The government is going to form a company to look after implementation of expensive liquefied natural gas (LNG)-relevant projects, including import and proper use of the costly fuel, a senior official said.
State-run Power Cell has already placed a proposal with the Energy and Mineral Resources Division (EMRD) under the Ministry of Power, Energy and Mineral Resources (MPEMR) for establishing the company.
"We have proposed to name the firm 'LNG Company of Bangladesh Ltd'," director-general of the Power Cell Mohammad Hossain told the FE Tuesday.
He said the company will be constituted soon.
The government has decided to import LNG to meet a mounting demand from country's industries, fertilizer factories, power plants and other commercial concerns.
To facilitate its import and smooth usage the formation of an LNG company is necessary, he said to justify the move.
The country's existing gas reserve is depleting, causing severe gas crisis, and importing LNG will help avoid any sudden fuel crisis, said Mr Hossain.
But with the import of LNG the overall costs in energy sourcing will escalate.
State-owned Petrobangla has calculated that the government will have to spend around Tk 211 billion (US$2.7 billion) per annum to foot the bill for importing around 500-million-cubic-foot-per-day (mmcfd) equivalent of LNG. The bill includes the cost of import handling.
Of the total cost, $2.58 billion will be required to import LNG and $90.16 million to pay the charge of LNG-import terminal.
Petrobangla has estimated $17.10 per Mcf (1,000 cubic feet) to be required at the transmission end with the import cost of $14 per unit (1 mcf), operation fee for providing storage and re-gasification service of $ 0.49 per unit and freight charges (delivery ex-ship).
Existing average price of gas at the user end will almost triple to $4.30 per unit from $1.60 and the average electricity-generation cost from gas-fired power plants will almost double to Tk 4.37 per unit (1 kilowatt-hour) from the existing Tk 2.20 per unit, if the planned quantity of imported LNG is used for power production.
Despite the higher import costs, the government has already moved to build a couple of LNG-import terminals and import the liquefied gas through pipelines to feed local industries.
Power Cell, an entity under the MPEMR, has already shortlisted five international firms to build and take a majority stake in Bangladesh's first onshore LNG terminal, which will be located at Matarbari on the Moheshkhali Island in the Bay of Bengal.
The planned onshore terminal would be country's second LNG terminal.
The short-listed firms might be asked to submit final bids soon.
Petrobangla earlier had signed a preliminary agreement with US firm Astra Oil and Excelerate Energy in June to build the country's first LNG-import terminal.
The US consortium will pay for the construction of a floating storage and re-gasification unit at the site.
The offshore terminal will have a capacity of 5 million tonnes per year.
Final deal is to be inked on completion of legal vetting and approval
by a cabinet committee.
In addition, the state-run North-West Power Generation Company (NWPGCL) is pursuing a plan to import LNG from India through a new pipeline between the two countries. It would feed a new 750-800mw combined-cycle power plant in Khulna.
Bangladesh also inked a memorandum of understanding with Qatar in January 2011 to import 4 million tonnes of LNG per year from Qatar Petroleum.
The country has extended the MOU with Qatar until June 2015.
A final deal over LNG import was not yet signed.
azizjst@yahoo.com
