Upload
duongmien
View
216
Download
2
Embed Size (px)
Citation preview
SUMMER INTERNSHIP REPORT
A Bankable Report on Energy Efficiency Finance
Program - Bangladesh
Sector Analysis and Financial analysis of Energy Efficiency measures for enhancing the capacity of financial institutions in understanding Energy Efficiency measures used in Industries in Bangladesh
UNDER THE GUIDANCE OF
Ms Farida Khan (Sr. Fellow), CAMPS, NPTI
& Mr Sumedh Agarwal, (Sr. Consultant), Tetratech
Submitted by
Piyush Kumar Jain
ROLL NO: 1031271
MBA (POWER MANAGEMENT)
(Under the Ministry of Power, Govt. of India)
Affiliated to
MAHARSHI DAYANAND UNIVERSITY, ROHTAK
AUGUST 2013
1 A Bankable report on Energy Efficiency finance program - Bangladesh
DECLARATION
I, Piyush Kumar Jain, Roll No. 1031271 Class M.B.A (Power Management) of the National
Power Training Institute, Faridabad, hereby declare that the Summer Training Report entitled ―A
Bankable report on Energy Efficiency finance program - Bangladesh ― is an original work and
the same has not been submitted to any other Institute for the award of any other degree.
A Seminar presentation of the Training Report was made on “A Bankable report on
Energy Efficiency finance program – Bangladesh” and the suggestions as approved by the
faculty were duly incorporated.
Date:
Place: Faridabad, Haryana
Presentation In charge Signature of the Candidate
(Faculty)
Countersigned
Director/Principal of the Institute
2 A Bankable report on Energy Efficiency finance program - Bangladesh
3 A Bankable report on Energy Efficiency finance program - Bangladesh
Acknowledgement
I would like to take this opportunity to express my respect and gratitude towards Mr. Rakesh
Kumar Goyal (Director, TetraTech ES Inc.) for consistently providing his guidance, support,
encouragement and showing keen interest and faith in my work. I am grateful to my mentor,
Mr. Sumedh Agarwal (Senior Consultant), who not only extended his precious guidance and
suggestions but his incredible help coupled with relentless efforts, constructive criticism and
timely disapprobation’s resulted in ultimate desired efficacy. A special thanks to Mr. Ritesh
Singh (Senior Consultant), Ms Abhineeta Srivastava and Mr. Sachin George for their precious
support while pursuing my internship.
I also thank Mr. S.K Choudhary, Principal Director (CAMPS), Mrs. Manju Mam (Director), Mrs.
Indu Maheshwari (Dy. Director), Ms. Farida Khan (Sr. Fellow) for providing me such a nice
opportunity to work with an esteemed organization. Special thanks are due to all other staff
members of Tetratech ES Inc., and my entire faculty, who helped me directly or indirectly in
completion of the project.
I place on record my deep sense of gratitude to the management of Tetratech ES Inc. for giving
me an opportunity to pursue my summer training in their organization and for their valuable
support.
4 A Bankable report on Energy Efficiency finance program - Bangladesh
List of Tables Table 1: Present Practice in Bangladesh – Textile Industry ............................................................... 24
Table 2: Present Practice in Bangladesh – Leather Industry ....................................................................... 25
Table 4: Cold Rolling Mills in Bangladesh Source: Sodev Consult, Field Survey ............................................... 32
Table 5: Major end products of the Steel and Iron Industry .................................................................. 33
Table 6: Sources of energy (Iron and Steel Industries) ............................................................................... 34
Table 7: Bangladesh Iron and Steel Industry – Energy Conservation Measures ........................................ 36
Table 9: Specific Energy Consumption - Global Benchmark Values: Iron & Steel Industry ....................... 37
Table 10: Distribution of Human Resource by Education Level .................................................................. 38
Table 11: Process Used in Ceramics Industry ............................................................................................. 44
Table 12: Sources of Energy (Ceramics sector). .......................................................................................... 45
Table 13 : Present Practice in Bangladesh - Ceramic Industry .................................................................... 46
Table 16: Total Production in last Five Years ......................................................................................... 50
Table 17: Bangladesh Basic Chemical Industry Production (MT/Day) ........................................................ 53
Table 18: Bangladesh Paper Industry - Equipment’s/Machineries currently in use ................................... 54
Table 19: Sources of Energy (Chemical, Fertilizer, Pulp and Paper, Plastic Sector) .................................... 56
Table 20 : Present Practice in Bangladesh – Chemical, Plastic and Paper Industry .................................... 57
Table 21: Jute Mills in Bangladesh Source: Bangladesh Jute Mill Corporation......................................... 62
Table 22 : Present Practice in Bangladesh Jute Industry ............................................................................ 66
Table 23 : Present Practice in Bangladesh Sugar Industry .......................................................................... 67
Table 24: Sources of energy (Agro industries) ............................................................................................ 68
Table 26: Distribution of Human Resource by Education Level .................................................................. 70
Table 27: General Assumptions used for Financial Analysis ....................................................................... 79
5 A Bankable report on Energy Efficiency finance program - Bangladesh
List of Figures Figure 1: Role of RMG in Total Export ......................................................................................................... 23
Figure 2: Electrical Energy Usage Pattern in Textile Industry, Bangladesh ................................................. 27
Figure 3: Thermal Energy Usage Pattern in Textile Industry, Bangladesh .................................................. 28
Figure 4: Profile of People Involved in Iron and Steel Company ................................................................ 37
Figure 5: Total Investment in Ceramics and Glass Sector ........................................................................... 40
Figure 6: Import details of Ceramics Products ........................................................................................... 40
Figure 7: Manufacturing and Production Process of Ceramics in Bangladesh ........................................... 43
Figure 8: Total investment projects in Chemical Sector registered with BOI during the period from FY
2005-06 to 2011-12..................................................................................................................................... 49
Figure 9: The various sections of Fourdrinier Machine. ............................................................................. 54
Figure 10: Local Investment Projects registered with BOI during the period from FY 2005-06 to 2011-12
in Agro-based industries Source 1: Board of Investment ........................................................................... 61
Figure 11: Section wise Energy Consumption - Sugar Industry .................................................................. 64
Figure 12: Section wise Energy Consumption - Jute Industry .................................................................... 64
Figure 13 : Profile of People Involved in Agri Sector Segment ................................................................... 69
Figure 14: Home page of a random Financial and Economic Analysis Tool................................................ 73
Figure 15: Technical Input Sheet showing specifications in a Financial and Economic Analysis Tool. ....... 74
Figure 16: Assumptions and Calculations in Technical Input Sheet............................................................ 75
Figure 17: Financial Input Sheet.................................................................................................................. 75
Figure 18: Financial Analysis sheet ............................................................................................................. 77
Figure 19: Summary of Results of Financial & Economic Analysis .............................................................. 78
Figure 20: Gas Demand and Supply Gap ..................................................................................................... 80
6 A Bankable report on Energy Efficiency finance program - Bangladesh
Table of Contents
DECLARATION ............................................................................................................................................... 1
CERTIFICATE ................................................................................................... Error! Bookmark not defined.
