BD plans gas-fired power plant in Bhola to cut LNG transportation costs

Bangladesh is reassessing its strategy for utilising surplus gas from the Bhola region, with state power officials arguing that building a gas-fired power plant near the source would be significantly cheaper than transporting the fuel, known as liquefied natural gas (LNG), to the capital.

The proposal was presented this week during a public hearing at the Bangladesh Energy Regulatory Commission (BERC), where the price of gas transported from Bhola was under review. Officials from the Bangladesh Power Development Board (BPDB) told regulators that constructing a 200-megawatt gas-based power plant in Bhola could save the state billions of taka over the next decade.

Currently, Bhola's Shahbazpur gas field produces more gas than local consumption, leaving around 30 million cubic feet per day unused. The government had earlier planned to convert this surplus into LNG and ship it by river to Dhaka and surrounding industrial areas to ease severe gas shortages. However, BPDB now says that the economics of that approach are unfavourable.

According to figures presented at the hearing, transporting 30 million cubic feet of gas annually in LNG form would cost about Tk 9.3 billion a year, or Tk 93 billion over a 10-year period. By contrast, generating electricity locally using the same gas and feeding it into the national grid would avoid most of those costs.

BPDB officials estimated that producing electricity from Bhola gas would cost roughly Tk 4 to Tk 5 per unit, with an additional transmission cost of about Tk 1.24 per unit to deliver power to Dhaka. That would place the total cost at around Tk 6.24 per unit—well below the equivalent cost of moving gas, such as LNG, which was cited at nearly Tk 30 per cubic metre.

Energy planners argue that such an approach would deliver dual benefits. Power generated in Bhola could be transmitted to the capital, easing electricity shortages, while gas supplies currently allocated to power plants around Dhaka could be redirected to industrial and household consumers, partially relieving the city’s acute gas crisis.

At present, a 200-megawatt power plant would require around 45 million cubic feet of gas per day. Officials told the hearing that integrating Bhola-based generation into the grid could help stabilise supply during peak demand periods.

The debate comes as Bangladesh struggles with a prolonged gas shortage, driven by declining domestic production, rising LNG import costs, and infrastructure constraints. Although Bhola holds substantial untapped gas reserves, the absence of a pipeline connection to the national grid has prevented large-scale exploitation.

BERC’s technical committee acknowledged that LNG transport from Bhola involves new and relatively untested technology in the local context, making precise cost assessments difficult. For now, it has proposed a ceiling price of Tk29.90 per cubic meter for transported gas, with final rates to be determined through competitive bidding, licensing approvals, and further public consultation.

Following the hearing, BERC Chairman Jalal Ahmed announced that he would review all stakeholder views and accept written submissions until early February. He confirmed that a preliminary feasibility study for a Bhola–Barishal gas pipeline had been completed, suggesting that pipeline development could offer a longer-term solution if funding hurdles are resolved.

Speakers at the hearing, including industry representatives and energy experts, strongly critiqued the LNG transport proposal, describing it as costly and risky. Several argued that specific companies had benefited from earlier approvals for LNG-based transport, prompting a re-evaluation in light of Bangladesh's strained public finances.

Bhola currently produces about 70 million cubic feet of gas per day, though existing wells across three fields have a combined potential capacity of 190 million cubic feet. State-owned Petrobangla has announced plans to drill 15 additional wells in the area, with officials projecting that daily output could eventually rise to between 300 and 400 million cubic feet once new wells and pipeline infrastructure are in place.

Despite ongoing feasibility studies, the Bhola–Barishal–Dhaka pipeline project has stalled due to funding constraints. Policymakers must choose between costly interim solutions and longer-term infrastructure investments until they resolve the bottleneck.

For Bangladesh, the debate over Bhola’s gas is emblematic of a larger energy challenge: how to balance speed, cost, and security at a time when fuel shortages are constraining economic growth and putting pressure on households and industries alike.