Long wait for new gas and power connections

After a lapse of two years, the government is still not in a position to provide gas connections to the aspirants. Industrial sector is mainly bearing the brunt of the gas connection suspension, which came into effect since July 2009. Gas connections to households remained suspended since July 2010. Titas, the country's largest gas marketing and distribution company, has around 500 applications pending from industrial sector alone for new gas connections. State-owned Petrobangla, according to reports, is struggling hard to maintain regular gas supplies to existing industries. The country's average daily gas supply is now hovering around 2000 million cubic feet (mmcf) against the demand for over 2,500 mmcf. Gas marketing and distribution companies are flooded with thousands of applications seeking gas connections across the country. Gas supply shortage has already pushed Petrobangla to ration supplies and introduce holiday staggering in industries and factories. A good number of power plants with a total generation capacity of around 600 megawatts are currently not operating due to gas crisis. Country's industrial growth is being hampered badly due to the suspension of new gas connections resulting in poor response for fresh investments in industrial sectors. Although electricity connections resumed in November last year after a seven-month suspension, a very few people are having the privilege to get electricity due to imposition of a new condition for setting up mandatory solar panels atop roofs of their buildings to get new power connections. The government has kept the aspirants for gas connections guessing for years without any prior warning. They have invested their hard earned money along with bank loans to set up industries. But it now appears that their investments have fallen flat due to non-availability of gas. Energy ministry had earlier indicated that new gas connections would resume only when the country's overall gas supply crosses 2200 mmcfd mark. But achieving gas supply to that level now seems far off as the government drive to augment supplies on fast-track basis has 'failed'. Immediately after taking office the government moved to drill five gas wells of state-owned gas fields by foreign firms. After two years of tendering process the bid winner Polish Krakow pulled out from signing deals to drill wells. Petrobangla's two years' home work on 'fast-track' project went in vain due to Krakow's pull-out. Continued slump in gas production from the country's lone offshore Sangu gas field worsened the situation further. Australian Santos-operated Sangu gas field is now producing a mere 11 mmcfd of gas, down from its peak production level of around 200 mmcfd several years ago. Government's latest drive to import liquefied natural gas (LNG) and supply piped gas after re-gasification is also being delayed due to procedural bottlenecks. Unless new gas fields are discovered country's present supply of gas will start diminishing from 2011. It forecasts that the country's current gas reserves will run out by 2014-2015 at current consumption rates. According to a study, Bangladesh's energy crunch causes $16.6 billion yearly loss in the gross domestic product (GDP). If it is assumed that around 10 percent of the energy shortfall is in the export-oriented manufacturing sector, then the output is $1.33 billion less is in this sector due to the power and energy crisis. Country's real estate sector is now facing a challenging situation. The developers are now failing to hand over the flats to their customers as the government had stopped giving new gas and electricity connections since June this year. As a result, scores of buyers have been denied entry into their new homes. Those who have given notices to their landlords for vacating their rented places in anticipation of living in their new homes are now in a deep dilemma. The knock-on effect of such a prolonged ban is huge. Housing companies are unable to hand over the readied flats to their customers. The developers are not being able to go for new ventures as they are not getting money from the sale proceeds of their readied apartments. House rents in the capital went up substantially due to scarcity of flats. Thousands of customers have been forced to pay more money as house rents as they are unable to live in their new apartments due to non-availability of gas and electricity. Bangladesh's proven gas reserve is dwindling fast. The present reserve will only meet the demand of a decade if no new exploration activities are undertaken by the authorities in the immediate future. A committee appointed by the government suggested that proven plus probable gas reserves were between 12.04 trillion cubic feet (tcf) and 15.55 tcf as of April 2002. Considering the current rate of gas consumption with an estimated demand growth of around 10 per cent a year, the gas would be able to meet the demands of the country's power plants, fertiliser factories, industries, domestic and other gas consuming sectors until between 2016 and 2018. Petrobangla statistics show the country had left-over of 14.88 tcf of recoverable gas as on August 2004. The current gas consumption rate shows the gas would be able to feed the country until 2018. The first question that arises in the ministry is how much gas is there underneath the on-shore and off-shore grounds of Bangladesh and is it enough for meeting the ever-rising domestic demand? Is Bangladesh in fact floating on a sea of gas as some optimists have earlier claimed? Unfortunately, there is no ready answer to these questions. Given the uncertainty over the quantum of the gas resource base, a major issue of public policy is whether a nation as poor as Bangladesh should take the risks necessary to significantly expand gas production. Gas underneath the ground is not wealth; it is only a potential asset that must be converted into an economic good that can be bought and sold. For it to become a marketable good, someone must risk the capital to discover the gas, develop the field, and put in place the associated infrastructure. These are highly capital intensive endeavours. Against the backdrop of the authorities' failure to provide new gas and power connections, the government is apparently not taking human miseries into consideration. Amid so much wait, new industries are still longing for gas. Efforts should be made to provide gas to such industries by installing new transmission lines from the gas fields. The latest reports indicate that it is not the shortage of gas, but the lack of adequate distribution lines that is hindering its supply. szkhan@dhaka.net