Cumilla Economic Zone cries for gas, power to buoy $800m investment plan

A planned $800 million investment by Meghna Group of Industries (MGI) for three major factories in the Cumilla Economic Zone faces uncertainty due to delays in securing electricity and gas connections.

The project includes a $400 million steel mill, a $200 million paper mill, and a $200 million glass factory, with production initially set to begin in early 2024. MGI says it has already invested around Tk3,000 crore (around $250 million) in civil work for the factories, much of which is financed through bank loans. However, with no production underway, the company incurs significant interest costs on the borrowed funds, it says.

At an event in the capital yesterday, Industries Adviser Adilur Rahman Khan said, "We will prioritise gas supply to industrial factories. We are trying to make use of the gas discovered in Bhola. We are also working on importing gas, which will increase the supply."

Project Director of Power Grid Network Strengthening Project Md Alamgir Hossain told TBS that the construction of a 660-megawatt substation in Gazaria is in the final stages and is expected to launch by November.

"We are under significant pressure as the office of the chief adviser has instructed us to complete the station swiftly. Once operational, electricity from this substation will be supplied to Cumilla Economic Zone," he said.

The Cumilla Economic Zone, owned by MGI, received final government approval on 20 March 2022. Construction began shortly after, to launch operations in the three factories. However, the absence of crucial energy infrastructure has left the ambitious project in limbo.

"Despite numerous efforts, we have been unable to ensure gas and electricity connections in the Cumilla Economic Zone. If these were available, production in the glass and steel re-rolling factories could have started," Mostafa Kamal, chairman and managing director of MGI, told TBS.

He said due to the lack of a gas connection, the economic zone is unable to go into production, and as a result, foreign investments are also not coming in.

At the far edge of Gazaria upazila in Munshiganj, near the Dhaka-Chattogram Highway in Meghna Upazila of Cumilla, lies the economic zone spanning 246.3 acres of land. MGI has a plan to expand the zone to 350 acres.

During a recent visit, TBS found that the construction of the Meghna Glass Industries building is nearly complete, awaiting a gas connection. The administrative building and connecting roads have been finished, while work on establishing a steel re-rolling mill factory with a production capacity of 1.4 million tonnes per year is underway.

MGI says due to the lack of gas and electricity connections, it has slowed down its work pace. It is also unable to import machinery from abroad for production.

Suman Bhowmik, general manager (accounts) of MGI, told TBS, "Approximately $200 million has been invested in Meghna Glass Industries. The construction of the steel re-rolling mill factory infrastructure is expected to cost around $400 million. Additionally, about $100 million has been spent on developing the infrastructure of the zone. All these investments remain stalled due to the lack of gas and electricity connections."

Currently, MGI operates three economic zones. Among them, the Meghna Industrial Economic Zone and Meghna Economic Zone are engaged in the production of domestic and international industrial products. 

But, MGI says, the lack of a gas connection is deterring investors from approaching to Cumilla Economic Zone

It says work is also underway to set up a power plant to ensure electricity supply to the Cumilla Economic Zone.

In the Meghna Industrial Economic Zone, around 13 foreign companies have already established their industrial facilities, says MGI. Similarly, several foreign investors from countries like China, Cambodia, the Netherlands, and India have expressed interest in setting up industries in Cumilla Economic Zone, it says. 

However, due to the uncertainty surrounding gas and electricity supply, MGI says, it has not been possible to enter into agreements with these foreign companies despite their investment interest. It has already submitted a letter to Chief Adviser Prof Muhammad Yunus and advisers concerned to resolve the problem at the earliest.

Infrastructure for gas and electricity

In December 2016, the Bangladesh Economic Zones Authority (Beza) issued a pre-qualification letter for the Cumilla Economic Zone. To facilitate gas supply, the Cumilla Economic Zone authorities applied to Titas Gas Transmission and Distribution on 15 October 2018. Following extensive discussions, it was decided to establish a new off-take point at Bhoberchar on the Bakhrabad-Haripur-Meghnaghat 42" pipeline for the Cumilla Economic Zone.

Based on the decision, the Cumilla Economic Zone authorities purchased 20 bighas of land for Gas Transmission Company Limited (GTCL) and 15 bighas for Titas Gas to construct the necessary infrastructure for the pipeline.

Similarly, to ensure electricity supply to the Cumilla Economic Zone, 25 bighas of land were purchased at Gazaria for constructing a 230/132 kV grid substation as per the requirements of the Power Grid Company of Bangladesh. Currently, infrastructural and civil work are ongoing at the site. 

Additionally, the Cumilla Economic Zone authorities have spent approximately Tk300 crore on purchasing necessary equipment and materials for establishing the gas connection. 

However, no memorandum of understanding (MoU) has been signed to date regarding the gas connection.

Beza Executive Chairman Chowdhury Ashik Mahmud Bin Harun told TBS, "Beza is coordinating with all stakeholders to ensure that Cumilla Economic Zone receives a gas connection promptly. However, there is currently a nationwide gas supply shortfall of approximately 25% compared to demand. Additionally, the pipeline infrastructure for gas supply is quite outdated. Broadly speaking, meeting the country's gas demand cannot be achieved overnight — it will take some time to address the issue."

He said in the future, when economic zones are approved, coordination will be done with other ministries to determine how long it will take them to provide their services. "For example, the Ministry of Energy will specify how long it will take to provide a gas connection. As a result, investors will have a clear understanding and will invest accordingly."