LNG set to empower Bangladesh economy

Dhaka,  Fri,  23 June 2017
Published : 17 May 2017, 20:03:50
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LNG set to empower Bangladesh economy

Abul Mansur Md Faizullah
Prime Minister Sheikh Hasina laid foundation stones on May 06 for setting up two floating liquefied national gas (LNG) terminals for imported gas in Cox's Bazar. These two terminals would carry maximum 1000mmcf of gas by sea daily in addition to the country's daily production of 2,700 million cubic feet (mmcf). Additionally, some other proposals have been under process for consideration for establishing land-based terminals in other areas along the coastal belt of the same district. 

The Bangladesh economy has been on the right track to de-list itself from the group of Least Developed Countries (LDCs) aiming to be a Middle-Income Country (MIC) by 2021. Indicators that determine elevation for up-gradation are positive. 

 The UN Growth Commission in 2015, headed by Nobel Laureate Micheal Spence, concluded that it is essential for a LDC to maintain a high growth of over 7.0 per cent for certain years to graduate to MIC. This view was endorsed in the Open Working Group (OWG) post-2015 UN Development Agenda. Bangladesh has been maintaining the growth rate in line with the findings of the UN group. 

Meanwhile, the UN General Assembly adopted the sustainable development goal (SDG) agenda in 2015. Bangladesh has incorporated all the 17 SDG goals in the 7th Five Year Plan. The country is the 43rd largest GDP (gross domestic product) on Nominal Price measure. The growth rate may only continue if all the crucial sectors make progress simultaneously. 

Major sectors broadly accounted for in the total GDP are agriculture, industry and service sector. Efforts are on to increase contribution of the industrial sector to the GDP from the present figure of 29 to 32. This is, however, a big challenge. This can possibly be met through more investment from domestic sources or foreign direct investment (FDI). Bangladesh is still a place where investment cost is less compared to other countries in Asia. The country's big population is also a positive determinant to attract investment. Moreover, the 100 Economic Zones in the coming years would be proper platforms for investment.  

But concern still remains as to whether industrialisation could really be possible if supply of energy is not met in time. So, quite reasonably the easiest and fastest source, as in other developed or developing world, is now the liquefied natural gas (LNG). Bangladesh has rightly decided on sourcing LNG to meet the demand of energy within a short time. 

THE ROLE OF PETROBANGLA: State-owned entity Petrobangla owns 13 companies to deal with natural gas exploration and its transmission and distribution to the users. Once the idea of having huge deposits of gas beneath the ground had triggered hope for the country to remain rich in gas for many years. But decades of huge consumption of gas has set in motion the process of depletion of its reserve. Twenty-six gas fields are basically the source of our energy supporting power plants, fertiliser factories, industries, commercial structures, automobiles, households etc.  

Exploration has been a continuous process and BAPEX along with a few foreign companies has been assigned the task of undertaking surveys and drilling both in shore and off-shore areas. There might be a few discoveries soon but that should not make us complacent. To cope with the plan for massive industrialisation throughout the country and particularly in all the existing economic zones including private economic zones, all the investors want confirmation of obtaining gas supply in order to keep their plans for industrial units in advance. 

The quick solution is the liquid gas. Liquid form of gas i.e. the LNG, has been the major supply of alternative energy in many countries.  Demand of power has still been a factor. Fuel, coal or nuclear-based power plants would require a sizable length of time to generate power and at the same time, transmission is also very critical coping equally with production to support the industries. Gas with the existing transmission lines or with little more addition can reach industry or factory sites in minimum time. 

Bangladesh, being the second largest producer of apparels, needs gas connectivity in readymade garment (RMG) factories. It is an obvious national responsibility to keep growth rate of the apparel sector moving faster. The huge number of applications from the RMG factories lying with Petrobangla is a testimony to the big demand. Carrying LNG through FSRU (Floating Storage and Regasifications Unit) can meet the present requirement by March or April 2018 as the transmission line from the off-take site at Moheskhali has already been built up to Anowara of Chittagong to connect it to the national grid. It is to be noted that the only 1,000 mmcf per day can produce 4,927 MW of power which can add Tk 2,760 billion annually to the GDP.  

FSRU, an easy and prompt solution of meeting gas demand, needs hardly a year to complete. It is a ship-to- ship (S-to-S System) transfer, where both the ships will remain anchored side by side in a suitable draught at Moheshkhali Channel. One ship will carry gas in liquid form (natural gas when pressurised under minus 160 degree Celsius that turns into liquid form) and the other one will take back the liquid into gaseous form. At Moheshkhali site, a sub-sea pipe line of 4/5 kilometres will be laid to carry the gas to the national grid on the shore. 

Meanwhile, two contracts were inked and now other processes are on their way to meet the targeted deadline to deliver gas by the first one by April 2018 and the second one by October 2018. It is understood that price of gas will be higher than the present rate but through its blending with the indigenous gas, price would be lower. Besides, respective agencies/organisations have been working to keep the price within the affordable limit of the users. 

RAPID INDUSTRIALISATION: The economy can move faster with massive transformation of the country to manufacturing and industrial one. Contribution of agriculture to the total GDP has come down to 15 per cent but labour force involvement still remains at 46 per cent. Further, the total factor productivity has not yet been increased due to absence of modernised and sufficient number of factories and industries. Investors both from within the country or outside would always measure the average buying capacity of people including favourable terms and conditions in exporting goods to other destinations. 

Bangladesh enjoys GSP (generalised system of preferences) in many countries, which has brought businessmen to a comfort zone in offering competitive price but non-tariff barriers (NTBs) are yet another hurdle for many manufacturers or exporters in convincing about products' quality.  International accreditation of testing labs is a compelling need for all ranges of products to enter markets on foreign soil. The Ministry of Commerce along with its organisations and with the support of a few development partners has made significant progress but it has more to do for opening up doors to widen product ranges in the developed world.  

Investment cost in Bangladesh is yet to be considered competitive in the South Asian region. Infrastructure is also not yet fully developed to motivate overseas investors to land in this country. BIDA, BEPZA, EZA, etc are now proactive with their lucrative offers, incentives, tax holidays including other supports. Energy, if made available at the doorstep of their plants, will go a long way in moving the economy more faster to make the country a MIC in 2021 and a Developed Country by the 2041, according to the vision that the Prime Minister has given before the people of Bangladesh.

Abul Mansur Md Faizullah, NDC is Chairman, Petrobangla

 
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