Acknowledgement ....................................................................................................................................... 3
List of Tables ................................................................................................................................................ 4
List of Figures .............................................................................................................................................. 5
Table of Contents ......................................................................................................................................... 6
Executive Summary ..................................................................................................................................... 9
Chapter 1: Introduction ............................................................................................................................ 11
1.1 About the Project ............................................................................................................................ 11
1.2 Problem Statement: ........................................................................................................................ 12
1.3 Objective: ........................................................................................................................................ 12
1.4 Scope: .............................................................................................................................................. 12
1.5 About the Organization:.................................................................................................................. 13
Chapter 2: Literature Review and Policy Framework ............................................................................ 14
2.1 Literature Review ............................................................................................................................ 14
2.2 Policy Framework ............................................................................................................................ 14
Chapter 3: Energy efficiency & its key drivers. ....................................................................................... 17
3.1 What is Energy Efficiency? .............................................................................................................. 17
3.2 Global drivers for Energy efficiency Implementations ................................................................... 17
3.3 Need for Energy Efficiency in Bangladesh ...................................................................................... 18
Chapter 4: Sector Analysis ........................................................................................................................ 21
Sector 1: Textile, Garments, Leather and related Industries .......................................................... 22
4.1.1 General Description .................................................................................................................... 22
4.1.2 Type of Industries........................................................................................................................ 23
4.1.3 End Products ............................................................................................................................... 23
4.1.4 Description of Technology.......................................................................................................... 24
4.1.5 Sources of Energy ........................................................................................................................ 26
4.1.6 Opportunities for Energy Conservation ...................................................................................... 27
7 A Bankable report on Energy Efficiency finance program - Bangladesh
4.1.7 Human Resource Skill Assessment .............................................................................................. 29
Sector 2: - Iron and Steel Industries ........................................................................................................ 30
4.2.1 General Description: ................................................................................................................... 30
4.2.2 Type of Industries: ...................................................................................................................... 31
4.2.3 End Products: .............................................................................................................................. 32
4.2.4 Description of Technology: ......................................................................................................... 33
4.2.5 Sources of Energy: ....................................................................................................................... 34
4.2.6 Opportunities for Energy Conservation: ..................................................................................... 35
4.2.7 Human Resource Skill Assessment: ............................................................................................ 37
Sector 3: Ceramics and Glass Sector ........................................................................................................ 39
4.3.1 General Description: ................................................................................................................... 39
4.3.2 Type of Industries........................................................................................................................ 40
4.3.3 End Products: .............................................................................................................................. 42
4.3.4 Description of Technology: ......................................................................................................... 42
4.3.5 Sources of Energy: ....................................................................................................................... 45
4.3.6 Opportunities for Energy Conservation: ..................................................................................... 46
4.3.7 Human Resource Skill Assessment: ............................................................................................ 47
Sector 4: Chemical, Fertilizer, Pulp and Paper, Plastic Sector ............................................................... 49
4.4.1 General Description: ................................................................................................................... 49
4.4.2 Type of Industries: ...................................................................................................................... 50
4.4.3 End Products: .............................................................................................................................. 52
4.4.4 Description of Technology: ........................................................................................................ 54
4.4.5 Sources of Energy: ....................................................................................................................... 56
4.4.6 Opportunities for Energy Conservation ...................................................................................... 57
4.4.7 Human Resource Skill Assessment: ............................................................................................ 59
Sector 5: Agro-industries, Including Sugar and Jute Industries ............................................................ 61
4.5.1 General Description .................................................................................................................... 61
4.5.2 Type of Industries........................................................................................................................ 62
4.5.3 End Products: .............................................................................................................................. 63
4.5.4 Opportunities for Energy Conservation ...................................................................................... 64
4.5.5 Description of Technology .......................................................................................................... 65
4.5.6 Sources of Energy: ....................................................................................................................... 68
8 A Bankable report on Energy Efficiency finance program - Bangladesh
4.5.7 Human Resource Skill Assessment: ............................................................................................ 69
Chapter 5: Financial Analysis ................................................................................................................... 72
5.1 Financial Analysis Tools: .................................................................................................................. 72
5.2 General Description of the tools ..................................................................................................... 72
Chapter 6: Findings & Recommendations ............................................................................................... 80
Chapter 7: Conclusion ............................................................................................................................... 82
Annexure 1: Financial Analysis of Energy Conservation Measures ...................................................... 83
1. Installation of High Efficiency Motors .............................................................................................. 83
2. Installation of Air Compressor with VFD Controller ........................................................................ 88
3. Replacing old inefficient boilers ......................................................................................................... 92
4. Replacing Efficient T5 lights instead of T8 lights .............................................................................. 97
9 A Bankable report on Energy Efficiency finance program - Bangladesh
Executive Summary
Many people assume that industries are already relatively energy efficient given the competitive
pressures under which they operate and their technical capability to use energy efficiently. But
there is in fact considerable scope to reduce the amount of energy used to manufacture most
commodities. Many of these reductions can be achieved very cheaply or even at a profit once the
value of the savings is taken into account. The International Energy Agency (IEA) and the
Intergovernmental Panel on Climate Change (IPCC) have estimated that five energy-intensive
industrial subsectors could achieve savings of between 10% and 40% of their current energy use
worldwide. In addition, further savings could be achieved by improving systems that are
common to a number of industries such as electric motors and steam boilers, increasing the use
of combined heat and power (CHP), integrating processes more effectively, recycling more, and
recovering more wasted energy (IEA, 2007a; Bernstein et al., 2007).
Historically, energy efficiency has improved, and emission intensities have reduced, as countries
have become more economically developed. This trend is expected to continue. Improvements in
industrial energy efficiency can significantly contribute to environmental, social and economic
sustainable development goals. They are an integral part of national socio-economic
development (see for example Winkler et al., 2008). As the IPCC has noted: ―it is often more
cost-effective to invest in end-use energy efficiency improvement than in increasing energy
supply to satisfy demand for energy services. Efficiency improvement can have a positive effect
on energy security, local and regional air pollution abatement, and employment.‖ And as
economies have to cope with the challenges of high energy prices and rapid increases in energy
demand, energy efficiency is simply economically efficient. Improving energy efficiency is also,
at a global level, the most cost effective way of reducing greenhouse gas GHG emissions.
Accelerating improvements in energy efficiency to meet GHG mitigation goals can also speed up
socio-economic development and reduce poverty.
On the same ground Asian Development Bank has launched Bangladesh – Industrial Energy
Efficiency Finance Program which will contribute to reducing Bangladesh's energy supply-
demand gap and mitigating climate change. The Asian Development Bank (ADB) has approved
the following non-sovereign loan facility and technical assistance. The loan facility will go to the
Industrial and Infrastructure Development Finance Company and other financial institutions for
on lending to eligible energy efficiency projects in seven target industries: brick making, textiles,
steel, cement, ceramics, chemicals, and Agri-industries. The program will contribute to reducing
Bangladesh's energy supply-demand gap and mitigating climate change.
Industrial sector of Bangladesh has demonstrated impressive growth over the last couple of
decades, primarily producing garments, textiles, chemicals, fertilizers, pharmaceuticals, tea
processing, paper & newsprint, cement, light engineering, sugar and leather goods. Most
important for Bangladeshi export are garments & knitwear, frozen fish, jute & jute products,
pharmaceutical products, tea, leather products, handicrafts and chemicals
It is interesting to know that primary driver for energy efficiency in Bangladesh is not the cost of
energy but availability of energy. In contrast, in most of the countries for industries energy
availability is concern but driving force for efficiency is high cost of energy.
10 A Bankable report on Energy Efficiency finance program - Bangladesh
This report is an attempt for explaining the obligation of implementing Energy Efficiency
Measures which apart from regulating the energy consumption, also ensures the enhancement of
economic benefits to the Industries. The report has thrown light on the energy conservation
measures which are economically viable and thereby enables the clients which are the financial
institutions to facilitate the capital investments to the industries for the employment of these
measures.
.
11 A Bankable report on Energy Efficiency finance program - Bangladesh
Chapter 1: Introduction
1.1 About the Project
Bangladesh – Industrial Energy Efficiency Finance Program: On 14 December 2011,
the Asian Development Bank (ADB) has approved the following non-sovereign loan facility and technical
assistance.
Description: The loan facility will go to the Industrial and Infrastructure Development Finance Company
and other financial institutions for on lending to eligible energy efficiency projects in seven target industries:
brick making, textiles, steel, cement, ceramics, chemicals, and Agri-industries. The program will contribute to
reducing Bangladesh's energy supply-demand gap and mitigating climate change.
Finance: $30 million loan facility from ordinary capital resources. $1.5 million reimbursable advance from
ADB‘s Technical Assistance Special Fund to help identify bankable efficiency projects in target industries.
Financing of up to $70 million from commercial sources is expected, including equity contributions from
industrial sponsors.
Project Specific: The Asian Development Bank (ADB) engaged TetraTech ES, Inc. United States in
association with Sodev Consult of Bangladesh, National Productivity Council, India and Electrical Research
Development Association, India to provide technical assistance (TA) to the Industrial and Infrastructure
Development Finance Company Limited for Bangladesh Industrial Energy Efficiency Finance Program.
