Govt permits pvt sector to import LNG despite lack of facilities
Saturday, 20 March 2010
M Azizur Rahman
The government has allowed the private sector to import liquefied natural gas under a new policy to ease acute gas crisis, although the country lacked infrastructure to gasify LNG and pipe it to the mainland.
Private companies will now be able to import LNG under the newly formulated Import Policy 2009-12, a commerce ministry official said, as the government eyes new fuel source to shore up its depleting gas reserve.
The companies must have to obtain licenses from the energy regulator, Bangladesh Energy Regulatory Commission (BERC), and approval from the energy ministry to import LNG and feed it into the national gas line.
"The aim is to cut over-dependence on locally extracted natural gas. Private companies who rely heavily on gas to fire their boilers and generators can now meet their own energy demand by importing LNG," he said.
"It will help ease nagging energy crisis in the country," he added.
The country had never imported LNG either by private or public sectors as its necessity was not felt before. But since 2008, the country has been facing an acute gas crisis, leading to stoppage of production in hundreds of factories.
Only a handful of companies now import liquefied petroleum gas (LPG) in bottles, used for cooking in rural towns and in some light engineering workshops.
Experts said the latest government move to boost gas supply would not make any immediate impact in the country's current energy scenario, as Bangladesh lacked infrastructure to facilitate LNG import and supply it to the national grid.
"It's a progress on paper," said an expert, speaking on condition of anonymity. "Unless the country has a LNG terminal and re-gasification facility, none will be interested to import liquefied gas spending tens of millions of dollars," he said.
Officials said the government has already planned to build a LNG terminal off Chittagong shore by 2012 so that both public and private sectors can import liquefied gas to meet domestic demand.
"The permission to private sector was a step in the right direction," an official said.
The approval comes as the government this month opened talks with foreign companies to set up a LNG terminal and re-gasification facility near the Chittagong Port. A tender will be floated later this year.
Under the government plan, winner of the bid will have to finance the US$1.5-$2.0 billion terminal, which will have the capacity to handle at least 3.5 million tonnes of LNG a year. The government will provide land and other licenses free of cost.
Top ministry officials already held talks with a number of global LNG firms including US' Excelerate Energy and UK's SBM Imodco to expedite LNG import.
It has also assigned Excelerate Energy to complete a study by mid-April to find out the best possible location for the terminal and how much it will cost.
Petrobangla chairman Dr Hossain Monsur also held talks with the Asian Development Bank (ADB) to arrange fund for the LNG project.
Monsur told the FE that some 20 foreign firms have lined up to provide technical support and build the LNG terminal within the next three years.
He said imported LNG would be the best solution to ease huge energy crunch in fuel-starved Chittagong region where the state-owned Petrobangla could supply only 170 million cubic feet of gas a day against a daily demand of 400mmcf.
Drastic fall in gas supply from the country's lone offshore Sangu gas field, which was once the lifeline for Chittagong, caused severe energy crisis in the port city.
Sangu is now supplying only around 35 mmcf of gas a day, down from 220 mmcfd four years back. The offshore gas field is expected to be dried up within a year.
In recent months acute gas supply shortage has severely affected industrial productions across the country, prompting Petrobangla to suspend supplies to new plants and ration gas to state-owned fertilizer and power plants.
The authorities have recently introduced staggered holidays in different industrial zones to cope with rising gas demand.
Officially the country's gas demand stands at around 2,200 mmcf a day against daily supply of less than 2,000 mmcf, but the hidden demand is believed to be over 2,500 mmcf a day, said Petrobangla sources.
The government has allowed the private sector to import liquefied natural gas under a new policy to ease acute gas crisis, although the country lacked infrastructure to gasify LNG and pipe it to the mainland.
Private companies will now be able to import LNG under the newly formulated Import Policy 2009-12, a commerce ministry official said, as the government eyes new fuel source to shore up its depleting gas reserve.
The companies must have to obtain licenses from the energy regulator, Bangladesh Energy Regulatory Commission (BERC), and approval from the energy ministry to import LNG and feed it into the national gas line.
"The aim is to cut over-dependence on locally extracted natural gas. Private companies who rely heavily on gas to fire their boilers and generators can now meet their own energy demand by importing LNG," he said.
"It will help ease nagging energy crisis in the country," he added.
The country had never imported LNG either by private or public sectors as its necessity was not felt before. But since 2008, the country has been facing an acute gas crisis, leading to stoppage of production in hundreds of factories.
Only a handful of companies now import liquefied petroleum gas (LPG) in bottles, used for cooking in rural towns and in some light engineering workshops.
Experts said the latest government move to boost gas supply would not make any immediate impact in the country's current energy scenario, as Bangladesh lacked infrastructure to facilitate LNG import and supply it to the national grid.
"It's a progress on paper," said an expert, speaking on condition of anonymity. "Unless the country has a LNG terminal and re-gasification facility, none will be interested to import liquefied gas spending tens of millions of dollars," he said.
Officials said the government has already planned to build a LNG terminal off Chittagong shore by 2012 so that both public and private sectors can import liquefied gas to meet domestic demand.
"The permission to private sector was a step in the right direction," an official said.
The approval comes as the government this month opened talks with foreign companies to set up a LNG terminal and re-gasification facility near the Chittagong Port. A tender will be floated later this year.
Under the government plan, winner of the bid will have to finance the US$1.5-$2.0 billion terminal, which will have the capacity to handle at least 3.5 million tonnes of LNG a year. The government will provide land and other licenses free of cost.
Top ministry officials already held talks with a number of global LNG firms including US' Excelerate Energy and UK's SBM Imodco to expedite LNG import.
It has also assigned Excelerate Energy to complete a study by mid-April to find out the best possible location for the terminal and how much it will cost.
Petrobangla chairman Dr Hossain Monsur also held talks with the Asian Development Bank (ADB) to arrange fund for the LNG project.
Monsur told the FE that some 20 foreign firms have lined up to provide technical support and build the LNG terminal within the next three years.
He said imported LNG would be the best solution to ease huge energy crunch in fuel-starved Chittagong region where the state-owned Petrobangla could supply only 170 million cubic feet of gas a day against a daily demand of 400mmcf.
Drastic fall in gas supply from the country's lone offshore Sangu gas field, which was once the lifeline for Chittagong, caused severe energy crisis in the port city.
Sangu is now supplying only around 35 mmcf of gas a day, down from 220 mmcfd four years back. The offshore gas field is expected to be dried up within a year.
In recent months acute gas supply shortage has severely affected industrial productions across the country, prompting Petrobangla to suspend supplies to new plants and ration gas to state-owned fertilizer and power plants.
The authorities have recently introduced staggered holidays in different industrial zones to cope with rising gas demand.
Officially the country's gas demand stands at around 2,200 mmcf a day against daily supply of less than 2,000 mmcf, but the hidden demand is believed to be over 2,500 mmcf a day, said Petrobangla sources.