President of FBCCI and President of Plastic Goods Manufacturers & Exporters Association Mr Jasim Uddin in a recent interview to Energy & Power Magazine said that the government should formulate a 25-year fuel supply plan with year-wise power and fuel supply projections for industries so that the investors can calculate risks and opportunities for investment. He further suggested that the government should declare what would be the cost of per unit gas for industries once LNG started to flow into the gas supply gridlines.
Without long-term cost indications for fuel, investors will shy away from investing. Appropriate policy guidelines are essential for long-term quality gas and power supply for setting up fuel-efficient industries.
The writer is a mining engineer and writes on energy and environment issues.
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