• Wednesday, Feb 08, 2023
  • Last Update : 10:24 am

Experts wary of importing LNG

  • Published at 10:10 am September 26th, 2021
The energy crisis is rooted in soaring demand for energy as the economic recovery from the pandemic takes hold Reuters

Three cargoes of LNG are being procured from the spot market to increase the country's gas supply

The government's decision to purchase liquefied natural gas (LNG) from the spot market brought a mixed bag of reactions from industry leaders and experts.

Talking to Dhaka Tribune, both groups lauded the move, but were sceptical at the same time.

Three cargoes of LNG are being procured from the spot market to increase the country's gas supply.

The Energy and Mineral Resources Division (EMRD), under the Ministry of Power, Energy and Mineral Resources (MPEMR), decided to handle the existing gas crisis despite the rise in LNG prices in the global market.

Prime Minister Sheikh Hasina has already given her nod for importing LNG.

Last Wednesday, the Cabinet Committee on Public Purchase approved 12 proposals, including the import of LNG.

State-owned Petrobangla will import some 33.60 lakh MMBtu LNG from the international spot market through quotation.

Vitol Asia Pte, Singapore, will supply the bulk LNG at a rate of $29.89 per million British thermal units (MMBtu).

According to sources, the government provides maximum gas for power generation every summer.

But this year, that was not the case. Instead, the gas crisis has reduced power supply from the power plants.

Also Read - Proposals for LNG, petroleum, wheat import get clearance

The spot market is currently fluctuating at $19-20 per MMBTU LNG. 3.3 crore MMBTU LNG will reach each cargo.

The first lot is slated to be brought by the end of this month.

At present, the daily gas demand of the country's power plants is 225.2 crore cubic feet.

In contrast, Petrobangla is able to supply 130-140 crore cubic feet.

However, Petrobangla re-increased the supply of LNG to the national grid in July this year as LNG prices continued to rise.

Talking to Dhaka Tribune, energy advisor to Consumer Association Bangladesh (CAB) M Shamsul Alam said: “Purchasing from the spot market would be beneficial, I have doubts. We don’t have that capacity to perceive the essence of the market.”

"I am cynical regarding the matter. The skill, expertise and efficiency required to purchase from the spot market is absent, although the strategy and the standard purchase procedure has been explained," he noted.

According to Rupantarita Prakritik Gas Company Limited (RPGCL), a total of 13 cargo LNG has been imported from the spot market so far. The LNG was imported from September 25 last year to July this year.

Earlier, it was decided not to buy the product from the spot market till next December due to the rise in LNG prices.

But the energy division backtracked on the decision, citing gas shortage.

Also Read - LNG import: Foreign companies seek long-term deals, but experts want competitive bidding

However, due to the gas shortage, the textile and apparel sectors of the country felt the pinch as they were in the fear of losing work orders if production cannot be continued.

Because of the low pressure of the gas in the major industrial areas, a number of factory units have been running at 50%-60% capacity, said the industry insiders.

Textile mills need the pressure of 10 pounds per square inch (PSI) or more for uninterrupted operations. But currently, sometimes the pressure level goes as low as 1.5 PSI.

The decision of buying LNG from the spot market may help the apparel and textile sector to overcome this shaky situation, the manufacturers hope.

Shahidullah Azim, vice-president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said that the decision to buy LNG from the spot market will be much better for the apparel sector. The sector is suffering the most due to the gas crisis.

“We are also suffering as textile millers will not be able to supply the yarn on time again if there is no quick solution to this problem, which will further hamper our production. The timely shipment of the huge amount of purchase orders will be affected,” he added.

He also said that they contacted Titas Gas, but they did not give any proper response.

Maybe the gas is being diverted to some other big production like power generation. It is almost impossible to keep the wheel of the economy moving by compromising the garment industry, he added.

He also said that it needs government intervention on an urgent basis.

“We are 168th out of 190 countries in Ease of Doing Business, which means we are lagging behind. It is difficult to survive if various obstacles keep hitting us like this,” he added.

Also Read - Bangladesh mulls producing LNG locally

He further said that if the gas problem prolonged, it would not be possible to fulfill the target they were pursuing, and efforts to return sales to the pre-pandemic level would be hampered.

Earlier, Mohammad Ali Khokon, president of the Bangladesh Textile Mills Association (BTMA), said in a statement that the spinning, weaving, dyeing-printing-finishing industries of Bangladesh are run on the basis of captive power generation, where gas is the main fuel.

The gas supply has been severely disrupted recently, where some factories run their productions by shutting down 70% of its machinery, he added.

“Despite the increase of the price of cotton in the international market, we have kept the price of yarn at a tolerable level to take forward the garment industry, which is the major source of export earnings of our country,” he added.

He feared that if the issue of gas shortage would be prolonged, the production of yarn would be disrupted significantly, which would have a negative impact on the country's garment industry.

According to the BTMA, some 450 spinning mills have been supplying 80% of the demand for yarn of the local apparel factories currently who are the main consumers of natural gas.

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