Industry hardly benefited from Bhola’s gas, but Intraco did

To address the severe energy shortage faced by industries, the ousted Awami League government took an initiative last year that shows how state resources were squandered to line the pockets of a businessman with close ties to the former government's policymakers.

In May last year, the Intraco Refueling Station was awarded a contract—allegedly due to its owner's close ties with the former state minister for Power, Energy, and Mineral Resources Nasrul Hamid—to ship surplus gas extracted from the gas fields of the southern island district of Bhola.

In the absence of traditional pipelines, the gas was converted into CNG before being distributed to industries in and around the capital Dhaka.

However, this effort did hardly anything to alleviate the energy crisis for the country's top foreign currency-earning industries. 

While the industrial sector gained next to nothing from Bhola's surplus gas, the contractor — Intraco — hit the jackpot, reaping substantial rewards in both the capital market and its CNG operations.

Questioned about the number of factories benefiting from the shipped gas, the relevant authorities drew a blank.

Intraco fails to meet the minimum target 

In 2022, as the gas crisis worsened due to the Russia-Ukraine conflict and volatile spot LNG prices, Bhola stood out with its additional gas production capacity. Consequently, authorities began efforts to harness the surplus gas from Bhola's gas fields.

In May 2023, Sundarban Gas Company Limited, a state-owned entity under Petrobangla, signed a 10-year contract with the private company Intraco to transport surplus gas from Bhola. 

As per the contract, Intraco is committed to shipping 5 million cubic feet (mmcf) of gas from Bhola to Narayanganj and Gazipur industrial areas each day. 

Intraco started to transport gas from Bhola in December 2023. 

In line with the contract obligation, a total of 1,372.68 mmcf of gas would have been transported in nine months. 

However, it failed to meet the target at a minimum level. 

In the last nine months, Intraco only transported 70 mmcf of gas from Bhola which is only 5% of the target, according to Sundarban Gas Company data.

When asked, Zanendra Nath Sarker, chairman at Bangladesh Oil Gas and Mineral Corporation (Petrobangla), on 28 August told TBS that Intraco is now shipping only 2 mmcf gas per day.

"As industries are less interested in taking the CNG gas, supply has not increased much," he said. 

But sources at Sundarban Gas and Titas Gas said that until shutting the operation on 30 August, the company could not even ship 2 mmcf gas in a single day in the last nine months (December-August). 

"Only one or two cascade trucks would ship some gas in a week," a source at Sundarban Gas told TBS on condition of anonymity.     

Industry hardly benefited  

When authorities signed the contract with Intraco to transport surplus gas from Bhola, factory owners in Gazipur, Dhaka, and Narayanganj hoped for relief from the ongoing energy crisis. 

However, due to the contractor's failure, factories continue to suffer from the same gas shortages that impact their productivity and operations.

Speaking anonymously to TBS, a leading spinning mill owner said that Bhola's gas has had no impact on the gas supply in major industrial areas like Gazipur and Narayanganj. 

He noted that the Narayanganj BISIC, Ponchoboti, and Fatullah regions have been low-pressure zones for several months, resulting in a daily loss of 30 to 35 tonnes of capacity for their spinning mills.

"The industry requires gas pressure of up to 15 pounds per square inch (PSI), but they are receiving only 1 PSI, with some meters even showing zero PSI," he said.

The entrepreneur emphasised that if the government could guarantee a minimum supply of 5 PSI, it would significantly aid in economic recovery.

Bangladesh Textiles Mills Association (BTMA) president Showkat Aziz Russell said Industries are not getting adequate gas supply despite paying high rates.

"Almost every industry is facing the challenge of low pressure in their gas supply," he said.

On the other hand, state-owned organisations such as the Bangladesh Petroleum Exploration Company Limited (Bapex), Bangladesh Petroleum Corporation (BPC) and Titas Gas Transmission and Distribution Company Limited (TGDCL), are making profit every year, which are designated to provide services, not doing business.

He also alleged that the state-owned organisation Bapex is responsible for exploring new gas files, but they don't do that.

"In some cases, they also demand bribes from international companies to get exploration work and at the end of the day, businessmen have to bear that cost," Showkat Aziz said, adding that running industries with costly gas like LNG will not be a business case. 

Intraco made huge profit from Bhola's gas 

Intraco has made a remarkable profit using this agreement. 

The company made a profit over 78% from February to June 2023 showcasing the project in the capital market, according to the Dhaka Stock Exchange (DSE) data. 

In February 2023, the price of Intraco's share in the DSE was Tk29.4 each. 

But its share price started to fly high, once the matter was disclosed that the company is going to get the contract to ship gas from Bhola. 

Within four months, the company recorded 78% profit in the capital market as its share price went up to Tk54.4. 

Apart from this, Intraco also earned Tk6 crore in the form of conversion and transportation charges of 70 mmcf gas that it shipped from Bhola. 

Intraco's financial report says that the company made net profit of Tk13 crore in the July-March period of FY23. But in the previous fiscal year, its total profit was only Tk10.34 crore. 

Contractor's competence overlooked

Learning about the government initiative about the surplus gas of Bhola gas fields, a total of nine private operators showed their interest and submitted proposals to the concerned gas distribution company and the Petrobangla. 

The business profile of some of these companies were comparatively better than Intraco, yet they were not called up for discussion about the merit of their proposal. 

In order to compress 5 mmcf of gas per day, the company would have required 47 cascade tankers and around 12 compressor stations, and to compress 25 mmcf of gas per day, it would have needed 60 compressors and 238 cascade tankers, said industry insiders. 

In 2023 when the contract was awarded, Intraco had no cascade tankers and 8 compressor units in different locations of the country.

The contract was given considering the personal relation as the Intacto's owner Mohammed Riyadh Ali is a close ally of former state minister for Power Energy and Mineral Resource Nasrul Hamid, said industry insiders. 

A document seen by TBS revealed that, when the issue of transporting gas from Bhola was discussed in a meeting on 12 October 2022 at former prime minister office, Nasrul Hamid spontaneously supported the proposal of Intraco. 

As Intraco's owner is a friend Nasrul Hamid, the proposals of other companies were not even discussed in order to find out the competent ones. 

Super Gas Ltd was one of the interested parties that had a good business profile in the CNG conversion and supply business, but did not get the chance to discuss their proposal. 

T Mashfu Bobby, managing director of Super Gas Ltd, told TBS, "We also expressed our interest, but the ministry did not call us despite being competent." 

TMSS CNG Limited also submitted a proposal to Sundarban Gas but did not get any response from the company. 

"We were interested in the initiative and submitted a proposal to the authorities. But we were not even called for a meeting," said Prof Dr Hosne-Ara Begum, the executive director at TMSS.

Moreover, the committee formed to conduct a feasibility study to ship gas from Bhola to Dhaka's industrial zones, proposed Tk25.12 per cubic metre for the contractor as operating and transportation charge. 

But in the contract, it was agreed that Intaco will receive Tk30.60 per cubic metre for converting natural gas to CNG and transportation. 

The authorities compromised with the public share to give the higher revenue to Intraco. 

As per the latest gas tariff, the government receives Tk35 per cubic metre from the CNG sector as feed gas price. But it is Tk17 per cubic metre for the gas converter by Intraco from Bhola.