The ADB‘s Bangladesh Industrial Energy Efficiency Program focuses on six target industrial sectors that show
large savings potential in Bangladesh. These sectors which happen to be highly energy intensive have
tremendous opportunities to reengineer technology processes, manpower and capacity. These include:
Sector 1: Textiles, garments, leather, and related industries
Sector 2: Steel, iron, and related industries
Sector 3: Agri-industries, including food processing, sugar, pulp and paper, and jute
Sector 4: Ceramics, glass, and related industries
Sector 5: Chemicals, fertilizers, pulp and paper, plastic, and related industries
Sector 6: Cement, clinker, and related industries
Out of these six sectors this report covers the complete analysis of five sectors omitting the Cement, clinker,
and related industries.
The focus under this project is to suggest the global best practices in energy efficiency improvement
technologies relevant to these sectors. This will include industrial sector feasibility studies for target clients
and prepare reports based on outcome.
The overarching ideology is to make the case from reports that can be utilized for creation of the business
model acceptable to financial institutions to help attain objectives.
12 A Bankable report on Energy Efficiency finance program - Bangladesh
1.2 Problem Statement:
The continuous increase in Energy Demand and supply gap is the major issue that the developing
nations in today‘s era are facing. The capacity addition can be a solution but it requires huge
capital investments and resources which are limited for the developing nations like Bangladesh
Countries. This report outlines the viability of Energy Efficiency in providing the solution to
these issues as a integral part of Demand Side management.
1.3 Objective:
Industrial Sector Analysis and Brief Study of Energy Efficiency measures used in Industries.
Enhancing the capacity of FI‘s in understanding energy efficiency measures by providing the
Financial Analysis.
1.4 Scope:
The project includes the overview of researched country‘s industrial sectors (Bangladesh) with
regard to the necessity of Energy Efficiency Measures for sustaining the growth benchmarks that
the country has maintained in the past decade. The Sector analysis done provides an insight to
the macros and micros affecting the various sectors discussed and determined drivers for its
growth.
This report is an attempt for explaining the obligation of implementing Energy Efficiency
Measures which apart from regulating the energy consumption, also ensures the enhancement of
economic benefits to the Industries. The report has thrown light on the energy conservation
measures of these which are economically viable and thereby enables the clients which are the
financial institutions to facilitate the capital investments to the industries for the employment
measures.
It has audited the current operational practices prevailing in the industries and suggested the
measures to improve them. This required a very comprehensive audit framework and
methodology .This methodology is explained briefly in this report. This methodology can be
implemented in various other programs ensuring their success.
The Financial Analysis done for the energy conservation measures provides the FI‘s an
understanding to these technical measures in terms of Simple pay period , IRR and other savings
highlighted in the tools and helps them in deciding their clients for loan facilities throughout the
project life time. The tools developed are designed so flexibly that they can be customized for
other countries and scenarios also.
13 A Bankable report on Energy Efficiency finance program - Bangladesh
1.5 About the Organization:
Tetra Tech, Inc. was founded in 1966 to provide engineering services related to waterways,
harbours and coastal areas. Over the past 40 years, the Company has substantially increased the
size and scope of its business and expanded its service offerings through a series of strategic
acquisitions and internal growth.
Tetra Tech now provides environmental services, water/wastewater management, and
infrastructure services including power, security design, and outsourced technical services.
From the beginning, Tetra Tech has attracted the best and brightest minds in science and
engineering, and has always focused on bringing innovative solutions to our clients' most
complex needs.
Today, Tetra Tech has approximately 13,000 employees located in 330 offices worldwide.
Tetra Tech is currently working in more than 50 countries to address complex challenges in an
environmentally responsible – and sustainable – manner. In addition to recent work in India, the
firm has significant experience in Afghanistan, Bangladesh, China, Indonesia, Iraq, Korea, the
Pacific Islands, Pakistan, the Philippines, Taiwan and Thailand.
Tetra Tech also has strong relationships with multilateral and bilateral funding agencies such as
the Japan Agency for International Cooperation (JICA), the World Bank (WB) and the Asian
Development Bank (ADB).
Tetra Tech supports a broad range of clients, including United States Municipal and County
Governments, Indian Government and regulatory agencies, urban local bodies, and public &
private sectors.
The strong presence in India with a close working relationship with more than 300 Indian
industries, municipal corporations, civic bodies, regulatory agencies, financial institutions and
NGO‘s is a key to the success in the Indian market.
14 A Bankable report on Energy Efficiency finance program - Bangladesh
Chapter 2: Literature Review and Policy Framework
2.1 Literature Review
Energy efficiency in the industrial sector in Bangladesh is a new concept. In the last few years,
donor agencies funded some studies in Bangladesh to estimate the potential of energy saving.
International Finance Corporation got energy audit conducted of about 20 industries in about 2
years‘ time. There is some significant study has been carried out for energy efficiency in brick
sector. Some of the industries are moving on to implement the recommendation also now.
However there is one common outcome of all studies that have been conducted so far in
Bangladesh for energy efficiency is that there is high potential.
This potential of energy saving is meant to be reduced by implementing the new technologies
and measures to ensure the sustainable growth of the country. The potential of every sector is
reviewed in the Sector Analysis and the information about all the macroeconomic aspects are
taken from the published annual reports of the public sector units in the country and other
researches done for determining the prospective of the sectors in different turfs. The deep
analysis uncovering the ground realties was possible because of the Energy Audit reports made
by the Tetratech Team working there actively in Bangladesh.
The Energy Efficiency Measures are suggested by the experienced consultants hired by the
Tetratech Consultants. The literatures work regarding these measures are also framed in
consultation with them.
Financial and Economic Analysis for the opportunities of energy conservation is done with the
help of the tools developed for each energy conservation measure used. While developing these
tools, significant considerations were taken from the financial model developed by U.S
Department of Energy‘s Industrial Technologies Program (ITP) which in collaboration with
Lawrence Berkeley National Laboratory that aimed to help industries to reduce energy intensity
and carbon emissions.
The Energy Audit methodology is framed by the Tetratech consultants and is described in very
comprehensive manner.
2.2 Policy Framework
Sustainable & Renewable Energy Development Authority Act (SREDA)
The concept of energy efficiency is new to Bangladesh Industry. Energy efficiency and
renewable energy are said to be the twin pillars for sustainable energy. There was no institutional
framework for renewable energy before 2008; therefore the renewable energy policy was
adopted by the government. According to the policy an institution, Sustainable & Renewable
15 A Bankable report on Energy Efficiency finance program - Bangladesh
Energy Development Authority (SREDA), was to be established as a focal point for the
promotion and development of sustainable energy, comprising of renewable energy, energy
efficiency and energy conservation. Establishment of SREDA is still under process. Power
division is to facilitate the development of renewable energy until SREDA is formed.
Other Energy Efficiency Initiatives:
The government has taken a number of initiatives for efficient energy use and reduced
consumption of energy.
Steps have been taken to revise the ‗Building Code‘ inserting energy efficiency and solar
energy issues
Initiatives have been taken in order to build awareness amongst the students, by
incorporating Energy Efficiency and Solar Energy issues in the academic curricula of
schools, madrasas and colleges
Installation of solar panels in the government, semi government and autonomous
organizations within the next 3 years
Use of CFL bulb in all ministries and power sector entities
Conventional street lights to be replaced by LED and solar lights subsequently
Public awareness for energy conservation
The gradual discontinuation of incandescent bulb and electric heater
Limiting the use of air conditioners, or keeping temperature within 25 degrees C
Encouraging the business community for using solar energy
Introduction of energy star rating system in the electric appliances through BSTI
Discouraging the use of neon sign in the markets and shopping malls at night
Closing of markets and shopping malls within 8 p.m.
Industrial Sustainability
Ministry of Industries, Government of the People‘s Republic of Bangladesh (GOB) is primarily
responsible for developing new policies & strategies for promotion, expansion and sustainable
development of industrial sector of the country. After the National Industrial Policy (NIP) 2005,
the present government has formulated the National Industrial Policy 2010. The NIP aims to
achieve the Millennium Development Goals (MDGs) by reducing poverty and hunger less than a
half by 2017 through adaptation of short, medium and long term programmes in the industrial
sector.
