Bangladesh: Tariff Reform and Inter-sectoral Allocation of Natural Gas

Sovereign Project | 44405-012

Summary

Bangladesh economy has been growing at an average rate of 6% in recent years and power shortages have been often cited as one of the main critical constraints for realizing the full growth potential of Bangladesh. Bangladesh has been experiencing power shortages as a result of the inadequate generation capacity; in 2009 the dependable power generation capacity was 3,800 MW whereas the peak demand was 5,500 MW. This has resulted in a peak deficit of 1,700 MW. About 54% of the power is generated using natural gas and extensive power cuts experienced in 2010 lead to use of more gas in the power sector. Consequently, gas supply was restricted to other important sectors such as fertilizer manufacturing, commercial establishments and households. Part of the problem is commitment made to supply gas to many sectors without adequate investments in the upstream gas field developments to augment gas supply.

Latest Project Documents


Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Public Communications Policy (PCP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Project Name Tariff Reform and Inter-sectoral Allocation of Natural Gas
Project Number 44405-012
Country Bangladesh
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 7758-BAN: Tariff Reform and Inter-sectoral Allocation of Natural Gas
Technical Assistance Special Fund US$ 225,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change
Sector / Subsector

Energy - Energy sector development and institutional reform

Gender Equity and Mainstreaming No gender elements
Description Bangladesh economy has been growing at an average rate of 6% in recent years and power shortages have been often cited as one of the main critical constraints for realizing the full growth potential of Bangladesh. Bangladesh has been experiencing power shortages as a result of the inadequate generation capacity; in 2009 the dependable power generation capacity was 3,800 MW whereas the peak demand was 5,500 MW. This has resulted in a peak deficit of 1,700 MW. About 54% of the power is generated using natural gas and extensive power cuts experienced in 2010 lead to use of more gas in the power sector. Consequently, gas supply was restricted to other important sectors such as fertilizer manufacturing, commercial establishments and households. Part of the problem is commitment made to supply gas to many sectors without adequate investments in the upstream gas field developments to augment gas supply. Gas prices are set below the market driven prices and that makes it difficult for the private sector to invest on gas field development and recover costs. Lower prices together with various governance issues related to gas pricing has contributed to weak enabling business environment in the gas sector.
Project Rationale and Linkage to Country/Regional Strategy Although Bangladesh is producing natural gas for over three decades, all of its major fields are underdeveloped and have not been properly delineated yet, and there are widely varying assessment of the country's natural gas resource potential. To meet growing demand and overcome production and transmission deficiencies, large scale investment has to be made in exploration, field development, and transmission and distribution network. Lack of proper coordination between upstream and downstream investments according to a long-term plan has resulted to gas shortages as well as under-utilization of the capacity of downstream infrastructure. A major concern in the gas sector is the security of adequate gas supply. Bangladesh Oil Gas and Mineral Corporation's (Petrobangla) estimates show that there will be serious shortfall in gas supply from the year 2015. The problem is not only that reserves and infrastructure to supply gas are insufficient, but also that, the absence of better policy mechanisms for allocating gas among different sectors, to ensure maximum benefits to the society .
Impact Improved economic efficiency in gas resource utilization
Project Outcome
Description of Outcome Accepted roadmap for gas pricing reforms and allocation of gas amongst different sectors
Progress Toward Outcome A consultation workshop was held in Dhaka on 3 June 2012 to discuss Tariff Reforms and Inter-sectoral Allocation of Natural Gas in Bangladesh, It was well-attended by prominent persons from the Energy and Mineral Resources Division and other related agencies including the Secretary of Energy.
Implementation Progress
Description of Project Outputs

tbd

New method/structures for setting tariff for entire supply chain of natural gas

Built awareness amongst stakeholders on the gas pricing reform

Estimated social benefits of gas in different sectors

Status of Implementation Progress (Outputs, Activities, and Issues) To enable further completion of reports submitted to the government, the TA closing was extended from 30 June 2012 to 31 December 2012.
Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services ADB will engage the consultants on an individual basis in accordance with its Guidelines on the Use of Consultants by ADB and its Borrowers, 2010, as amended from time to time and other arrangements satisfactory to ADB for engaging individual consultants. Disbursements under the S-PATA will be made in accordance with ADB's Technical Assistance Disbursement Handbook, 2010, as amended from time to time. Outline terms of reference are given in Appendix 3. The consultants will prepare inception, draft final and final reports.
Responsible ADB Officer Herath M. Gunatilake
Responsible ADB Department South Asia Department
Responsible ADB Division Energy Division, SARD
Executing Agencies
Ministry of Power, Energy and Mineral ResourcesWAPDA Building
Motijheel Commercial Area, Dhaka-1000
Bangladesh
Timetable
Concept Clearance -
Fact Finding 28 Feb 2010 to 13 Mar 2010
MRM -
Approval 08 Dec 2010
Last Review Mission -
Last PDS Update 27 Sep 2012

TA 7758-BAN

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
08 Dec 2010 - 08 Dec 2010 30 Jun 2012 31 Dec 2012 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
225,000.00 0.00 50,000.00 0.00 0.00 0.00 275,000.00 08 Dec 2010 213,280.65

Safeguard Documents

See also: Safeguards

No documents found.

Evaluation Documents

See also: Independent Evaluation

No documents found.


The Public Communications Policy (PCP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.