In 2005, only 44% of the population of Bangladesh had access to electricity at a per capita consumption of 171 kilowatt-hours (kWh), one of the lowest in South Asia. Inadequate energy supply was a key constraint on economic development. Natural gas—although pivotal in the economy since 1973 and shared 70% of the country’s primary energy in 2005—was under-used compared to the immense potential of domestic reserves. Insufficient investment, inadequate infrastructure, low extraction, lack of commercial orientation in tariffs, and poor maintenance all drove the underdevelopment of country’s gas sector. Bangladesh needed investment in the gas sector to grow the economy, meet increasing demand, and reduce poverty.
Against this backdrop, the Asian Development Bank (ADB) helped Petrobangla, a department of the Ministry of Power, Energy and Mineral Resources responsible for the exploration and development of the oil, gas, and mineral resources of the country, develop a $3 billion investment plan for 2002–2020 for the gas sector. The investment plan was aligned with the national gas sector reform roadmap (GSRR). ADB designed the Gas Transmission and Development Project as part of Petrobangla’s investment plan, and in October 2005, approved $230 million in two loans and the administration of a $5 million cofinancing grant from the government of Norway for the project.
The project had increased pace of economic development as envisaged impact, and enhanced use of natural gas by residential, industrial, and commercial users as expected outcome. It had four planned outputs: (i) improved and expanded gas transmission and distribution networks in the project area; (ii) gas field appraisal to update estimated reserves and determine the location of future drilling activities; (iii) enhanced financial performance, governance, and efficiency indicators of the gas sector utilities through GSRR capacity building and implementation; and (iv) improved air quality.
At completion, the project achieved 7 of its 8 output targets. A total of 345 kilometers (km) of gas transmission line, with an aggregate 342 MMCFD gas throughput, and 270 km of gas distribution network were constructed. However, the installation of 4 compressor stations was dropped because of a significant increase in the bid prices. Seismic surveys were undertaken in 5 gas fields, as targeted. Enhanced capacity of the gas sector utilities and the implementation of GSRR helped reduce system losses, enabled more efficient operation and management of the gas entities, and catalyzed the approval of relevant policies such as the Bangladesh Gas Act of 2010, the Gas Development Fund Policy of 2012, and other regulations to streamline processes and attract private investment in liquified petroleum and natural gas. Distribution networks installed by the project, although significantly delayed, allowed the households to shift from firewood to gas burners, improving ambient and indoor air quality.
Improvements in the energy infrastructure due to the project connected the energy-starved western region and helped meet the energy demand in the rapidly growing industrial and commercial zones around the capital city of Dhaka. Utilization of some project outputs was affected by the domestic gas supply shortage, which led government to get into huge importation agreements. Nevertheless, current interventions and energy sector plans indicate a crucial role for the facilities established under the project as the country’s demand for energy continues to increase.
The project had several gas transmission companies as executing agencies: the Gas Transmission Company Limited for output 1; the Bangladesh Gas Fields Company Limited and the Sylhet Gas Fields Limited for output 2; the Pashchimanchal Gas Company Limited for output 3; and the Petrobangla and Energy and Mineral Resources Division of the Ministry of Power, Energy and Mineral Resources for output 4 and the grant component. Thirteen project management units took charge of day-to-day project implementation.
