Suspension of new gas connections draws flak from industry leaders

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M Azizur Rahman
The government has suspended new gas connections to bulk consumers including factories and power plants from the end of last month sparking off sharp criticism from the industry leaders, officials said.
The gas marketing and distribution companies are not entertaining applications from the new connection seekers in line with an energy ministry's directive to suspend new gas connections until the country's overall gas output reaches 2200 million cubic feet per day (mmcfd).
The country's total gas output is now hovering around 1950 mmcfd and the ministry itself does not know exactly when the supply would reach the 'benchmark' level.
The ministry's directive, which is the first of its kind in the country's hydrocarbon history, came in the last week of July spelling out that new gas connections to bulk consumers would not be entertained except for prior commitments.
It also coincided with the latest gas tariff hike by 11.22 per cent, which came into effect from August 1.
Earlier in 2007, a regional gas marketing and distribution company - Bakhrabad Gas Systems Ltd - issued a similar 'embargo' on new gas connections, which was limited to the consumers of port city Chittagong only.
All types of gas-guzzling industrial units including power plants, fertiliser factories, tea estates and brickfields would bear the burnt of the energy ministry's latest directive.
"We had no other alternatives but to impose the ban as the demand was soaring against the gas output constraints," Prime Minister's adviser Dr Tawfiq-e-Elahi told the FE.
He said a huge gap between gas demand and supply has been created over the last seven years only due to the absence of hydrocarbon exploration activities.
"We are running with at least 15 per cent deficit in gas supplies," said Dr Tawfiq, who is also the energy adviser.
Energy ministry officials said the government is now struggling to provide gas to the running industrial units, fertiliser factories and power plants.
Three fertiliser factories remained closed for the last several months and several gas-guzzling power plants having the generation capacity of at least 600 megawatts (mw) remained inoperative only due to the gas crisis.
Low gas pressure and abrupt shutting down of supply have been plaguing the country's gas supply system, the official said.
"We have stopped processing applications for new gas connections since the energy ministry's directive reached us a couple of weeks ago," Managing Director of Titas Gas Transmission and Distribution Company Ltd (TGTDCL) Abdul Aziz Khan told the FE.
He said Titas, the country's largest gas marketing and distribution company, would restart giving new gas connections only after receiving orders from the ministry.
"This is ridiculous. The country's industrial growth will be seriously hampered due to the embargo on new gas connections," said President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Annisul Huq.
He said the country's overall economy would be affected and the growth in gross domestic product (GDP) will be frustrated as a consequence.
"It's a double blow for us as it came along with the government decision to hike the gas tariff," the chief of the country's apex trade body said.
The industries are now in disarray as they don't know how to deal with this unforeseen energy crisis, he added.
Local manufactures would lose to their rivals, as the fuel supply crunch would enhance production costs, Mr Huq added.
"It will leave a negative impact on the industrial sector. No new industry will be set up as a consequence," said President of Bangladesh Knitwear Manufactures' and Exporters' Association (BKMEA) Fazlul Haque said.
The government embargo came at the time when the business sector was shrugging off the impact of global recession, he said.
"Instead of linking the embargo with gas output limit the government should give us certain time-limit," said the leader of the BKMEA, the sector that contributes significantly to the country's export earnings.
He said the business people do not understand the technicalities of gas production.
"A certain time-frame would help them plan their future businesses," said the BKMEA president.
The country urgently needs new energy sources and unless new gas fields were discovered, the supply of gas would start diminishing from 2011.
The government forecasts that the country's current gas reserves will run out by 2014-2015 at the current consumption rates.
At present, proven gas reserves are 7.3 Tcf, while the probable reserves are 5.5 Tcf.
The country's economy has been growing at an average of 6 per cent since 2003-2004, the highest rate since independence in 1971 and expanded industrial activities have raised the demand for energy causing a daily shortage of 250 mmcfd.
This has forced Petrobangla to suspend gas supplies to new industries.
Bangladesh currently produces around 1.950 mmcfd of gas against the demand for over 2150 mmcfd.