The government on Wednesday approved a Petrobangla proposal to establish the third liquefied natural gas terminal in Moheskhali of Cox’s Bazar while energy experts said that the move would increase the county’s dependency on imported fossil fuel and pressure on forex reserves.
The cabinet committee on economic affairs in a meeting on Wednesday agreed in principle on the proposal.
The terminal would be established by Summit Oil and Shipping Co Ltd with an estimate capacity of 600 million cubic feet LNG per day.
Finance minister AHM Mustafa Kamal presided over the online meeting.
The approval would help the Petrobangla to start establishment of the terminal, said cabinet division additional secretary Sayed Mahbub Khan without giving any details regarding the completion period of the terminal and its establishment cost.
Energy experts said that volatility in the global energy markets and the price hike of fossil fuel forced the government to suspend projects linked to import of fossil fuel mainly LNG for the time being.
With the latest decision, the government has dropped a broad hint to increase its dependency on imported gas ignoring the longstanding demand for generating the item from domestic gas fields, they added.
‘Such decision is not a wise one,’ said Badrul Imam, an energy expert and honorary professor at the geology department of Dhaka University.
The disruption to coal import has forced the government to keep power production at the country’s biggest 1320-megawatt Payra power plant in Patuakhali suspended since June 5.
The ongoing power outages affecting people’s life and livelihood hit a new high at more than 3,000MW against the demand for over 15,000MW while the country has an installed generation capacity of 25,000MW, with most of the plant remaining shut for fuel shortage.
The government had also been forced to keep import of LNG suspended for almost seven months following the price hike of the item in the international market.
Since February 2023, Petrobangla has resumed import of LNG against the backdrop of falling prices, but those are inadequate to meet the local demand for about 4,000 million cubic feet per day against the supply of 3,000mmcf.
The data available from the Petrobangla on Wednesday showed that it could supply some 3,000mmcf, with over 8,00mmcf from import sources and the rest from local sources.
The country will not have faced gas shortage if it could be able to increase domestic gas production that, according to experts, would be much cheaper than imported gas.
But the present government has been showing more inclination towards importing gas instead of production at local level, said consumers Association of Bangladesh senior vice-president and energy adviser professor Shamsul Alam.
One major reason for such policy is that the government decision is dominated by the interest of energy businesses, he added.
Calling such policy suicidal for the country’s overall energy security and the economy, experts said that the growing import payment for primary fuel oil would keep foreign currency reserves under pressure in future.
Since February 2022, the county’s macro-economy has been facing the biggest pressure because of dollar shortage pulling down the forex reserves below $30 billion from $48 billion in August 2021.
The local currency lost it gloss as it has depreciated by 24 per cent against the US dollar in the past one year while the headline inflation hit the decade high at 9.9 per cent in May.
To overcome the dollar shortage, the government is borrowing a $4.7-billion loan from the International Monetary Fund over the period of next three years.
At present, there are two LNG terminals with regasification facility – one run by Excelerate Energy of the United Sates at Moheskhali with 500 million cubic feet per day capacity and another by the Summit Group in the same area.
Petrobangla officials said that they had plans to set up two more LNG terminals at Payra and Matarbari to enhance gas regasification capacity by more than 3,000MMcfd.
They added that the LNG terminals would be set up on the basis of unsolicited offers received from local and foreign companies.
It would take at least three years from approval to setting up the terminals for operation, according to the officials.
They calculated that the country’s demand for gas supply was growing rapidly and it would reach 6500 MMcfd by 2030 from the current demand for 4,000 MMcf/d against a supply of 3,000 MMcfd.