The NIP aims to increase the GDP contribution of the industrial sector from present 28% to 40%
and increase the proportion of the labour force employed from the present 16% to 25% by 2021.
The NIP has identified the labour‐intensive industries i.e. the Small and Medium Enterprises
(SMEs) as one of the thrust sectors to sustain the industrial growth. The NIP aims to develop an
environmental friendly industrial sector and ensure compliance by the industrial sectors with
relevant national environmental laws and also with the health, safety and other standards
16 A Bankable report on Energy Efficiency finance program - Bangladesh
required under the rules of the World Trade Organization (WTO).
Supposition
The purpose of the above description is to make a point that there are hardly any efforts for
energy efficiency in the industrial sector in Bangladesh. In the last few years, donor agencies
funded some studies in Bangladesh to estimate the potential of energy saving. International
Finance Corporation got energy audit conducted of about 20 industries in about 2 years‘ time.
There is some significant study has been carried out for energy efficiency in brick sector. Some
of the industries are moving on to implement the recommendation also now. However there is
one common outcome of all studies that have been conducted so far in Bangladesh for energy
efficiency is that there is high potential
17 A Bankable report on Energy Efficiency finance program - Bangladesh
Chapter 3: Energy Efficiency & its key drivers of esh Sector
3.1 Energy Efficiency Energy efficiency is the goal of efforts to reduce the amount of energy required to provide
products and services. It is basically the percentage of total energy input to a machine or
equipment that is consumed in useful work and not wasted as useless heat.
To economists energy efficiency has a broader meaning; it encompasses all changes that result in
decreasing the amount of energy used to produce one unit of economic activity. Energy
efficiency is associated with economic efficiency and includes technological, behavioural and
economic changes.
According to the ‗National Action Plan for Energy Efficiency‘ published by U. S. Department of
Energy and Environmental Protection Agency (EPA), Energy Efficiency (EE) refers to using less
energy to provide the same or improved level of service to the energy consumer in an
economically efficient way.
3.2 Global drivers for Energy efficiency Implementations
Carbon reduction mandate or any other environmental imperative: To contain global warming, United Nations Framework for Climate Change (UNFCCC) issues
Carbon Credits to those companies which reduce their Greenhouse gas emissions below a certain
benchmark level. Those companies getting the carbon credits can immensely benefit by selling
the carbon credits to the international market. Sometimes reduction in GHG emission level is
mandated by the Government in many sectors. For them adapting energy efficient programs is
the most profitable way out.
Fuel Supply Shortages: Fuel of any kind is limited to a certain extent. But the demand is ever increasing, so to cut down
the demand and cope up with the limited supply of fuel energy efficiency programs are the only
way out.
Energy Efficiency measures acts as insurance: Energy efficiency assumes significance for any nation in the current environment of shortages
and concerns over climate change. Increased energy efficiency enhances energy security while
also leading to a sustainable economic growth. As energy efficiency leads to reduction in the use
of energy for facility owners, there is a business model embedded in the implementation.
Energy Efficiency performance Standard:
18 A Bankable report on Energy Efficiency finance program - Bangladesh
Minimum performance standards are maintained in case of energy efficient appliances. It earns
good brand equity of the company.
Low Payback Period
Initial investment for energy efficiency programs might be a bit higher than conventional ones,
but the return that can be achieved in terms of energy savings are many times higher than what is
invested. Most importantly the payback period is low. Within a maximum of five years most
energy efficient technologies start reaping results.
Reduced Operating Costs The operating cost gets reasonably reduced after adaptation of EE programs.
Lower Maintenance Costs & Extended Equipment Lives Efficient equipment necessarily ensures smooth working of the same. It consumes less energy
producing the same output.
Increased Productivity In case of energy efficient equipments, the consumption level goes down, keeping the production
level same. This implies for the same energy consumption level the productivity actually goes
up, increasing the profitability of the company keeping the expenses constant.
3.3 Need for Energy Efficiency in Bangladesh
Bangladesh is a rapidly growing developing country with a population of 142.32 million and a
per capita GDP of 1700 USD (PPP). The World Bank projects that despite an unfavourable
global economy, GDP of Bangladesh will grow at around 6% in FY 13. This places Bangladesh
among the top 35 out of 150 countries in IMF‘s October 2012 World Economic Outlook.
Bangladesh has maintained 6% plus growth over most of the last 10 years through strong export
and remittance growth. Growth has been led by industry and services sectors. Sustained growth
in recent years has generated higher demand for electricity, transport, and telecommunication
services, and contributed to widening infrastructure deficits and investment for future growth.
Goldman Sachs expects that within the next 50 years, 5 of the G-7 nations will be replaced by
emerging economies. Many of these economies have large population, cheap labor and high
levels of productivity. The Bangladeshi economy possesses these characteristics, leading
Goldman Sachs to include the country in its list of ―The Next Eleven (or N-11)‖ - economies that
are expected to have a high potential for driving the global growth in the 21st century. Similarly,
Citi Group has also included Bangladesh in its list of 3G (Global Growth Generator) countries.
Given the immense potentials of Bangladesh, there has been a lot of interest in Bangladesh as a
new destination for foreign investments.
19 A Bankable report on Energy Efficiency finance program - Bangladesh
Despite impressive showing in industrial growth, power and gas shortages have undermined
external competitiveness. The immediate problem of the electricity sector is that the demand
cannot be met. The forecasted electricity growth rate is 10%. The main demand growth is in the
industrial sector. Bangladesh Power Development Board (BPDB) is finding it very difficult to
maintain uninterrupted electricity supply as its generating units are mostly old (some are over 35
years old). Moreover, the generating units have become unreliable due lack of spare parts, proper
maintenance, etc. Facing difficulties regarding power, many industries have to plan for captive
generation. About 1100 MW, which is one third of grid capacity, is captive generation in
Bangladesh. These captive generators run on gas and are putting tremendous pressure on the gas
grid especially in some industrial clusters.
Despite having significant reserves of natural gas to meet present demand, Bangladesh is failing
to develop its gas resources as required to meet increasing demand. Thus, lack of transmission
facilities often cause gas shortages in different parts of the country, especially in those with the
industrial clusters. These shortages are handled by shutting down big loads like power plants and
fertilizer plants.
Based on the growth projection and potential demand, the Bangladesh government has set a
target electricity production capacity of 20,000 megawatts by the year 2020. Because securing
new sources of energy will take time, Bangladesh is in process of promoting more efficient uses
of existing resources, both on the supply and demand sides. On the supply side, power plants
have to become more efficient. On the demand side, Industries have been made key focus area
for energy efficiency initiatives, as industries directly and indirectly consume about 50% of
Bangladesh‘s gas. Industries also directly consume other types of fossil fuels: oil for captive
generators but also coal (the brick-making industry imports 2–3 million tons of coal per year).
There are hardly any efforts for energy efficiency in the industrial sector in Bangladesh. In the
last few years, donor agencies funded some studies in Bangladesh to estimate the potential of
energy saving. International Finance Corporation got energy audit conducted of about 20
industries in about 2 years‘ time. There is some significant study has been carried out for energy
efficiency in brick sector. Some of the industries are moving on to implement the
recommendation also now. However there is one common outcome of all studies that have been
conducted so far in Bangladesh for energy efficiency is that there is high potential.
Today many industries in Bangladesh are unable to start production or enhance production due to
time to time restrictions on release of new gas/electricity connection or in restriction for increase
of load. The situation is so alarming that about 135K domestic flats could not be occupied due to
non-release of domestic gas connections. The industries which are getting sufficient
gas/electricity and have no plan for expansion, energy efficiency investment to them is
unnecessary.
Following are the key drivers at the present for industries in Bangladesh to implement energy
efficiency measures in order of importance:-
20 A Bankable report on Energy Efficiency finance program - Bangladesh
Expansion plan: - Due to demand supply gap it is difficult for the industries to get either
electricity or gas load increased.
Replacement of old Equipment’s: -Progressive industries appreciate the importance of
energy saving and wishes to purchase energy efficient machines.
Easy and Soft Loan: - Industries feel since there is an arrangement for easy and soft
financing in the program. Along with this they may be able to get finance for their
expansion plan and/or for replacement of some of the old machineries.
