$1 billion worth of gas being stolen every year in the name of 'system loss': Ijaz Hossain

One billion dollars' worth of gas is being stolen annually in the name of system loss, prominent energy expert Ijaz Hossain claimed today (4 September).

Speaking at a seminar at the International Business Forum of Bangladesh (IBFB) Conference Center yesterday, Ijaz Hossain said, "If systems losses, currently at 9.82%, can be reduced by half, we could save $500 million annually, which would provide an opportunity to save on imports."

The Implementation Monitoring and Evaluation Division, in a report on system loss reduction of Titas Gas in 2014, defined system loss as the amount of gas that is unaccounted for.

"That is, it is the difference between total amounts of gas supplied – the total amount of gas accounted for," states the report.

System loss may be due to several factors, including inaccuracy of the metering system and equipment, meter tampering, connection without metering, illegal connections, and leakages in the pipeline of the distribution system.

Meanwhile, the seminar, titled "Challenges in Reforming the Power and Energy Sector of Bangladesh," was organised jointly by the IBFB and Energy & Power magazine.

IBFB President Humayun Rashid presided over the event, while Mollah M Amjad Hossain, editor of Energy & Power, conducted the proceedings.

In his keynote address, Ijaz Hossain expressed his support for LNG imports but noted the need to strengthen domestic gas production and exploration activities.

"If we want to ensure uninterrupted electricity and fuel supply, the import cost in this sector will amount to $24 billion, which is highly challenging for our economy," he said.

He further explained that Bangladesh's domestic gas fields are depleting, leading to a decline in production.

"To maintain the current production capacity of 2,000 million cubic feet per day, we need to drill at least 10 exploration wells per year. At one point, we produced 2,800 million cubic feet per day, but this has decreased due to a lack of exploration activities," he said.

Mollah Amjad Hossain pointed out that Bangladesh's power and energy sector debt stands at $5 billion, with electricity prices increasing by 128% over the past 15 years.

"If the fuel debt is not cleared and supply is not ensured, the economy will be at risk. Garment exports have already declined by 6%, which poses a significant threat," he said.

He also recommended importing 15 million tonnes of coal by 2030 and called for a decision on the use of domestic coal, advocating the increased use of alternative fuels in industries alongside gas.

Energy expert Dr M Tamim also highlighted concerns over capacity payments.

"We need to examine how much of the unused capacity is being paid for, and if any manipulation is found, measures should be taken against it," he said.

He also mentioned that while the government aims for electricity production to reach 23,000MW, the figures include contributions from captive power.

"Petrobangla has been making the right proposals, but they are often changed for political reasons. There is no gas, yet power plants are being set up, and agreements have been made to supply gas under pressure," he added.

Tamim criticised what he termed "information terrorism" in various areas and argued that the previous government's plan for 9% GDP growth in the power sector over 20 years was based on an unrealistic high-income plan, with per capita income estimated at $12,000.

He also underscored the need to reduce import dependency and suggested increasing production in fields operated by companies like Chevron.

"There is a double tax in many areas, which is causing prices to rise. Businesses need to be protected; otherwise, there will be pressure on foreign currency reserves," he concluded.

IBFB Vice President MS Siddiqui pointed out that in times of crisis, Bangladesh often resorts to interim arrangements that lack transparency and competition.

"Institutions do not develop without competition. No one buys cars from Pragoti Industries except the government, which must purchase them at a higher price without a tender," he said.

Shawkat Aziz Russell, president of the Bangladesh Textile Mills Association, described the situation as complicated. He said a contract at a rate of Tk3 higher per unit for energy suppliers translates to an additional Tk3 lakh per hour for businesses.

"Gas supply needs to be ensured for the industry; factories are not running properly due to lack of gas," he said.

Razeeb Haider, director of the Bangladesh Textile Mills Association, highlighted the impact of subsidies amounting to Tk1.02 trillion.

"We are facing issues like gas theft, capacity charges, and sudden price hikes. We cannot simply pass these costs on to buyers. If 40-50% of capacity remains unused, businesses will suffer. The price of gas must be reduced; otherwise, industries will not survive," he added