The New Nation - Internet Edition

BUSINESS REPORT

India's Tata Group's decision to withdraw a US$3 billion investment proposal has brought a great sigh of relief to thousands of small and medium-scale gas-based industry owners as the country has been facing growing difficulties to meet its domestic requirement of natural gas.

Tata pulled out its investment proposal after it failed to get guarantees from the government for the supply of natural gas for its projects.

"It is clear that the (Bangladesh) government will not be in a position, in the foreseeable future, to grant the projects the natural gas commitment they would require," Mumbai-based Tata Group said. "Consequently, there is no prospect of taking these projects further."

However, Finance Adviser Dr AB Mirza Azizul Islam said the Tata Group's decision is unlikely to affect the flow of foreign direct investment (FDI) in Bangladesh.

He said: "I hope there'll be no adverse impact on the investment."

Board of Investment chief Kamaluddin Ahmed said Bangladesh does not have enough gas to ensure the required supply to the Tata's projects.

However, Anisul Haq, president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), expressed disappointment at the Tata's decision and feared that this might affect FDI inflow, although the country's industrialists and businessmen have long been vehemently opposing the Tata's proposal saying that domestic industries would face a serious setback if the Indian conglomerate was given a guarantee of uninterrupted supply of natural gas for its projects for the next several years.

They even feared that the local industries might subsequently be deprived of natural gas supplies if the government approved the Tata's investment proposal.

On the other hand, International Chamber of Commerce Bangladesh (ICCB) said the country is facing three roadblocks for the development of energy sector. Lack of proper strategy for augmenting increasing demand for power supply, depleting natural gas reserves, and exorbitant world price hike of petroleum and food are posing three big challenges for the sector.

Quoting energy experts, the ICCB, in the Editorial of its Quarterly Bulletin released on July 30, said Bangladesh needs an investment of US$8 billion in the energy sector to fulfill the rising demand by 2025.

Citing the government estimate, it said Bangladesh, with 13.54 tcf of proven and recoverable gas reserves, is facing at least 100 million cubic feet of gas (mmcf) shortages a day, as the country can supply up to 1,738 mmcf of gas against daily demand of 1,833 mmcf. In order to achieve and maintain at least seven per cent growth, the country would need supply of energy at a much higher rate to meet increasing demand.

It said per capita power consumption in Bangladesh is only 140 kilowatt hour (kwh) as compared to 325 Kwh in Sri Lanka, 408 Kwh in Pakistan and 663 Kwh in India. Moreover, it keeps electricity out of reach of 70 per cent people of the country. Besides, whatever is available is so erratic and irregular that nobody knows when it is going to come and go-its like a hide and seek game.

The present installed capacity of power generation of the country is around 3500 megawatt, against a demand of over 5000 megawatt on an average. Even against the installed daily generation capacity of 3500 megawatt, the load-shedding, which is a regular phenomenon, is in the range of 600 to 1200 megawatt. Out of this, 500 to 600 megawatt is due to gas shortage. Stoppage or curtailment of gas supplies to industries or power plant has been aggravating the situation further.

Last year 87 percent of total electricity came from gas. Experts said that ground reality of gas production does not suggest that future generation can be continued based on mono primary energy, which is gas. They apprehend that the power crisis will not be over before next 3-4 years. Even situation might worsen. This obviously hampers the much needed growth of industrial sector. Agriculture will also be affected severely due to power crisis.

The power sector master plan suggests that Bangladesh requires 43,000 megawatt (MW) electricity to ensure power for all by 2025. According to the plan, 76 percent of the requirement or 33,000 MW will come from coal although now the percentage is only 5.