M Azizur Rahman

The government will import liquefied natural gas (LNG) to ensure that power plants and industrial units do not face sudden halt in gas supply amid fast depletion of local reserves, officials said Sunday.

Energy advisor Dr. Tawfiq-e-Elahi Chowdhury told the FE that the move is taken to fix the country's mounting energy crunch and allay fears of industry that factories could face an abrupt closure if local gas supply runs dry.

"Import of LNG is one of our key options to make sure that the country does not face any sudden energy crisis due to the supply shortfall in the near future," Dr. Tawfiq said.

"We also want to diversify our energy sources and cut over-reliance on natural gas produced in the local fields," he said.

More than 90 percent of Bangladesh factories and power plants are fired by locally produced gas, which is projected to diminish from 2011 and the entire reserve would run out by 2014-2015 at current consumption rate.

Officials said in an effort to prevent a total blackout the energy ministry is now working to determine the mechanism to import LNG for the first time in the country's history.

It could be imported either directly through state-to-state negotiation with the LNG exporting countries or by tying up with private sector under the proposed public-private partnership (PPP) initiative, an official said.

Private sector could also be allowed to import LNG, re-gasify it in the port and distribute through pipeline as natural gas.

The ministry has already asked the state-owned energy giant Petrobangla to submit a "detailed paper" on importing LNG.

"We are working on the paper. It will be submitted to the ministry by next week," Petrobangla acting Chairman M Muqtadir Ali told the FE.

Leading energy expert professor Ijaz Hossain of Bangladesh University of Engineering and Technology backed the government plan to import LNG.

"The decision is timely. Our domestic reserve is drying fast. The government should ready an alternative plan so that five years down the future our gas-fired factories and power plants don't face shutdown," he said.

He said the government must sort out the price issue before it imports LNG, as it would be a costly option compared to the cheap natural gas that the local factories now enjoy.

Massive investment would be required to install LNG re-gasification plant close to Chittagong port, said Mr Ijaz.

An energy ministry official said the country's bulk natural gas consumers like Karnaphuli Fertilser Company Ltd and Korean Export Processing Zone would be main clients for imported LNG.

Many industrial units that could not go into operation or business expansion due to gas crisis would also be the targeted clients, he said.

A massive expansion of industry has already led to an acute shortfall of gas in the country since late 2007, with the daily demand now hovering around 2200 million cubic feet (mmcf) against a supply of around 1900 mmcf.

The country's proven gas reserve has fallen down to 7.3 trillion cubic feet (tcf) from 15 tcf due to soaring consumption. Officials said the existing gas-fields might have an extra reserve of 5.5 tcf.

Bangladesh economy has been growing at an average rate of six per cent since 2003-2004, the highest since independence, and expanded industrial activities are raising the demand for energy every day.

Acute gas crisis has already forced Petrobangla to halt supplies to new industrial units. The state-owned energy giant also suspended operation of three gas-guzzling fertilizer factories in order to divert supply to power plants.

Separately, a number of power plants with a total generation capacity of around 600mw could not go into operation due to gas crisis.

The use of LNG has been growing fast across the world with some of the Asian giant economies like Japan, Korea and Taiwan becoming increasingly dependent on its use.

Fast booming economic giants China and India have also started importing LNG in a massive way to meet the demand of their expanding economies.