Gas line unused as installed on ‘political’ consideration 

There has been a consistent gas supply shortage for the last several years. Still, gas pipelines were extended to Rajshahi and Khulna, to cater to a few new clients. 

A new pipeline is being installed to supply gas to Rangpur, despite significant uncertainty over availability of gas. 

The projects have allegedly been implemented to materialise political promises, while the gas transmission authority – Gas Transmission Company Limited (GTCL) – is struggling to make up for the heavy losses from the pipeline installation projects. 

According to the GTCL sources, it handles 75 per cent of the total gas supply across the country, and its only source of revenue is charges from gas transmission. The supply and revenue go hand in hand. 

More than half of GTCL’s supply capacity remains unused as its daily gas transmission capacity is 5 billion cubic feet, while the actual daily supply volume is only 2 billion cubic feet. Thus, arbitrary installation of new pipelines turned the gas transmission company into a loss-making entity during the previous government. 

The GTCL used its own funds to install the pipelines, in addition to investments from the government as well as other lenders. Now, it has been going through financial strains and struggling to repay loan installments, say multiple officials. 

GTCL began its operation on 4 December, 1993, with a gas transmission line of 544 km. It grew to 2,167 km by the end of the 2022-23 fiscal year. 

The company posted a profit of Tk 740 million for the 2020-21 fiscal year, but plunged to a loss of Tk 2.17 billion in the 2021-22 fiscal year. In the 2022-23 fiscal year, its gas transmission volume decreased by 11 per cent in the 2022-23 fiscal year, forcing it to incur a loss of Tk 12.12 billion. 

Rukhsana Nazma Ishaq, managing director of the GTCL, noted in the annual report for FY23 that the interest costs are going up due to capitalization of projects. On the flip side, high depreciation and inclusion of system losses are pulling up the amount of total losses. 

Two transmission lines – one from Hatikumrul to Bheramara, while the other from Bheramara to Khulna – were installed at a cost of Tk 15 billion, to supply gas to the south-west region. Later, the Sundarban Gas Company constructed more distribution pipelines to deliver gas to consumers. 

Without any surety on the gas supply, the authorities are now constructing – work is now at the final stage – an 800 MW gas-powered power plant in Khulna. 

The Sundarban Gas Company was formed in 2009 to serve Khulna, Barishal, and parts of Dhaka division. With its 144 km distribution pipeline, the company facilitated gas connections to 2,393 establishments, including 2,376 residential ones  between 2012-13 and the last year. 

They have only provided eight industrial connections in the last 11 years. Excluding three factories in Kushtia, all connections have been made in Bhola, with no service in Khulna and Barishal. 

Insiders said residential gas connections have been halted for almost a decade, while industrial connections are approved only under special considerations. Industries are struggling due to a shortage in gas supply, yet new pipelines are being constructed in the name of economic development.

Acknowledging the underutilisation of gas pipelines, Zanendra Nath Sarker, chairman of Petrobangla, told Prothom Alo that these pipeline projects were undertaken many years ago. There were plans to increase gas production, but it did not come true. The supply of gas could have been increased if production was raised by drilling new wells. 

The country’s daily gas demand stands at 3.80 billion cubic feet, while the supply volume is 3 to 3.1 billion cubic feet. Of this, 2 billion cubic feet comes from domestic sources, while 1.10 billion cubic feet is imported as liquefied natural gas (LNG). 

Domestic production is unlikely to increase in the near future, and it prompted the previous government to plan to boost LNG imports. Alongside imports, they took initiatives to sign contracts for new terminal construction. 

Among the new projects, the Payra-Barisal-Gopalganj pipeline construction project is estimated to cost about Tk 60 billion. It is intended to supply gas from the under-construction LNG terminal at Payra. 

Also, the Jajira-Tekerhat-Gopalganj pipeline, running from Langalband in Narayanganj to Mawa, is projected to cost Tk 23.60 billion. The interim government is reconsidering these projects.

M Tamim, special assistant on energy to the chief advisor, told Prothom Alo that the gas shortage has persisted since the time of installing pipelines in Khulna and Rajshahi. There were political considerations behind the projects. These are bad investments and sick projects. The pipelines were constructed to fulfill political promises rather than to meet real energy needs.