Record shortfall in gas and electricity

The country currently has a daily gas demand of 3.8 billion cubic feet. Although around 2.65 billion cubic feet was supplied during normal times, the supply has now fallen to 2.43 billion cubic feet. Meanwhile, the country has electricity generation capacity of around 29,000 megawatts. Although average demand stands at 16,000 to 17,000 megawatts, only 14,000 to 15,000 megawatts is being generated due to fuel shortages and financial constraints. As a result, the gas and electricity crisis continue.

The ousted Awami League government raised gas prices by as much as 179 percent at the beginning of 2023, promising uninterrupted gas supplies to industries. Despite the record price hike, the crisis was not resolved. Instead, it worsened. Alongside gas, uninterrupted electricity is also unavailable.

Meanwhile, many industrial entrepreneurs who made substantial investments in the hope of receiving gas have been suffering for days. Despite repeatedly appealing for connections, they are not receiving gas connections. They are having to pay huge amounts of interest every month.

Soon after the current government took office, a high-level meeting was held on gas connections for industries. The difficulties faced by factories due to gas shortages came up at the meeting. It was suggested that industries, excluding power plants and fertilizer factories, should be prioritized for gas connections.

Power, Energy and Mineral Resources Minister Iqbal Hasan Mahmud has alleged that no rules or policies were followed regarding gas connections to industries during the Awami League government. He said it would take time to bring discipline to the energy sector. The government is working toward that goal, he said. If gas connections are provided to industries, companies that have deposited the money against demand notes first will receive priority.

Gas supplies plunged after the LNG terminal operated by Excelerate was damaged on July 21. The crisis worsened further when gas supplies from Summit's terminal were also suspended last Thursday. Total supply fell to 1.93 billion cubic feet on Friday. During normal times, around 2.65 billion cubic feet is supplied.

The gas crisis led to an increase in electricity load shedding. Homes, factories and CNG stations all faced severe gas shortages. On Tuesday, a decision was made to reduce gas supplies to industries and increase electricity generation in an effort to ease public anger and protests. Although this reduced electricity load shedding, production at most factories came to a halt.

However, with both terminals now operational, gas supplies increased from yesterday to around 2.43 billion cubic feet per day. Of this, 1.62 billion cubic feet is being supplied from domestic gas fields and 810 million cubic feet from LNG. Officials hope the supply will gradually reach 1 billion cubic feet soon.

The increase in gas supplies has brought some relief to factories. Gas based electricity generation has also increased. Yesterday, the highest load shedding was 2,087 megawatts despite it being a holiday. Average load shedding last week was between 3,000 and 3,500 megawatts. The highest load shedding exceeded 3,700 megawatts.

The country currently has electricity generation capacity of around 29,000 megawatts. Peak demand is between 17,000 and 17,500 megawatts. Despite having capacity well above demand, uninterrupted electricity supply cannot be ensured because of a lack of necessary fuel. As a result, 40 to 50 percent of power plants remain idle. Yet the government has to pay capacity charges regularly under existing contracts. At the same time, load shedding is increasing.

Currently, average electricity demand across the country is 15,000 to 16,000 megawatts. Against this, 14,000 to 15,000 megawatts is being supplied. Last week, supply was around 12,000 to 13,000 megawatts. Generation had fallen mainly because supplies of gas and coal were disrupted. Generation has now increased somewhat as supplies have improved. However, demand also rises when temperatures increase.

Mohammad Hatеm, president of the Bangladesh Knitwear Manufacturers and Exporters Association, told Agamir Somoy, “The Awami League government increased the price of gas from 12 taka to 30 taka, saying that uninterrupted gas would be supplied to factories. We accepted it despite the difficulties in the hope of getting gas, but we did not get gas. The crisis became more severe after the increase in gas prices. On the one hand, there is no gas, and on the other hand, costs have increased. Difficulties in repaying bank loans have increased.”

Gas demand and supply: According to government figures, daily gas demand in the country is 3.8 billion cubic feet. In reality, demand is even higher. A proposal to increase industrial gas prices on January 6 last year put daily demand at 5.35 billion cubic feet. Six months later, in August, a proposal to increase gas prices for fertilizer factories put demand at 5.1 billion cubic feet. In addition, there are committed and pending customers. As a result, there is disagreement over the actual level of demand.

According to data from the Bangladesh Oil, Gas and Mineral Resources Corporation, known as Petrobangla, daily gas demand for power plants is 2.52 billion cubic feet against total demand of 3.8 billion cubic feet. An average of 800 million to 1 billion cubic feet is supplied. Fertilizer factories have a demand of around 330 million cubic feet, against which 140 million to 180 million cubic feet is supplied. The remaining gas is supplied to other sectors, including industry, commerce, residential consumers, CNG and tea production. Since demand in these other sectors is not listed separately, it is difficult to determine how much demand exists in each sector.

However, Petrobangla officials said around 41 percent of gas is supplied to the power sector. Around 6 percent goes to fertilizer production, 11 percent to households, 36 percent to industry, including captive power, 5 percent to the CNG sector and around 1 percent to the tea sector. Depending on demand, supplies are reduced in one sector and increased in another.

According to this calculation, around 1.4 billion cubic feet of gas is supplied to industries. However, the existing industrial connections have a demand of at least 1.8 billion to 2 billion cubic feet. Last Wednesday, gas supplies to industry fell to around 600 million cubic feet as gas supplies to the power sector were increased.

New factories suffering: After the Awami League government made an abnormal increase in gas prices, gas prices for new industrial connections and increased loads were raised by 33 percent during the interim government in April last year. However, new gas connections are still not being provided.

Discussions with Petrobangla officials revealed that more than 1,800 applications for industrial gas connections are pending with state owned gas distribution companies. Of these, owners of around 550 establishments have completed all procedures, including depositing the required money against demand notes for gas connections, but have not received gas.

Affected entrepreneurs said they had invested heavily and built factories based on assurances that they would receive gas. However, because production has not started due to the lack of gas, they are having to pay large amounts of interest on loans and maintenance costs every month.

Experts said the Awami League government did not put enough emphasis on domestic gas exploration and production. Instead, there was a focus on imports. As a result, the crisis is becoming increasingly severe.

Professor Dr. M Shamsul Alam, energy adviser to the Consumers Association of Bangladesh, told Agamir Somoy that factories are shutting down because of shortages of electricity and gas. If industrial production declines, industry revenues will fall, and companies will stop paying, or will be unable to pay, VAT and taxes to the government.

The expert said, “The various forms of plunder, unfair costs and unjustified expenses that have been added at different levels of electricity and energy supply over the past one and a half to two decades must be reviewed immediately and eliminated. Under a short-term plan, gas use must be brought down to a limited level. LNG imports cannot be increased beyond 1 billion cubic feet under any circumstances. If expensive furnace oil-based power plants are scrapped, electricity can be generated from coal-based power plants at comparatively lower costs. At the same time, it is essential to increase the use of renewable energy.”

According to M. K. Elahi Chowdhury, a former member for gas at the Bangladesh Energy Regulatory Commission, it takes around 10 years to explore for and extract gas offshore. In contrast, gas can be discovered onshore within six months to one and a half years. However, there is no discussion about this, he said. Greater emphasis needs to be placed on onshore exploration.