EZ, EPZ industries to get priority as gas connections resume amid supply crunch

Infographics: TBS

Due to limited gas supply, not all factories and businesses will receive new connections—even at higher tariffs. The government will prioritise export-oriented industries located within Economic Zones and Export Processing Zones (EPZs), basing decisions on economic impact assessments. Load increases will also be approved for operational factories.

The Energy Division issued new guidelines yesterday, instructing distribution companies to prepare and submit lists of eligible businesses for new connections and load increases, based on a first-come, first-served basis. Connections will only be granted after confirming compliance with ministry directives and receiving board approval from the respective distribution companies, according to Energy Division officials.

To ensure adequate gas pressure for newly connected factories and halve system loss by June 2026, the Energy Division has directed Petrobangla, the Gas Transmission Company Limited (GTCL), and all distribution entities to implement a time-bound roadmap.

An Energy Division official noted that residential consumers may experience reduced gas pressure in household stoves as supply is prioritised for industrial use. While this reduction will not be formally announced, households will be gradually encouraged to transition to LNG due to falling pipeline pressure.

Currently, daily demand for gas stands at 4,000 million cubic feet (MMCF), compared to a supply of only 2,700 MMCF. Monthly system loss is estimated at 240 MMCF—equating to an annual waste of approximately $1 billion.

A high-level meeting chaired by Energy Adviser Muhammad Fouzul Kabir Khan was held yesterday to address this issue, attended by senior officials from Petrobangla, GTCL, Titas, and other stakeholders. The Energy Division has assigned specific responsibilities to designated officials, with performance-linked incentives and penalties tied to progress in reducing system loss.

Speaking to The Business Standard, the Energy Adviser said a roadmap has been issued to all companies to cut system loss by 50% by June 2026, with progress to be reviewed quarterly. He also noted that 8 MMCF and 20 MMCF of additional gas will be available within three to six months from two new exploratory sites.

"No new connections will be granted without confirming availability of supply," the adviser said. "Connections will be prioritised for export-oriented factories located in EPZs and planned industrial areas, based on their potential economic contribution."

Gas connections have been suspended for several months. On 13 April, the Bangladesh Energy Regulatory Commission raised gas tariffs for new industries from Tk30 to Tk40 per unit, and for captive generators from Tk30 to Tk42. Charges for load usage beyond approved capacity were also increased to Tk40.

An Energy Division official revealed that over 1,000 applications for new connections or load increases have been submitted to distribution companies, with more than 450 received by Titas alone. However, due to supply constraints, it is not feasible to meet all requests.

Distribution companies have been instructed to clearly differentiate which categories of businesses will receive priority. Export-oriented factories located in EPZs and economic zones, especially those close to pipelines, will be favoured. Non-operational or unproductive businesses will not be considered. Load increases will be approved for currently running factories, while locations at the distant ends of pipelines will be excluded due to low pressure.

Priority lists must be prepared based on the date of application and sent to the Energy Division for review. Connections will be authorised only after obtaining ministry consent and board approval.

In addition, the government will assess the additional demand for gas and take measures to import LNG to meet the demand.

"The energy adviser has clearly directed that any factory receiving a new connection or load increase must be supplied gas as per their operational demand," the official said. Petrobangla will reallocate gas supplies in line with the demand forecasts from distribution companies.

In response to concerns about how new industries will be served without expanding the total supply, the official said the focus is firmly on reducing system loss. In January, Titas Gas, which supplies 60% of the country's gas, reported a system loss of 10.53%. They have been instructed to reduce this to 5.00% by June 2026—a target they claim is achievable. Bakhrabad Gas, with a loss rate of 13.60% in January, has been given the same deadline to meet the 5.00% benchmark.

GTCL, a transmission company that theoretically should have zero loss, reported a 2.23% system loss, which must be reduced to 1.00% by next June.

"These targets are based on internationally accepted standards. In a gas-scarce economy like Bangladesh, continuing to absorb such high levels of system loss is unsustainable," the official added.

Titas is already implementing a project in Narayanganj to reduce losses, and a similar initiative is under consideration for Bakhrabad Gas Company.