Loss of production due to low gas pressure.
To reduce cost and become competitive (Biggest low cost threat is coming from
China).
To improve Quality to increase export.
Concern for increasing demand supply gap in both gas and electricity: - GOB in
time to come may come out with some regulations/incentive.
21 A Bankable report on Energy Efficiency finance program - Bangladesh
Chapter 4: Sector Analysis
This report covers the detailed study of five sectors which happen to be highly energy intensive
have tremendous opportunities to reengineer technology processes, manpower and capacity.
These include:
Sector 1: Textiles, garments, leather, and related industries.
Sector 2: Steel, iron, and related industries.
Sector 3: Agri-industries, including food processing, sugar, pulp and paper, and
jute.
Sector 4: Ceramics, glass, and related industries.
Sector 5: Chemicals, fertilizers, pulp and paper, plastic, and related industries.
22 A Bankable report on Energy Efficiency finance program - Bangladesh
Sector 1: Textile, Garments, Leather and related Industries
4.1.1 General Description Bangladesh Textile and Garments industry
contribute 13% to the total GDP of country‘s
economy. One of the major sources of export
earnings, this sector positions the country as a
world‘s second largest apparel exporter of western
brands after China.
Apart from liberalization initiated as a policy
measure by the Government, two main reasons
behind this phenomenal growth in this sector are:
Cheap availability of labor and lower energy costs.
Labor cost is only 23 cents/hr. whereas, in India,
Pakistan and China the labor costs are 43, 41 and
89 cents/hour, respectively. Gas burned energy
costs in Bangladesh is less than 2 cents/kWh in
comparison to 9.33, 6.72 and 7.84 cents/ kWh in
India, Pakistan and China,
respectively. Environmental and safety compliance
has just started to get required attention. Past growth movements can also be attributed to
moderate standards set for labor safety and environment compliance.
Continued growth in this sector has also been witnessed by the trade encouragement policies of
the western countries such as WTO Agreement on Textiles and Clothing (ATC), Everything but
Arms (EBA), Generalized System of Privilege (GSP) in the EU countries and The US 2009
Tariff Relief Assistance. These policies have provided Bangladesh with huge market potential in
global clothing market especially in EU and America.
Sector Export Earnings (FY 2011-12):
$20.13 billion Industry Growth since 1993-94:
1. Ready Made Garments – 196%
2. Yarn Production – 148%
3. Fabric Production – 38 times
Workforce:
Currently, this sector has provided job to
over 5.0 Million people of which 80% are
women.
Consumer Market:
60% of the export contracts are with
European Union and about 40% with
American buyers. Others include Canada,
Japan etc. Bangladesh holds 9.02% &
3.57 % share in export to US & EU
market respectively.
Trade Associations:
Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
Bangladesh Knit Manufacturers & Exporters Association (BKMEA).
Bangladesh Textile Mills association (BTMA)
23 A Bankable report on Energy Efficiency finance program - Bangladesh
4.1.2 Type of Industries The sector features prominently with units/factories in two major areas:
1. Leather Tanneries
2. Ready Made Garments
Leather Industry:
The leather sector is the 4th export earning sector of the country contributing 1.54% of total
export, next to readymade garments, jute and frozen food. Vast domestic livestock population‘s
skin and hides which are used as raw materials & the low cost of available skilled labor are the
two natural competitive advantages that the Leather industry of Bangladesh has as compared to
other countries. The annual supply of hides and skins in the country is about 200 million square
feet consisting of 63.98% cow
hides, 2.19% buffalo hides,
32.74% goat skins and 1.09%
sheep skins.
Ready Made Garments
(RMG):
Till 2012 there were 5400
Garment factories in
Bangladesh. The Country has
projected the sector
contribution rising up to US$
34.5 bn till 2015 adding 20.5%
to the total GDP. Bangladesh being 2nd largest exporter worldwide, the industry plays a
significant role in total export of the country.
4.1.3 End Products
As per BTMA data of registered firms, Textile industry in Bangladesh consists of:
75.83% 79.33%
77.12%
78.15% 78.60%
0
5000
10000
15000
20000
25000
30000
2007-08
2008-09
2009-10
2010-11
2011-12
RMG EXPORT 10699.8 12347.77 12496.72 17914.46 19089.69
TOTAL EXPORT 14110.8 15565.19 16204.65 22924.38 24287.66
% OF RMG'S TOTOTAL EXPORT
75.83% 79.33% 77.12% 78.15% 78.60%
Mill
ion
US
$
Figure 1: Role of RMG in Total Export
24 A Bankable report on Energy Efficiency finance program - Bangladesh
1. Yarn Manufacturing Mills: There is a total of 383 different yarn manufacturing unit‘s i.e. 97 Ring
Spinning units, 195 Ring Spinning with Open-end Capacity, about 51 Rotor/Open-end and around 30
Synthetic Yarn Mills with a total capacity of producing 17 billion ton of yarn.
2. Fabric Manufacturing: There are total of 743 fabric manufacturing units producing Woven, Denim,
Home Textile and Knit Fabrics. Total production capacity is around 2000,000,000 meter of fabric.
3. Dyeing/Printing/ Finishing Member Mills: These are around 238 in number.
4. Ready Made Garments: This includes units producing Jerseys, Pullover, Men Suits, Trousers,
Jackets and T-shirts.
Leather industry constitutes three major product lines having following end products.
1. Leather processing Industry (Tanning) includes the production of wet-blue, crust and finished
leather. There are 206 tanneries in total.
2. Footwear Industry: There are about 40 mechanized footwear industries and about 4500 small and
cottage units producing various types of footwear with a production capacity of about 178.74 million
pairs.
3. Leather Goods Industry: There are 5 large and 15 medium and small mechanized and semi-
mechanized and more than 1500 cottage level leather goods manufacturing units in the country.
4.1.4 Description of Technology
The Table 1 presented below depicts the present technology and machineries used in textile industries of
Bangladesh:
Table 1: Present Practice in Bangladesh – Textile Industry
Bangladesh Textile Industry - Equipment’s/Machineries currently in use
S.No Machinery Present Practice
1 Production equipment‘s in dyeing /
washing and processing section Most of the units are having imported machineries.
2 Stenters
Some of the units are having direct gas fired stenters. Others are having hot oil based stenters
3 Steam Boilers and Thermic Fluid Heaters Most of the units are having 2 pass steam boilers and
some units are having 3 pass steam boilers.
4 Air Compressors
•Most of the units are having air compressors
purchased from scrapped ships and also reconditioned
air compressors to reduce the initial cost.
25 A Bankable report on Energy Efficiency finance program - Bangladesh
Bangladesh Textile Industry - Equipment’s/Machineries currently in use
•Large units are having latest screw compressors.
5 Water Pumps Most of the units are using locally available
submersible / centrifugal water pumps
6 Stand-by Power Generators
•Most of the units are having generators purchased
from scrapped ships and also reconditioned high
capacity power generators to reduce the initial
investment.
•Large units are having high efficiency generators
operating as base load engines.
7 Waste Heat Recovery Boilers •Units operating base load engines have installed
waste heat recovery boilers to generate steam.
8 Plant lighting
•All the major textile processing units are having large
number of (2000 to 10000) FTL lamps. Some are
having Low loss chokes and others are with
conventional electromagnetic chokes.
•Use of T5 FTL lamps with Electronic choke and LED
lamps can reduce considerable energy in Textile and
Garments Industries.
Table 2 depicts the present practice and machineries used in textile industries of Bangladesh:
Table 2: Present Practice in Bangladesh – Leather Industry
Bangladesh Leather Industry - Equipment’s/Machineries currently in use
S.No Machinery Present Practice
1 Washing Drums
Locally manufactured Drums in small units. Large
productions have imported drums.
2 Production drums Locally manufactured Drums in small units. Large productions have imported drums
3 Tunnel dryers
•Small units are having locally fabricated (with brick
works) gas fired tunnel dryers with burner arrangements
separately.
•Large production units are having imported tunnel dryers
using steam as heating media.
4 Toggle dryers
•Small units are having locally fabricated gas fired toggle
dryers with burner arrangements separately.
•Large production units are having imported toggle dryers
using steam as heating media.
