Industries unwilling to buy costlier Bhola gas

The government's proposal to pipe surplus natural gas from Bhola to factories in energy-hungry industrial zones of Gazipur and Bhaluka has been met with some reluctance.

Although factory owners think the gas will bring some respite, they are apprehensive of the comparatively higher prices.

At present, the consumer rate of compressed natural gas (CNG) is Tk43 per unit (1 cubic metre), including Tk35 as feed gas price and Tk8 as operating margin.

But due to compression, transportation and then depressurisation, alongside different other charges, the price for Bhola gas will cost around Tk51.12 per cubic metre, according to the proposal of the technical committee for this.

Mill owners instead want to purchase the island gas for specific hours – when there is low or no pressure of gas from the Titas Gas Transmission and Distribution Company – instead of going for long-term fixed contracts.

In separate discussions, factory owners have already informed the matter to Petrobangla's technical committee on supplying the gas to industrial consumers in Titas distribution areas through cascade cylinders after converting it into CNG.

Expressing concern about the gas price, Muhammad Shahidul Islam of RAK Ceramics (Bangladesh) Limited said they have requested the authorities to keep the price competitive.

"But if the price remains higher than the present rates of industrial gas and even CNG, we would have no other option than buying it. Because, it is a total loss if we fail to run a factory over gas crisis. Costly gas at least allows us to keep the factory running," he said.

Meanwhile, the Petrobangla technical committee recommended that the CNG from Bhola gas could be marketed by a private entrepreneur instead of the state-owned gas distribution companies.

Intraco Refueling Station Limited has been picked for the project under the special act for the power and energy sector – Quick Enhancement of Electricity and Energy Supply (Special Provisions) Act 2010, apart from its role of merely conversion and carrier, reads a document obtained by The Business Standard.

A top official at Petrobangla on condition of anonymity told TBS that a proposal with its recommendations has been sent for the prime minister's approval to materialise the plan by next May.

5mmcf gas to ship from Bhola to Gazipur, Bhaluka

At present, the country has a deficit of around 800 million cubic feet (mmcf) of gas per day. The supply is only 2,682 mmcf against the demand of 3,500 mmcf per day.

Amid the outcry of different industries starved of energy, Prime Minister's Energy Adviser Dr Tawfiq-e-Elahi Chowdhury on 23 October last year floated the idea of fetching 80 mmcfd of gas in compressed form from the Bhola gas field within the next two to three months.

The two Bhola gas fields have around 200 mmcf production capacity, while the production hovers between 80 mmcf to 85 mmcf.

Therefore, around 120 mmcf surplus capacity remains unused in the eight wells of Shahbazpur and Bhola gas fields.

A lack of a pipeline and transmission facilities have rendered the government unable to transport the surplus gas to industrial zones facing an energy-crisis.

Initially, 5 mmcf gas will be carried every day from Bhola to other parts of the country, which will be scaled up to 25 mmcf by June, reads a feasibility report.

Other charges making cheap gas costlier

Compression, transportation and then depressurisation, alongside a few other charges, are making Bhola's surplus gas unbearably expensive for consumers.

The technical committee's recommendation of Tk51.12 per cubic metre includes Intraco's share – Tk31.29 per cubic metre for the first three years and Tk28.13 for the next seven years.

For gas compression, transportation and depressurisation, Intraco proposed around Tk49 per cubic metre for the first three years, Tk43 till five years, Tk41 until seven years, Tk39 for the next three years.

But the technical committee proposed Tk31.29 per cubic metre for the first three years and in 10 years it will be Tk28.13.

In the first three years, Intraco proposed Tk8 per cubic metre for compression, Tk37 for transportation, and Tk4 for depressurisation excluding taxes and VATs. But the advisory committee considers Tk8, Tk18.57, and Tk4.63 including all taxes and VATs.

In making this proposal, the technical committee reduced the price of feed gas and lowered the amount of other government charges.

GM Salahuddin, company secretary at Intraco Refueling, said, "We have proposed different rates for different time periods and the Petrobangla technical committee recommended the rates after analysing ours. We cannot comment further now as the proposal is under the consideration of the Prime Minister's Office and we do not know the technical committee's recommended rates.

"We will analyse the rates once the technical committee's proposal is approved by the PMO."

Industries suffer from gas shortage at night

A source at Titas Gas said there are 18 industrial consumers in Gazipur and Bhaluka with 10 mmcf gas deficit per day.

Mother Textile in Gazipur requires 2.5 mmcf gas every day. But it gets only 20% from the gas supply line and suffers a 2 mmcf deficit.

Euro Asia struggles with a 0.2 mmcf gas deficit to run its factory at full swing while Paramount Textiles suffers from a 30% gas supply deficit.

The Petrobangla committee held separate meetings with the interested consumers from Bhaluka and Gazipur on 9-10 January this year.

The committee learned that only eight consumers with a requirement of 5 mmcf gas per day are interested in Bhola's CNG converted gas.

For instance, spinning and dyeing factories require gas supply for 24 hours.

The interested consumers are now getting the gas required from Titas from 6am to 6pm.

So, factories do not get gas at night as Titas shuts its district regulatory station for load management in Bhaluka.

Thus, the factories are only interested in taking the supply for 12 hours, reads the recommendation document.

Industries unwilling to enter any contract

During the meeting with the technical committee, industry owners said they won't be able to use this high price gas for a long time as energy price is a major cost of production.

They can use the gas for a certain period of time and will switch to Titas' distribution system when the gas crisis situation improves.

So, they are not willing to sign a long-term contract with the suppliers.

It is quite impossible to run the factories for a long time with this expensive gas, and factories might face risks such as closure if they do, they said.