Increase coal-fired power to free up gas for industries: PM

Infographics: TBS

Prime Minister Tarique Rahman has directed the power, energy and mineral resources ministry to take urgent steps to increase power generation from coal-fired plants to free up more gas for industries and ensure timely LNG imports while avoiding the direct procurement method.

He also instructed the ministry to strengthen the country's energy supply system to turn Bangladesh into a large-scale manufacturing hub by 2029 and ensure sustainable energy security over the following five years.

The directives came at a meeting on the country's energy crisis yesterday, where the Energy and Mineral Resources Division presented an assessment of the current power and energy supply situation, compared it with conditions when the BNP government took office, and outlined medium-term plans through 2029 and long-term plans through 2035.

The prime minister reviewed in detail the demand and supply of gas, fuel oil, coal and furnace oil, as well as electricity demand and the amount of power currently being generated from different fuel sources.

Speaking to reporters, Prime Minister's Economic Affairs Adviser Dr Rashed Al Mahmud Titumir said the gas supply situation for industries would improve by the coming winter, while visible progress in both gas and electricity supplies would be achieved by next summer.

Tarique Rahman has sought a detailed plan outlining how the country's energy supply situation is expected to evolve at different stages through 2029. The government wants to prepare the plan to give investors a clear and advance indication of energy availability.

57 days of fuel stock expected

The government is building up fuel-oil reserves to cover 90 days of demand. If all letters of credit opened for fuel imports through 30 August are delivered on time, the country will have enough stock for 57 days.

When the current government took office, the country had only 14 days' worth of fuel-oil reserves.

In the short term, however, the government has limited options to address the gas shortage. The prime minister has therefore stressed ensuring LNG imports within the capacity of the country's two floating LNG terminals while avoiding direct procurement (DPM).

Recently, Bangladesh failed to receive six LNG cargoes ordered through the DPM system. Foreign suppliers diverted the cargoes to other countries at higher prices.

"Because this creates uncertainty over LNG supplies and also leaves room for corruption," a government official told TBS.

More coal-fired power to free up gas for industry

The government is also seeking to reduce the power sector's dependence on gas in the short term by increasing generation from coal-fired power plants.

The prime minister has instructed authorities to prioritise coal-based generation even if it means somewhat higher power subsidies, so that more gas can be diverted to industries.

The Energy Division has also told the prime minister that the country's electricity situation is expected to improve when the first unit of the Rooppur Nuclear Power Plant comes online in September-October, reducing some pressure on gas-fired power generation.

Bhola gas pipeline planned

To improve energy supplies by 2029, the government is planning to connect newly discovered gas reserves in Bhola to the national grid through a pipeline. A feasibility study has already been completed, with the pipeline estimated to cost Tk500 crore.

The Energy Division said Bangladesh currently has to buy LNG from international markets at high prices, with each cargo costing Tk730-750 crore. As a result, spending Tk500 crore on a pipeline to bring Bhola's gas into the national grid would be economically viable.

The government is also planning to step up drilling and re-drilling of 150 gas wells across the country.

The Energy Division has presented a plan to increase domestic gas supplies by an additional 1,750 mmcfd by 2029. The prime minister has instructed the division to intensify efforts to boost production from domestic sources.

Bangladesh seeks LNG deals beyond Middle East

The government does not want to remain entirely dependent on the Middle East for LNG supplies. It is therefore negotiating long-term LNG agreements with countries outside the region.

Discussions are also underway with two or three additional US companies over long-term LNG supply deals.

The Energy Division told the prime minister that the approved gas load nationwide stands at 5,200 mmcfd. If 3,200 mmcfd can be supplied regularly, most sectors would be able to operate more or less normally. A supply of 3,800 mmcfd, however, would eliminate the gas shortfall, according to the ministry.

Currently, the country can supply only around 2,600-2,750 mmcfd of gas, Energy Division officials said.

Of this, 1,585 mmcfd – around 62% of total supply – is used for electricity generation.

Power plants receive 1,000 mmcfd, while 585 mmcfd is supplied for captive power generation by various industries and organisations.

The remaining 38% goes to industrial facilities, commercial users, transport and households.

Gas production fallen since 2018

The Energy Division has recommended increasing coal-fired power generation to free up more gas for industrial users.

Although coal-based power generation costs somewhat more than gas-fired generation, the division supports accepting the additional cost to ensure adequate gas supplies for industry.

One mmcfd of gas can generate around 5MW of electricity. The division has also recommended increasing solar power generation to further reduce pressure on gas.

Bangladesh began importing LNG in 2018. Before that, domestic gas production was sufficient to meet the country's needs.

In 2018, local gas fields supplied around 2,000-2,100 mmcfd. As domestic demand increased, the government began importing LNG. At the same time, domestic gas production failed to rise and instead declined.

Gas production from the country's fields currently stands at around 1,600 mmcfd.

With a view to tackling the gas supply shortfall, the government plans to install three more floating LNG terminals (FSRUs) by 2029.