Govt aims local gas boost with offshore bidding in Dec, onshore in March

To alleviate the ongoing gas crisis affecting industries, the interim government has decided to invite international tenders for offshore gas exploration on December 9 and for exploring onshore reserves, including those in hilly regions, in March next year, according to Petrobangla Chairman Zanendra Nath Sarker.

This move is part of a broader strategy to boost local gas production, reduce reliance on LNG imports and ease supply constraints. 

At a seminar titled "Ways of Mitigating Energy Crisis in the Industrial Sectors" at The Westin Hotel in Dhaka yesterday, Zanendra expressed hope that this initiative would attract more global energy companies, similar to how Chevron has invested in Bangladesh's energy sector.

In addition to increasing the domestic gas supply, the government has decided to allow LNG imports through open tenders, starting 1 December. This will enable anyone to import LNG from the spot market, said the Petrobangla chairman. 

Furthermore, tenders will be issued next month for the establishment of new floating LNG terminals. 

The announcement comes as entrepreneurs and industrialists at the same event expressed concerns about the ongoing gas crisis, highlighting their inability to operate factories at full capacity, which has led to numerous closures. 

The event was attended by Power and Energy Adviser Muhammad Fouzul Kabir Khan and Commerce Adviser Sheikh Bashir Uddin.

Fouzul Kabir said a tender will be issued in December to bring the recently discovered gas resource in Bhola to Dhaka.

He said although 70 mmcf of gas has been found in Bhola, it cannot be brought to Dhaka or industrial areas due to the lack of a pipeline.

"Interested businesses can participate in the tender and bring Bhola's gas to Dhaka in the form of compressed natural gas [CNG] or liquefied natural gas [LNG]," he said, adding that bringing Bhola's gas to Dhaka will somewhat alleviate the gas shortage in industries.

The energy adviser said, "Under the previous government, 23 companies supplied LNG. We are now opening the process to everyone through open tenders. Bidding for gas well drilling is also being made available, with offshore bidding scheduled for next December."

Fauzul Kabir said the government expects to save Tk360 crore over six months (January to June) by relaxing a condition related to fuel oil imports. Previously, fuel oil suppliers were required to own a refinery, but this condition has been lifted. So, significant savings are anticipated.

When asked about the savings, BPC Chairman Md Amin Ul Ahsan told TBS, "In the tender for importing fuel oil for the upcoming January-June period, suppliers have offered significantly lower premiums compared to the previous six months [Jul-Dec]. This will lead to savings in the next six months."

"For diesel imports during the Jul-Dec period, the premium was 8.75% per barrel. This time, 14 companies participated in the tender, with the two offering the lowest premiums of 5.18% and 5.44%, which is why this saving will occur," the BPC chairman said.

Fouzul Kabir said the government will float tenders for the installation of 30-40 renewable energy projects next week.

He further added that currently, the government is providing an annual subsidy of Tk36,000 crore for electricity, Tk2,000 crore for fuel oil, and Tk6,000 crore for LNG imports.

At the event, business leaders called for prioritising gas supply to industries over households by stopping CNG gas supply to vehicles.

In response, Petrobangla Chairman Zanendra Nath Sarker said that while the previous government focused on increasing gas supply to the power sector, the current focus is on boosting supply to industries. He assured that the gas supply to industries will be increased gradually next year.

He said that in 2025, Bangladesh will need to import 115 LNG cargoes, with 56 of them under long-term contracts, and the remaining cargoes will have to be sourced from the spot market.

The Petrobangla chairman also said that 1,500 mmcf of gas will be added to the national grid from various domestic sources by December next year. 

"If the DPPs [Development Project Proposals] for gas well drilling are approved by the Ministry of Finance and the Ministry of Planning within the next 2-3 months, it will be possible to drill 50 wells by December 2025," Zanendra Nath added.