5 Spray dryers
•Small units are having semi-automated spray dryers.
•Large production units are having imported spray dryers
using steam as heating media with all control systems.
26 A Bankable report on Energy Efficiency finance program - Bangladesh
Bangladesh Leather Industry - Equipment’s/Machineries currently in use
6 Vacuum dryers
•Small units are having single plate hot water vacuum
dryers.
•Large production units are having imported vacuum
dryers using hot water as heating media with all control
systems
7 Hydraulic heat press •Most of the production units are having imported
hydraulic heat press.
8 Hot water boilers
•Small units are having separate hot water boilers for
drum hot water and for vacuum dryer hot water
requirements.
•Large production units are having single steam boiler and
generating hot water in separate tank and steam is used
directly in dryers.
9 Electric drives
•Most of the units are having motors purchased from
scrapped ships and also imported old motors.
•Large units are having some of the motors supplied by
OEM.
10 Air compressors
•Most of the units are having air compressors purchased
from scrapped ships and also reconditioned air
compressors to reduce the initial cost.
•Large units are having latest screw compressors. Source: TetraTech Analysis
4.1.5 Sources of Energy
Textile industries require both thermal and electrical energy for its operation. Electrical Energy is
available in the industry
I. From State Electricity Grid/State Utility: Almost every industry has facility to get electric power
from national grid (through different grid service providers) at different voltage level
i.e.33KV/11KV/0.4V.
II. From Captive Power Generation utilizing Natural Gas: Common practice is to generate
electricity through own generators and use it for continuous factory production. 80% of the units
have their own captive power plant. Textile Sector alone has captive generation capacity of 1100
MW while the whole country has a total generation capacity of about 8525 MW till Dec. 2012.
III. Diesel Generators are kept as a source of back up supply.
Interestingly, in Bangladesh electricity from grid acts more like a stand by supply and most of
the companies resort to captive generation.
27 A Bankable report on Energy Efficiency finance program - Bangladesh
This is on account of imbalance in Gas and electricity tariff i.e. Electricity is being supplied to
the industries at the rate of about 6BDT/unit by distribution companies while the cost of
electricity generation by industry using their own gas generator without any waste recovery is
about 3BDT/unit. To achieve the economies of scale most of the industrial units have captive
generation.
IV. Thermal energy is used for steam generation. Since most common usage is gas based, there is
frequent interruption in the required pressure at end point. Due to interruption of natural gas supply,
few factories are also additionally using diesel boiler, furnace oil boiler, CNG (compressed natural
gas) boiler, electric boiler etc. Some factories have started to use EGB (exhaust gas boiler) to get
steam from generator exhaust and cogeneration. However it is not practiced commonly.
4.1.6 Opportunities for Energy Conservation The main focus of technology is on the efficient
use of Electricity, Fuel and Steam for
enhancing the overall efficiency.
Motor Efficiency: About 80% of the electrical
energy is used by the Motors for manufacturing
equipment and utilities. These motors are
operated for more than 6000 hours to 7000 hours
in a year. Currently HEM‘s are not installed in
factories. HEM‘s are having efficiency
improvement in the order of 3% to 4% compare
to standard motors.
Boiler Efficiency: Thermal Energy is used for steam generation and direct (to produce hot
water)/ indirect heating (drying and heat setting processing equipment) in the process. Package
boilers with an increased efficiency level up to 82% have replaced the formerly used Lancastrian
Boilers which had an efficiency level of about 55-65%. Use of Water Tube Boiler and fluidized
bed combustion is currently not in practice. Water Tube Boiler can improve the efficiency levels
as high as 90%. Only few mills have replaced old 2 pass boilers to 3 pass boilers, which have
resulted in efficiency improvement of 8 to 10%.Fluidized Bed Combustion can further increase
the efficiency by 10-12% of boilers.
Spinning, 41%
Weaving Process,
18%
Humidification, 19%
Wet Processing ,
10%
Lighting, 4% Others,
8%
Figure 2: Electrical Energy Usage Pattern in Textile Industry, Bangladesh
28 A Bankable report on Energy Efficiency finance program - Bangladesh
Variable Frequency drive: Adding a variable
frequency drive (VFD) to a motor-driven
system can offer potential energy savings in
a system in which the loads vary with time,
for e.g. in stitching of garments VFD’s are
used for changing the speed of sewing
machine without stopping it which reduces
the energy loss due to starting of motor
again & again. Moreover, the starter is no
longer required which cuts down additional
energy loss in motors.
A VFD may be used for control of
process temperature, pressure or flow without use of a separate controller. In general, by
controlling speed of a pump rather than controlling flow through use of throttling valves or
nozzles, a speed reduction of 20% can yield energy savings of 50%1. VFD‘s can be installed for
washer pump motor, fan motors for the flow control, in Humidification plant, and Air
Compressor.
Lighting: It accounts for about 4% of the total electricity use in a composite textile plant.
Readymade garments and footwear industry also require adequate lighting during stitching or
sewing and finishing processes. Only few factories have progressed towards energy efficient
lighting systems by replacing T-12 tubes by T-5 tubes. Still, in Bangladesh mercury lights with
metal halide or high pressure sodium lights are not common. These can yield 50-60% energy
savings. Replacing magnetics ballasts with electronic ballasts can save 12-25% of electric use.
Replace Diesel/Furnace Oil Water Boilers with Solar Water Boilers: The long-term average
sunshine data indicate that the period of bright (i.e., more than 200 W/m2 intensity) sunshine
hours in Bangladesh vary from 3 to 11 h daily and the global radiation varies from 3.8 to 6.4 kW
1 Why Use Variable Frequency Drive? written by Filtrex, Inc. distributed by Paddock Pool Equipment Company, Inc. & Filtrex,
Inc. www.paddockindustries.com
Sream Distribution losses, 10%
Bleaching and
Finishing, 35%
Dyeing & printing,
15%
Humidification, Sizing
and Others, 15%
Boiler Plant Losses, 25%
Figure 3: Thermal Energy Usage Pattern in Textile Industry, Bangladesh
29 A Bankable report on Energy Efficiency finance program - Bangladesh
h/m2/day2.These data indicate that there are good prospects for solar, thermal and photovoltaic
application in Bangladesh. Further the cost of these solar generators has decreased, and the cost
of diesel has increased so, they are now in a position to replace diesel generators completely.
4.1.7 Human Resource Skill Assessment
In year 2012 the textile and related industry accounted for 45% of all industrial employment in
the country yet only contributed 5% of the Bangladesh's total national income. This is because
insufficient size of skilled workforce impedes an increase in productivity and move towards more
sophisticated products. It is estimated that currently there is 25% shortage of skilled workers in
Bangladesh textile and related industries3. Along with high labor turnover, the future growth of
this sector industry will require up to 6 million workers by 2020.
It has been observed that small units are dependent on only very few technicians for the entire
plant operation. Also, existing challenges have multiplied as suppliers aren‟t able to find higher-
skill middle management positions.
Other key factors limiting productivity improvement are:
Educational institutions for technical skills are few or non-existent
The RMG Industry‟s image is not attractive enough to interest young top employees
and graduates
„Importing‟ middle management creates several problems, such as increased costs
and cultural issues.
The sector requires attention at energy policy level and require training staff to increase
their awareness about energy use, targets, and success stories every quarter; this will
be formalized by their human resources management. Top management of the
company need to drive this process initially until it is implemented and appreciated by
lower staff.
Investments in developing an energy policy and building the energy management
capacity of the staff will help this sector to drive the energy efficiency measures on a
sustainable basis. 2 Research Article, Potential of Wind and Solar Electricity Generation in Bangladesh, Sanjoy Kumar Nandi, Mohammad Nasirul
Hoque, Himangshu Ranjan Ghosh, and Swapan Kumar Roy, Received 29 October 2011; Accepted 11 December 2011 3 Mckinsey, Report on Bangladesh RMG landscape
30 A Bankable report on Energy Efficiency finance program - Bangladesh
Sector 2: - Iron and Steel Industries
4.2.1 General Description:
The production of mild steel structural products in Bangladesh was about 0.29 Million
Tons in the year 2008-09, about 0.17 Million Tons in 2009-10, and about 0.23 Million
Tons in the year 2010-11. The per capita consumption/manufacture of steel is often
taken as an indicator of the state of development
of a nation. Based on the above numbers and the
population numbers of about 161 million on July
2012, the per capita manufacture of mild steel in
Bangladesh works out as 1.43 kg/person. This is
far below that the world average steel use per
capita of 216.7 kg/person4.Recent estimates show
that the demand of steel in Bangladesh is growing
at a rate of about 10% annually.
