Govt to redirect gas from power plants to industries to address crisis

The government plans to dial back gas supply to power plants and reroute it to industries that have long been left high and dry by shortages, impacting production and exports.

To further ease the gas crunch, four additional cargoes of liquefied natural gas (LNG) will be imported and allocated to the industrial sector between May and August, Energy Adviser Fouzul Kabir Khan said following a meeting with top business leaders at the Secretariat today (7 May).

He said the power sector had been receiving 1,200 million cubic feet of gas per day (mmcfd) to meet the heightened demand during Ramadan and for irrigation. Now, 150 mmcfd will be redirected to industries, along with an additional 100 mmcfd from four incoming LNG cargoes. In total, industries will receive 250 mmcfd more gas going forward.

Meanwhile, the energy adviser assured that gas and electricity prices will remain unchanged for now.

Former FBCCI president and Ha-meem Group Managing Director AK Azad, who attended the meeting, said the planned additional gas supply would roughly meet the current industrial demand.

The industrial sector needs 1,306 mmcfd but is receiving only 994 mmcfd, creating a 312 mmcfd shortfall, according to the Energy Division.

The meeting was attended by leading industrialists, including Meghna Group Md Mostafa Kamal, Pran Group Chairman Ahsan Khan Chowdhury, BKMEA President Md Hatem, and Bangladesh Chamber of Industries President Anwar-Ul-Alam Chowdhury Parvez, along with business representatives from various sectors.

Energy Secretary Saiful Islam, Petrobangla Chairman Rezanur Rahman, and Chief Adviser's Press Secretary Shafiqul Alam were also present.

The government's move follows growing pressure from investors to boost energy supply to the industrial sector. 

At a webinar on Tuesday, Chowdhury Ashik Mahmud Bin Harun, executive chairman of the Bangladesh Investment Development Authority (Bida), said that both local and foreign investors have flagged four major challenges affecting the investment climate, chief among them being energy availability and pricing policy.

At today's briefing, Fouzul Kabir said the areas where gas supply will be boosted will be determined in coordination with industry stakeholders.

He also acknowledged that the move would create a fiscal deficit of over Tk11,000 crore, but it's outweighed by potential industrial losses

The energy adviser explained that increasing gas supply is challenging due to declining domestic extraction, prompting higher LNG imports. 

To curb illegal gas connections, the government plans to form a joint task force with the business community. Titas Gas will soon launch a hotline, and a dedicated team will monitor field-level supply and usage.

When asked whether reduced gas supply to power plants might trigger load shedding, the adviser said the government would switch to oil-based power plants to meet electricity demand.

Bangladesh's gas demand and supply

At the meeting, the energy division presented an overview of gas demand, supply efforts, and the financial pressure the government is facing. A report on March's gas demand and supply was presented, a copy of which TBS has seen.

In March, the average daily gas demand was 3,800 mmcfd, while the average supply was 2,790 mmcfd. Of the supply, 1,862 mmcfd came from local fields and 928 mmcfd from LNG imports.

The industrial sector accounts for a large portion of demand, requiring 1,306 mmcfd (649 mmcfd for factories and 658 mmcfd for captive power), but only 994 mmcfd is being supplied, creating a 312 mmcfd shortfall.

Gas is also supplied for power generation (1,200 mmcfd), fertiliser plants (147 mmcfd), residential use (287 mmcfd), CNG stations (140 mmcfd), commercial activities (21 mmcfd), and tea estates (2 mmcfd).

Subsidy on gas 

The government mixes domestic gas with imported LNG, costing Tk29.72 per cubic meter, while it sells gas at an average of Tk22.64 per cubic foot, resulting in a loss of Tk7.08 per cubic foot. Part of this loss is covered by subsidies.

According to the energy division's report, the average price of LNG imported under long-term contracts is $10.50 per unit, while LNG from the spot market is priced at $14 per unit.

The energy division plans to import a total of 98 LNG cargoes in 2025, with 39 cargoes coming from the spot market. This LNG importation will require $4.543 billion.

The energy division's report shows that the government's gas sales revenue is expected to be Tk38,970 crore, while expenses will total Tk56,647 crore, resulting in a Tk17,677 crore shortfall. Of this, Tk6,500 crore will be subsidised from the budget, leaving a net deficit of Tk11,177 crore for the Energy Division.

Govt's plan to meet gas demand

The energy division's report highlights the government's strategy to address rising gas demand, focusing on boosting domestic production, reducing system losses, and increasing LNG imports.

The goal is to cut system loss by 50% by June 2026, mainly through disconnecting illegal gas connections. By year-end, 50 wells will be drilled and worked over, adding 648 mmcfd to the national grid, with another 50 wells expected to add 985 mmcfd by 2028.

Fouzul Kabir said that 27 mmcfd of gas has already been added from the workover of three wells.

Starting January 2026, LNG imports under long-term contracts will increase, and additional FSRUs (Floating Storage Regasification Units) will be set up to convert the LNG into gas. 

A tender for the fourth FSRU is in progress, and a land-based LNG terminal under a PPP model is also underway, as shared with business leaders.