Bangladesh News

Persistent gas crisis in Chittagong region has created uncertainty over two upcoming power projects in two of the port city’s export processing zones (EPZs).

Bangladesh Export Processing Zones Authority (Bepza) last year initiated the process of having exclusive gas-fired power plants at the EPZs as service industry investment and thus cut down the lengthy tendering process. This is the first time the country has opted for power plants as service industry investment mainly to end investors’ sufferings and attract new investment.

As part of it, Bepza signed two deals with Malancha Holdings Ltd (MHL)–an enterprise of United Group–to set up a 40 megawatt (MW) plant in Chittagong EPZ and another 40MW in Dhaka EPZ. The Bepza earlier this week signed a deal with Korean EPZ in Chittagong to set up another 50MW power plant.

Sources said, of these three deals–the two power plants by the MHL are expected to come into operation by August-September this year. The Korean EPZ plant may come into operation next year.

Each of the Dhaka and Chittagong EPZs consume around 30MW power during production peak hours and the consumption drops down to 10MW. “We can supply the surplus power to the national grid easily and minimize Chittagong’s power crisis to some extent,” said a Bepza official.

As Chittagong’s gas supplies lag by around 100 million cubic feet a day (mmcfd), the port city cannot generate enough gas-fired power to meet its own demands.

Meanwhile, amid the gas crisis, MHL has arranged five high-efficiency gas engines from Wärtsilä of Finland, and started developing the plant site on the Chittagong EPZ premises.

“The plant shall need gas from June for testing and commissioning purpose. Initially, about 10 mmcfd gas at a pressure of 80-90psi will be consumed by the plant,” said a source, adding, “But due to gas crisis, the whole scheme has become uncertain.”

This gas crisis was triggered by declining gas production of the off-shore Sangu rig and lack of gas pipeline capacity that could supply larger volume of gas to Chittagong from Titas gas field or the gas fields in Sylhet. According to Petrobangla, there is no project in hand that could resolve the gas crisis within a couple of years. The government is considering a Tk 1200 crore pipeline project that could end this problem but it will take a few years to complete.

“One way to tackle this situation on a short term basis is to divert some gas supplies from the two 210MW Rauzan and the 60MW Sikalbaha plants in Chittagong and supply 10 mmcfd gas to the Chittagong EPZ. These three plants presently consume 120 mmcfd gas. The machines of these plants are not very efficient and it is a good idea to utilise a part of the gas for more efficient production of power,” noted a source.

Another idea is to install the plant in Dhaka EPZ, instead of Chittagong EPZ and dedicate the power to Chittagong EPZ. “Dhaka, for now, does not have the problems being faced by Chittagong,” he added.

This means, the Korean EPZ power project also remains uncertain. Korean EPZ sources told The Daily Star that it was eager to invest for 1,000MW power plant at the EPZ site if the government could ensure gas supplies.

“If we cannot have gas facility, we shall ask the investors to set up the plants with dual-fuel facility so that they can generate power using petroleum oil if necessary,” said a Bepza official.

“We cannot just sit idle when investors have become fed up with load-shedding. Thousands of people are working at the EPZs and the nation is earning valuable foreign currency. This is why the Bepza devised the plan to have its own plants. If there is gas crisis, we will do it in some other way,” he added.

“Power is the lifeline of modern development,” said an investor, “But we do not see enough moves from the government that encourage us to invest more.”

The country is set to have more than 1000MW power shortage this summer.

The power investors themselves were assigned to ensure their gas supplies. Sources said that MHL had initially obtained assurance from the Bakhrabad Gas Field Company of Chittagong of enough gas supplies for a 10MW plant at the Chittagong EPZ and it had made preparations accordingly. But the government later asked MHL to build a 40MW plant.

Petrobangla sources said the country will continue to face at least 200 mmcfd gas supply shortfall this year and the situation will continue to worsen.

However, the crisis in Chittagong could have been tackled easily if the government approved a small pipeline project, costing between Tk 40 crore and Tk 50 crore, to transmit high pressure gas from the Titas gas field to the Ashuganj-Bakhrabad (AB) pipeline. The 14 kilometre 20 inch pipeline could transmit 200 mmcfd from the field to the AB pipeline at a high pressure of 1000psi. The work would take just one winter to complete. This Petrobangla proposal, however, did not get due attention of the government.