Industries keen for energy efficiency, Titas stands in the way

Amid the Russia-Ukraine war, energy shortages and rising production costs became a headache for entrepreneurs and businesses tried to opt for savings costs from decreased energy consumption to remain competitive. However, this quest for efficiency hit twin walls of connection delays and bureaucratic barriers.

When an entrepreneur in the textile and accessories sector, who wished to remain anonymous, purchased two energy-efficient generators over two years ago, each generator costing Tk5 crore financed through a bank, he expected to see some savings as his energy bills would also come down proportionately. His new generators now lie useless as the entrepreneur is still waiting for the necessary gas connection even after paying Tk20 lakh in bribes.

The new generators are designed to produce 35% more energy than the previous ones, from 1,050kwh to over 1,400 kilowatt-hour (kWh) while using the same amount of gas. 

The savings with energy efficient power generators are quite obvious to businesses. Shams Mahmud, managing director of Shasha Denims, is benefiting from using an energy-efficient generator, which has helped him avoid potential production losses caused by the low pressure of piped gas.

Infographic: TBS

He explains that even when the gas supply to the generator falls below 10psi (pounds per square inch), the energy-efficient generator continues to perform well. This is because it requires less fuel to produce the same amount of power compared to less efficient generators.

Efficient machinery can save up to 41% energy

A study conducted by the Asian Development Bank in 2014 found that steel and iron industries can save up to 41% of energy by using efficient machinery, while the savings can be 18% for the agro- and food-processing, sugar, and jute industries.

But perplexing red tapes are getting in the way of new gas connections to energy-efficient machines and preventing dozens of industries from reducing gas consumption.

Infographic: TBS

Long and uncertain wait for gas connection

Businesses go through lengthy and uncertain waits for a new gas connection even if they had an older connection to inefficient machinery. 

The gas distribution company responsible for providing gas connections, Titas Gas, says approval is a lengthy process because every proposal has to be approved at a company board meeting while business owners wonder why these generator replacement proposals need the board's approval that take forever making business costly as each day goes by.

Titas Gas Managing Director Engineer Md Haronur Rashid Mullah however does not agree that they are not approving energy-efficient connection proposals from industries.

He said such applications include replacement of old machines with new ones, applications to increase the gas supply load and provide fresh gas connection. Moreover, approving such proposals also include some technical report analysis and field visits.

"We are approving five to 10 such proposals in each board meeting held at least once a month. But the number of such applications is huge," Haronur told The Business Standard, adding, "Moreover, the agenda of a board meeting is not limited to approving such proposals alone. It includes multiple issues," he added.

Even though he did not provide the number of such pending applications, insiders said the number would be over 100.

When asked if the managing director himself can approve such issues, he said, "The managing director can not approve this without presenting the cases before the board."

Titas' move also contradicts the government policies. For example, the government-established Sustainable and Renewable Energy Development Authority or Sreda is conducting an energy efficiency and conservation promotion financing project that offers low-interest (4%-6%) loans for industry, housing, and residential sectors for purchasing energy-efficient machinery. Some 46 industries have reduced their electricity bills by replacing old machines with new ones and have received low-interest loans from Jica, according to Sreda.

In addition, various organisations are working to promote the use of solar and wind power in industries. The Infrastructure Development Company Limited (Idcol), a government-owned development finance institution, is providing loans and technical support to industries to help them adopt renewable energy technologies.

At present, there are around 2,200 captive connections and 7,018 industrial connections under six gas distribution companies that have been taking around 35% of the country's total gas.

Titas Gas Transmission and Distribution Company Limited, the largest gas distribution company of the country, has around 1,736 captives and 5,396 industrial consumers out of its 28.77 lakh different connections.

In the fiscal year 2021-22, the two sectors consumed around 31% and 28.37% respectively from the total marketing volume of Titas Gas.

RMG industry owners said that energy-efficient generators can reduce gas consumption by a minimum of 10%.

In order to encourage these consumers to use energy efficient equipment, the energy regulatory commission asked the gas distribution companies in its October 2018 order to pay 0.25% rebate on the total bills of the captive and industrial consumers that run their factories with co-generation-enabled generators and machines for three months.

The distribution companies suggested getting the money from the energy security fund under Petrobangla's management.

The regulatory commission also asked Petrobangla to prepare a methodology on the matter.

But neither the methodology was set nor the industries have got the rebate benefit and nor even they have been able to replace their old machines.

When asked, Petrobangla Chairman Zanendra Nath Sarkar told TBS that he had sought time to know the position of the ministry on the issue.

Businesses face harassment instead of rewards

In order to benefit from advanced generators, many industry owners and entrepreneurs applied to Titas Gas seeking approval to replace their old gas generators. But they have not been able to replace the generators allegedly due to a lack of cooperation from Titas Gas officials.

Knitwear industry has about 300 factories with captive connections. Some of them are using energy-efficient generators and a large number are still running with old generators, said the industry insiders.

Despite the benefit of using advanced generators capable of co-generation, a large number of factories feel comfortable staying with the existing generators because of the harassment they face during the process of replacing the new ones.

Some entrepreneurs bought new machines and kept them idle as they are not getting cooperation from gas distribution companies, said industry insiders.

Confirming the allegations, Mohammad Hatem, vice-president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) urged the authorities to make the process easier.

In the textile sector, there are about 400 mills with captive connections. Of the total, only 30% have energy efficient machineries.

When industrialists approach the gas distribution companies with an application to change the model of the generator, they have to go through the same process they already did while getting the connection, said industry insiders.

A spinning miller wishing not to be named told TBS that this process usually takes around one and a half years.

A director of the Federation of Bangladesh Chambers of Commerce and Industries said many textile owners have drawn the attention of the federation to this issue and the federation leaders have informed the matter to the top authorities of the ministry concerned.

There are around 350-400 factories and washing plants that are affiliated with BGMEA and have captive connections. Of them, only the larger factories are using advanced energy-efficient generators, said sources at the BGMEA

A vice president of the BGMEA on condition of anonymity said that factory owners cannot replace the new generators despite their needs.

"Entrepreneurs have to spend 'speed money' whether it is a new connection and replacement of old one which ultimately increases the cost of production," he further added.

When asked, recent past chairman of the Bangladesh Energy Regulatory Commission Md Abdul Jalil said, "The regulatory body does not have the resources to implement the order. What we can do is to ask the agencies concerned to implement the order which is beneficial for both consumers and companies."

"If they don't implement the order, we can only take action once we receive a complaint," he added.