Business enterprises struggle to keep production running for several reasons including shortages of natural gas supply. The incumbent interim government has taken some initiatives to increase gas supply for urea fertilizer production and electricity generation. On 20 October 2024, Mohammad Fouzul Kabir Khan, Adviser for the Ministry of Power, Energy and Mineral Resources of the Interim Government, said the government's highest priority was to reduce the cost of energy and power and reduce the burden of government subsidy for the sector. He was speaking at a meeting organised by the Foreign Investors Chamber of Commerce and Industries (FICCI). The adviser further said that the drilling programmes for exploration and for increasing natural gas production at onshore and offshore fields would continue further. The state-owned company BAPEX would be engaged in accomplishment of a part of the drilling programmes and the remaining part of the drilling works would be awarded to international contractor companies through open and competitive bidding.
Petrobangla sources suggest that the current demand for natural gas in the country have reached 3,800 mmcfd. Gas production and supply in the country is declining steadily. At present, the natural gas production from the domestic gas fields remains approximately at 1,960 mmcfd. The government is importing LNG from different suppliers and the existing two Floating Storage and Re-gasification Units (FSRUs) at Maheshkhali (the two FSRUs can process and supply approximately 1,000 mmcfd gas) supply nearly 820 mmcfd gas to the national grid. As a result, the daily gas supply is 2,780 mmcfd. To enhance gas supply in the country the government is trying to increase more LNG import in the near future. But gas supply from import sources cannot be immediately increased, primarily due to the FSRU facilities' capacity constraint and secondly, the cost of LNG imports (Petrobangla signed long-term contracts for 3.5-5 million tonnes per annum of LNG supply, equivalent to approximately 700 mmcfd natural gas supply) under two existing contracts with Qatar and Oman. LNG is imported from the international spot market on a regular basis to meet the additional requirement. Petrobangla has to follow the competitive and time-consuming process under the Public Procurement Rules 2008 for importing LNG as the interim government suspended on September 4 2024 import of energy under 'Quick Enhancement of Electricity & Energy Supply (Special Provision) Act, 2010. Under the Act, Petrobangla earlier could bypass the existing laws and rules for procurement and import of LNG. The Act protected the government officials from legal challenges for actions taken in good faith for taking effective and urgent measures to enhance generation, transmission, transportation and marketing of electricity and energy. In the meantime, the Interim Government has scrapped its contract with Summit Group for building a third FSRU in Bangladesh. Earlier on March 30, 2024 Petrobangla and Summit Group signed the contract on the 3rd FSRU with a capacity to re-gasify 4.5 MT LNG annually and supply 1.5 million MT by the end of 2026. Petrobangla has also cancelled a memorandum of understanding (MoU)/Term Sheet and decided not to sign an agreement with Excelerate Energy to build the 4th FSRU (with a capacity to re-gasify 4.5 MT LNG annually) and lay 60km RLNG carrying pipelines from the FSRU near Payra, Patuakhali to southern Khulna to feed gas to industries and power plants by 2026. The previous government decided to award both the FSRU building contracts under the 'Quick Enhancement of Electricity and Energy Supply Act 2010 bypassing tender process.
The Interim Government has also decided to stall negotiations for concluding an agreement between H-Energy India and RPGCL (a subsidiary company of Petrobangla) to import re-gasified LNG (RLNG) through a pipeline. Petrobangla has also stopped negotiations with Saudi Bangla Pipeline Limited (SBPL), a joint venture between Dipon Group of Bangladesh and Saudi Investment Company EDH, for importing 550 mmcfd gas under the private sector LNG/RLNG import policy of Bangladesh. The gas supplies under the agreements were designed to feed Khulna area consumers including Rupsha Power Plant Project.
Bangladesh Energy Regulatory Commission (BERC) Chairman Jalal Ahmed informed the media that the International Monetary Fund (IMF) officials in a recent meeting with BERC officials suggested complete withdrawal of government subsidies on electricity and fuel sectors. It is a common knowledge that the huge idling capacity of the power generation plants in the country has been contributing to the increased power tariff. So far, Bangladesh has the installed power generation capacity of nearly 28,000 MW. On the other hand, the present average daily demand for power is around 15,000 MW. Fuel efficient natural gas-based power plants are lying idle due to shortages of gas supply. For example, the 800 MW Rupsha combined cycle power plant, a gas-based power plant, is almost ready for power generation but has to wait until the issue of gas supply is resolved. For utilising the full production capacity, the Rupsha power plant at Khalishpur in Khulna will require 140 mmcfd gas supply daily. Petrobangla intended to supply gas for the plant in February 2017 and the ECNEC approved a draft project proposal (DPP) for the power plant project in 2018. The Asian Development Bank (ADB) signed a credit agreement with the government of Bangladesh for building the power plant in August 2018. The power plant was supposed to commence production by the end 2024. However, gas supplies remain uncertain now for the greater Khulna region. Natural gas supply uncertainty compels costly diesel use for the power plants installed in the region (for dual fuel power plants) or to keep them idle. Huge investments have been made for the Rupsha Combined Cycle 800 MW Power Plant and other plants in the region which are now at risk, waiting for fuel supply and operations. It is almost certain that the gas supply problem for greater Khulna region will not be resolved within the next couple of months.
Earlier the media reported that the limitations for arranging a sufficient amount of natural gas made it uncertain for operating half a dozen new power plants with a cumulative generation capacity of 3,510 MW. Three of the power plants belong to private sector companies (Unique Meghnaghat 584 MW power plant, Summit Meghnaghat-II 583 MW power plant and the 718 MW plant owned by a joint venture between India's Reliance Power and Japan's JERA) and the other belongs to the public sector North West Power Generation Company Ltd.
The Adviser for Ministry of Power, Energy and Mineral Resources has informed that the Interim Government has decided not to renew the contracts on quick rental power plants signed by the previous government. He says the quick rental power plant contracts have impacts on the cost of power generation and supply. The Interim Government on September 05 2024 constituted a five-member National Committee headed by Justice Moinul Islam Chowdhury for reviewing the contracts signed under the Speedy Power and Energy Supply (Special) Act, 2010 during the tenure of the previous government. The Energy Adviser expects actions based on the review report of the committee.
At this stage, the Interim Government issued a directive on October 28 2024 for ministries and their sub-ordinate organisations to reduce energy consumption through minimum air-conditioner use during the winter season (from November 2014 to February 2025) considering the challenges of fuel shortages and electricity supply. The aim is to conserve energy to address the country's electricity demand in critical sectors for purposes including irrigation and fertilizer production as well as gas supply for industrial production. Earlier a directive was issued to all ministries of the government to reduce electricity consumption by 25 per cent.
The author is a mining engineer and he writes on energy and environmental issues.
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