World-wide steel industry can be divided into two
types of producers. Those who convert iron ore
into steel (known as Integrated Producers).
Others are the mini steel plants, which make steel
by melting scrap or sponge iron or mixture of the
two (known as Secondary Producers) .The steel products that are currently
manufactured locally, are of secondary level processing.
The lone basic steel mill ever set up was Chittagong Steel Mills Limited (CSM), an
enterprise of Bangladesh Steel and Engineering Corporation (BSEC), at Chittagong. It
was closed down in year 1996 much due to its adoption of rather obsolete method of
steel production process and logistics constraints. Since then, no major basic steel
production facilities were developed in Bangladesh. Therefore, the country kept on
relying on import based steel processing facilities governed by private entrepreneurs
and the Ship Building and Recycling Industries (SBRI) which accounts for 50% of the
4 World Steel Association, 2012
As per International Trade Centre
Sector Export in Value (FY 2011): 40,349 thousand US$; 0.15 % of Total Exports. Sector Import in Value (FY 2011):
1475779 thousand US$; 4.78% of Total imports. Industry Annual Import Growth (FY
2007-11): 13.85%
Trade Associations:
Bangladesh Steel and Engineering
Corporation (BSEC)
Bangladesh Steel Mills Association
Bangladesh Foundry Owners
Association.
Ship breaking and recycling industry
(SBRI)
31 A Bankable report on Energy Efficiency finance program - Bangladesh
steel supply of the nation. (Majority of steel units in the country are only engaged in re-
rolling of steel scrap & solids obtained predominantly from “ship breaking” operations
which is major business activity in Bangladesh).
4.2.2 Type of Industries:
The present structure of the Bangladesh iron & steel industry is composed of the following units:
Electric Arc Furnace and Induction Furnace Units:
There are a number of electric arc furnace and induction furnace (EAF/IF) units making
continuously cast (CC) billets, pencil ingots and channel cast billets. These units are
catering to the quality requirement of the country. Billets produced are being used in
their own re-rolling mills.
Rolling Mills Units:
Existing re-rolling mills are meeting the entire domestic demand of Bangladesh except for
imports of small quantity of quality long products. There are still unutilized capacities in the re-
rolling sector which is likely to fulfill increasing demand of long products in future years with
higher capacity utilization. However, there was a gap of 161,000 tons by 2010-11 and 498,000
tons by 2011-12.Majority of steel units in the country are only engaged in re-rolling of steel
scrap & solids obtained predominantly from “ship breaking” operations which is major business
activity in Bangladesh. The steel products produced from this feedstock are not of standard
specification & quality and as such are not recommended for important engineering application
and for quality construction sector like high rise buildings, bridges etc. Availability of ferrous
scrap from ship breaking industry is about 1 million tons per year at present. Bangladesh has a
number of re-rolling units with installed capacity of around 1.5 million tons per year. These re-
rolling units essentially reheat ship yard scrap and re-roll it into rods & bars.
Cold Rolling Mills Units:
There are 6 steel cold rolling mills in Bangladesh using imported hot rolled Coil for
production of cold rolled coil. Their install capacity is as follows:
32 A Bankable report on Energy Efficiency finance program - Bangladesh
Steel Pipe and Tube Manufacturing Units:
Bangladesh is having steel pipe & tube manufacturing units but their capacity utilization
is very less resulting in import of about 58,000 tons per year at present. Shortage was
10,000 tons in
Galvanized Plain and Corrugated Sheets & Galvanized Pipes Manufacturing Units:
There are a number of units producing galvanized plain (GP) and galvanized corrugated
(GC) sheets in Bangladesh. Overall installed capacity of galvanized sheet
manufacturing in Bangladesh is reported to be about 700,000 tons per year. Above 80%
of the production is in respect of corrugated sheets meeting the requirement of
construction industry for roofing and side sheeting.
National Tube Ltd (NTL) is the major producer of pipes & tubes with a capacity of
45,000 tons per year. Other major units are Asia Pipes Ltd and Kusthia Pipes Ltd. NTL
and Asia Pipes Ltd are manufacturing MS non-galvanized pipes whereas Kusthia Pipes
Ltd is manufacturing GI pipes. Overall capacity is reported as 80,000 tons per annum
whereas existing production is only 20,000 tons per year.
4.2.3 End Products:
The major end products of the Steel and Iron Industry in Bangladesh are illustrated in
following table:
Cold Rolling Mills In Bangladesh
Name Capacity
M Ton/yr.
S. Alam Cold Rolled Steels Ltd. 120,000
PHP Cold Rolls Mills 240,000
Abul Khair Steel Products Ltd. 250,000
K1Y. Cold Rolled Mills Ltd. 300,000
Karnafully Steels Ltd. 80,000
Appollo Cold Rolled Mills Ltd. 200,000
1,380,000 M Ton
Table 3: Cold Rolling Mills in Bangladesh Source: Sodev Consult, Field Survey
33 A Bankable report on Energy Efficiency finance program - Bangladesh
4.2.4 Description of Technology:
Since Bangladesh is secondary producer of steel, the main raw material used for
production is steel scraps.
The main steps employed in secondary steel making process are: • Melting and refining of steel scrap to produce clean liquid steel (sometimes other sources of
irons are also used)
• Converting liquid steel into intermediate shapes, i.e. Ingot or billet.
• Size reduction of billets by rolling into products i.e. rods, deformed bar, flats etc.
Following table illustrate the major technology process equipment utilised in the
Bangladesh iron & steel sector
Bangladesh Steel Industry - Technology and Equipment’s currently in use
S No Machinery Present Practice
1
Furnaces for Melting -
Induction Furnaces and
Electric Arc Furnaces.
Since Electric Furnaces is concerned with lack of the availability of
spares, maintenance, trained manpower for operating these units,
irregular power supply etc., Induction Furnaces are majorly used. All
induction furnaces used are of relatively older designs and small
capacities with hardly any refining facilities. Some steel makers do
uses Ladle Furnace for refining, but this also allows very limited
refining. As a result, the chemical composition and metallurgical
quality of steel are not consistent and are mainly a reflection of the
characteristics of the raw material.
2 Reheating/Heating/Process
furnaces.
Most of the steel foundries use traditional cupola furnaces. The new
trends include Divided Blast Cupola Furnace in place of traditional
SI. No. Products Availability (in Tons)
2008-09 2009-10 2010-11 A. Semi-finished products
1. CC billets 1,80,000 2,50,000 3,20,000
2. Pencil ingots/channel cast billets 75,000 75,000 75,000
Sub-total (A) 2,55,000 3,25,000 3,95,000
B. Finished products
1. Bars & rods and structural 12,00,000 12,70,000 13,00,000
2. CR coils/sheets 2,70,000 2,80,000 3,00,000
3. GPI/CGI sheets 5,95,000 6,00,000 6,75,000
4. Pipes & tubes 30,000 35,000 40,000
Total = 23,50,000 25,10,000 26,30,000
Table 4: Major end products of the Steel and Iron Industry
34 A Bankable report on Energy Efficiency finance program - Bangladesh
Bangladesh Steel Industry - Technology and Equipment’s currently in use cupola furnaces have also been suggested and supported by Foundry
Owners Association of Bogra, Bangladesh.
3 Casting Technologies
The units undertaking value addition to scrap by post melt refining
tend to use the continuous casting technique for making billets. In
contrast, the units undertaking only melting of scrap without or with
only minor refining, conduct casting operations into ―channel cast
billets‖ or ―pencil ingots‖.
