The government is going to allow private companies to start importing Liquefied Natural Gas (LNG) to meet the future demand of the country. Accordingly, the energy division has drafted a "Policy for Private Sector 2018" to facilitate the import of LNG.
With limited domestic gas reserves, declining production and favourable global factors, experts have long considered import of LNG as the next best option to meet Bangladesh’s growing energy demand. Right now, Petrobangla, the government agency to ensure energy for sustainable economic growth and maintain energy security of the country, is allowed to import LNG from the international market.
In August last year, the country entered the LNG era after receiving the first consignment of LNG in the national grid. Now the current supply of LNG in the national grid is around 360 million cubic feet (mmcf).
An official of the Energy and Mineral Resources Division, under the Power, Energy and Mineral Resources Ministry, told The Independent that the government has decided to formulate such a policy to put the brakes on the impending gas crisis, which is arising because of the increasing demand-supply gap of natural gas.
After the policy is formulated and enacted, private importers would be able to import LNG and sell it to the national gas grid in accordance with prices fixed by the government, said the official.
Private importers would also be able to sell LNG to private organisations after bilateral negotiations between them, the official added.
It is noted in the draft policy that some organisations of the country’s expanding private sector have evinced interest in importing LNG and using it in their own industry. The ’LNG imports for private sector policy, 2018’ is going to be formulated against this backdrop, it said.
The draft policy observed that a gas crisis has been prevailing in Chittagong for a long time since the expiry of gas in the Sangu gas field in Chittagong. Besides, as the gas reserves in other gas fields across the country have been dwindling, the gas crisis will only exacerbate in future.
According to the draft, there was a deficit of gas to the extent of 600 million cubic metres despite a current daily production of around 2,700 million cubic metres. In this context, LNG has been seen as the next best option for continuing gas supplies.
The draft LNG policy said private importers, after obtaining permission from the relevant department of the government, can establish their own facility to import, preserve and convert LNG to gas.
Under the draft policy, those private organisations that wish to import LNG must construct a re-gasification plant and terminal and have the financial capacity to construct those. The importers must have some practical experience in construction in the energy and power sector or heavy industries. Importers have to pay VAT and other necessary taxes. The importers also should abide by all the laws and policy of the land.
About the supply and distribution of LNG, the draft policy said, private players could supply LNG into any power plant, industry they own or to power plant or industry owned by others by obtaining permission and necessary approval from the Energy and Mineral Resources Division (EMRD). The importers in this case must have the financial capacity to construct jetty or unloading platform as per international standards.
The private importers could use the transmission and distribution line of Petrobangla, provided they have prior permission to use the line. Petrobangla will decide separate wheeling charges for the private importers, said the draft.
The private importers of LNG can fix prices of LNG they are going to sell to interested buyers by signing a bi-lateral financial contract and memorandum of understanding. They will be able to independently sign the contract without any intervention.
Petrobangla can receive a highest of 25 per cent of the LNG imported by the private players for a certain period and Petrobangla will fix the price of that LNG, said the draft.
The importers have to abide by Petrobangla’s specifications, set under the Energy and Mineral Resources Division. If they fail to meet certain specifications, the government can cancel the licence of the importer.
Besides, the Energy Division and Petrobangla can, together or individually, go in for inspection of ships used for LNG, and the unloading terminal, storage tanks and trucks needed for the LNG and re-gasification plants, the draft policy has stipulated.
Talking to The Independent, Dr Ijaz Hossain, professor of Chemical Engineering of BUET, said allowing private entities to import LNG might hasten the process of importing LNG to the country but he didn’t see the need for it.
“The LNG is usually being brought across the world through government-to-government (G2G basis). The entry of private players will only complicate the process,” he added.
Dr Hossain said the oil in Bangladesh is being imported by the government. “It once tried to import it through private players, but that created hassles. I believe LNG should be imported by the government,” he added.
He also cited the example of Pakistan, which last year thought of opening the import to private players, but later backed off from the plan.
“It is not easy to do business as the policy is being formulated because it has lot of challenges and business risk as well,” said a businessman who has been involved in the energy sector for the last few years.