In response to businessmen's demand to redirect gas from power plants to industries, Bangladesh Power Development Board (BPDB) Chairman Md. Rezaul Karim stated that reducing the gas supply to power plants would require an increase in coal and oil-based power generation, leading to higher generation costs.

This, in turn, could result in either increased government subsidies or more frequent load shedding, he said, stressing the importance of maintaining a stable gas supply for power generation in the upcoming summer season.

'System loss in gas is $1b' 

While presenting the keynote at the seminar, Professor Ejaz Ahmed of Bangladesh University of Engineering and Technology (BUET) pointed out that the average system loss in Bangladesh's gas distribution over the last three years, since 2020, stands at 9.82%, amounting to approximately $1 billion annually, which he referred to as "theft" rather than loss.

However, the Petrobangla chairman disputed this, stating that the average loss for Petrobangla is 5-6%, though Titas and Bakhrabad have much higher losses. 

He also mentioned a recent crackdown on illegal gas lines in 200 factories in Keraniganj and urged business owners to cooperate with ongoing operations in Narayanganj.

Ejaz Ahmed stated that the ongoing gas and power crises have led to a significant decline in industrial production: the RMG sector has seen a 30-35% reduction, the steel industry has dropped by 25-30%, ceramic production has fallen by more than 50%, and approximately 40% of SMEs (small and medium-sized enterprises) have been forced to shut down.

He noted that while the industrial sector requires 1,040mmcf of gas, only 500 mmcf is being supplied. Despite areas like Gazipur, Ashulia, Narayanganj, Chattogram, Savar, Dhaka, and Mymensingh being major industrial hubs, they are not receiving adequate gas. 

He proposed adjusting the gas distribution to better serve these key industrial regions.

Businessmen demand smooth gas, power supply 

Apex Group MD Nasim Manzur pointed out the shrinking industrial employment due to the ongoing gas crisis. 

"For three years, we've had to cover two gas-powered Rolls-Royce generators in our Savar factory with polythene because gas is unavailable," he said, adding that the gas and power crisis is damaging the factory's machinery. 

He proposed the full operation of coal-fired power plants, with gas from these plants redirected to industries.

Former FBCCI president Abdul Awal Mintu voiced similar concerns, stating, "If the gas and electricity crisis is not resolved, there will be no new investments or job creation in the country, which will only exacerbate inflation. The government is relying solely on monetary policy to control it."

Former FBCCI president Mir Nasir Hossain said, "There was a lack of transparency during the Awami League regime. This is why we are suffering now. Gazipur factories are not getting gas, while the 250 MW power plant in Mymensingh receives gas through the same pipeline. That power plant should be shut down, and gas should be redirected to the Gazipur factories."

FBCCI President AK Azad said, "Textile mills are facing 30-35% load shedding. Running factories on diesel generators is not sustainable. A textile mill owner in Narsingdi had to close part of his factory due to the gas crisis. One day, he was in tears while praying with me."

"The workers from the closed factories are coming to the gates of my factory seeking jobs. How can I employ them when my own factory is on the verge of closure? With the current gas and electricity crisis, we cannot sustain operations," he said.

Amitabh Chakraborty, adviser to City Group, said, "We obtained gas permits for our factories between 2018 and 2021, yet the government still hasn't provided the gas. As a result, we cannot start operations."

Bangladesh Chamber of Industries (BCI) President Anwar-ul Alam Chowdhury Parvez added, "Let me make one thing clear: the business community is struggling, especially those in the manufacturing sector, who are facing even greater challenges."

He said that in the past five years, gas prices have risen by 286.5%, electricity by 33.5%, diesel by 68%, and transport costs by 50%, with freight charges increasing by 30-40%. By September this year, 200 RMG factories had shut down, and another 300 may close within a year.

Parvez explained, "Industries cannot survive unless they operate at 85-90% capacity to break even. With production at 60-75%, bankruptcy becomes inevitable, leading businesses to default on bank loans."

He further stressed, "Reforms across sectors can take time, but the industrial sector cannot afford delays. Time is a luxury we do not have."