Gas supply to industries with captive power plants to be reduced in phases

The government has taken initiatives to reduce gas consumption in the industry’s own power generation system, known as captive power in phases and diverting to national power plants, energy division official said.

The energy division took the decision in light of the country’s increased capacity to generate surplus electricity and less efficiencies of the captive power plants. On the contrary, the power division is going to supply uninterrupted electricity and also considering to reduce electricity tariff in the industry.

It also discussed about captive power in a recent monthly co-ordination meeting of energy division. 

Sources said that earlier the Prime Minister Sheikh Hasina had instructed to gradually reduce giving gas connection to captive power plants and to divert the saved gas resources to national power plants. 

Based on the PM’s directives, gas consumption in captive power plants has dropped to 15.12 percent now from 17.10 percent in 2015. However, the government has also increased gas unit price to discourage captive power plants in the last few years. 

The country’s power generation capacity has increased as per the plan. However, the demand has not increased as per the forecast. The current grid electricity generation capacity stands at 20,383MW against the maximum demand of 14,000MW. Besides, 365MW of electricity is generating from renewable energy. 

Currently, there are around 3,000 captive power plants having capacity of producing 2800MW of electricity in different factories. Of these, around 2500MW captive power is gas-based and its gas consumption is 480mmcfd. The government is supplying gas at low cost to the captive power plants.

The State Minister for Power, Energy and Mineral Resources Nasrul Hamid has said, “The captive power plants are not so efficient. Its efficiency is only 15 percent, whereas national power plant efficiency is 55 percent. That’s why we are discouraging industrialists to use gas in captive power plants by increasing gas price.’

Nasrul further said “We have sufficient electricity. The government will ensure uninterrupted electricity for all at affordable price. No need to use gas in captive power plants.”

    A Power Division official said, “The government is now more concentrated on energy saving. Gas to captive power plants is being wasted. So, the government wants to use the gas in national power plants and reduce gas supply to captive power plants and gradually close it.

According to the ministry, in those industrial areas where uninterrupted power supply is possible, gas supply for captive power plants will be cut off. To this end Power distribution companies have been directed to prepare a list of such areas expeditiously. However, captive power plants will be available in areas where there is a shortage of power distribution system.

An additional secretary of the power division said that according to the plan, the power generation capacity will be 40,000 MW by 2030. Now if captive power is encouraged in industries, then grid electricity will not be used properly. This will cause huge financial loss of the government.’

In addition, a captive power plant, also called auto producer or embedded generation, is an electricity generation facility used and managed by an industrial or commercial energy user for their own energy consumption. 

Captive power plants are generally used by power-intensive industries where continuity and quality of energy supply are crucial, such as aluminum smelters, steel plants, chemical plants and others.

The government began to allow captive power generation in 1990 due to an unreliable power supply. However, the situation has changed. The country’s power generation capacity has increased more than four times.