4 Hot Rolling and Cold Rolling Mill
Latest technology like 6 High Cold Rolling Mills is in use. By using this
technology, the sheet width can be reduced considerably
4.2.5 Sources of Energy:
Steel industry majorly uses following sources of Energy
S No Sources of Energy
1 Natural Gas ( Primary)
2 Electricity
3 High Speed Diesel (HSD)
4 Compressed Natural Gas ( CNG)
5 Furnace Oil
Table 5: Sources of energy (Iron and Steel Industries)
Electricity and Natural Gas are the main sources of energy. Iron & Steel Sector is the largest
private sector consumer of Natural Gas in Bangladesh. Natural Gas is provided by the Gas
Utility active at the location. It is the major component used in the steel manufacturing process
being utilized in boiler, generator & Furnace.
Common practice adopted in the plants is to generate electricity through own generators and use
it for continuous factory production. 80% of the units have their own captive power plant. The
captive generation is up to 300% times cheaper than the electricity from the grid. (Electricity
generation from Gas is around 2 BDT as compared to Grid Electricity of 6.95 BDT). HSD is
predominantly used for utility purpose and is kept as a source of back up supply
Almost every industry has facility to get electric power from national grid (through different grid
service providers) at different voltage level i.e.33KV/11KV. However it is mostly used as back
up when Gas supply is interrupted or its pressure is low. It has also been noticed that the few
companies resort to using CNG or HSD in case Natural Gas connection is not processed.
Studies have indicated that efficiency of Gas Engine generators is 30% and this leads to increase
of specific energy consumption when used instead of grid electricity. Efforts at policy level and
35 A Bankable report on Energy Efficiency finance program - Bangladesh
plant level to use solar generation can help in reducing SEC and conserving significant amount
of energy.
4.2.6 Opportunities for Energy Conservation:
Significant opportunities for energy conservation exist in Iron and Steel sector in terms of
processes and practices followed in Bangladesh when compared internationally. Major savings
can come through installation of Top Pressure recovery systems, Exhaust Gas Recovery/ Waste
heat utilization, Generation of Electricity in co-generation mode. The details about the present
practice and scope are illustrated in the following table:
Bangladesh Iron and Steel Industry – Energy Conservation Measures
S No Machinery Present Practice Proposed System 1 Exhaust Gas Heat Recovery for heating the
combustion air: Charge metal is heated by
natural gas air mixture flow in re-heating
furnace at 1000 degree C to 1250 degree C
depending on the thickness of charge
material. As a result a pressure is created in
the re-heated furnace. The excess pressure
is released through the chimney. The burned
gases in the furnace also flow through the
chimney due to pressure difference between
furnace and atmosphere. These burned
gases which flow through the chimney are
known as exhaust flue gases. The
temperature of exhaust flue gas varies from
300˚ C to 400 ˚C.
Exhaust gas coming
out of the gas
generator/re heating
furnace is dissipated
into atmosphere
resulting in energy
loss and increase
carbon emission.
A portion of these exhaust gas heat
can be utilized to pre-heat the charged
materials before charging it in the
furnace or pre heat the combustion
air. It was found that waste heat
utilization from a typical 7.8 MW
Natural Gas Gen set can save up to 15
Billion m3 of Natural gas annually.
2
Generation of electricity before using steam
in co-generation mode: the steam
requirement in the steel plant is 0.01 T/hour
at a pressure of 2-4 Kg/cm2 (4 kg/hour in
picking line, 4 kg/hour in galvanizing plant &
2 kg/hour in CR mill). But, the boilers used
are of greater capacity around 3-6 T/hour
which produces steam at around 10
Kg/cm2.Therefore, the pressure of this
steam is reduced in a pressure reduction
valve to 4 kg/cm2 for use in the various
processes. Instead of using this pressure
reduction valves a micro steam turbine can
be installed to generate electricity with the
Most of the factories
do not deploy
cogeneration
mechanisms
Instead of using this pressure
reduction valves a micro steam
turbine can be installed to generate
electricity with the rest of the
produced steam. It was found that
with a 6T/hour capacity boiler around
8.6 x 106 kWh/year of electricity can
be generated. The simple payback
period of the investment is found to
be 19.2 months.
36 A Bankable report on Energy Efficiency finance program - Bangladesh
Bangladesh Iron and Steel Industry – Energy Conservation Measures
rest of the produced steam.
3
Top Pressure Recovery Systems (TRT-
System): In present day steel plants, large
blast furnace units are operated at an
increased top pressure for achieving higher
iron production. This results in relatively
large gas flow rates available at the
corresponding high pressures. The furnace
gas emerges from top of the furnace at a
significant temperature (200˚ – 300˚ C) and
an absolute pressure greater than
atmospheric. Hence possibility exists for
tapping the pressure & thermal energy
contained in the furnace gas by converting it
into useful work.
Mills operate without a top pressure recovery systems
Using a Top Recovery Turbine (TRT)
coupled to a turbo generator for the
purpose of producing electric power
will improve savings. Such top
recovery turbines are widely used in
tandem with blast furnace gas in
integrated steel plants. Extensive
experience at various European &
Japanese plants have clearly
demonstrated that up to 30% of the
energy requirements of the blast
furnace air blast blowers can be
recovered by using axial type top
recovery turbines.
4
Installation of Lid: For inserting the metal
(known as charge metal) into the induction
furnace there is a door. This door is kept
open for easy charging which leads to
considerable amount of heat loss. To
minimize the heat loss a sliding cover plate
can be installed on the mouth of the
charging door. The cover plate is known as
Lid
None of the plants’ induction furnaces have lid as a result significant amount of heat loss is observed.
If a motorized lid is installed on the
mouth of the charging door, it will
reduce radiation loss at the holding
temperature. The saving potential of
about 7.5% of total heat is observed
by implementing this practice
5
Automation of Re-heating Furnace: Raw
materials are charged by pusher at one end
of the reheating furnace and discharged at
the other. The hot metal is carried out either
by conveyors or manual sent to roll stand for
rolling
Hot metal is retrieved manually through the sliding door by tongs. The method is time consuming and leads to heat loss. As a result production is decreased to some extent.
Convert the present manual system by
installing automatic retrieval and
transportation conveyors system that
can take hot metal to roll stand
directly.
Table 6: Bangladesh Iron and Steel Industry – Energy Conservation Measures
37 A Bankable report on Energy Efficiency finance program - Bangladesh
Table 7: Specific Energy Consumption - Global Benchmark Values: Iron & Steel Industry
4.2.7 Human Resource Skill Assessment:
The management of iron and steel plants comprises of professionals, engineers and other support
staff. Number of engineers, professionals and other staff is not well balanced in small plants.
Some firms have very few engineers and they operate through technicians.
The following figure illustrates the profile of people employed in the iron and steel industry
Figure 4: Profile of People Involved in Iron and Steel Company
Country Specific Energy Consumption (GCal/TCS)
Spain 3.8
Japan 4.2
Italy 4.5
Sweden 4.7
United Kingdom 4.7
Germany 4.8
USA 5.1
38 A Bankable report on Energy Efficiency finance program - Bangladesh
The following table represents the education profile of persons across steel segments of the
organized side of the sector in Bangladesh. As seen, most of the persons employed are minimally
educated and most have studies till 10th standard or below:
Total Employment Industry Aggregate
Employment with Management Education 1-2%
Post Graduates 1%
Graduates 12%
Diploma Holders/ Certificate Holders 3%
10th Standard or below ( those requiring ‘short term/modular’ training skills building of some form or the other)
80%
Daily Wages/ Contractual 5% Table 8: Distribution of Human Resource by Education Level
There is a dearth of human resources in the manufacturing sector particularly at mid-level
management. This can mainly be attributed to narrow career opportunities, unattractive salary
packages, and better opportunities in textiles and other sectors. Mills suffered from lack of
engineers since most prospective engineers are not motivated to join. More importantly, there is
no specialised technical engineering institution in Bangladesh for iron and steel sector.
The readings suggested that the sector requires attention at energy policy level and require
training staff to increase their awareness about energy use, targets, and success stories every
quarter; this will be formalized by their human resources management. Top management of the
company need to drive this process initially until it is implemented and appreciated by lower
staff.
Investments in developing an energy policy and building the energy management capacity of the
staff will help this sector to drive the energy efficiency measures on a sustainable basis.
39 A Bankable report on Energy Efficiency finance program - Bangladesh
Table 1: Export / Import Statics of the Sector FY-2011-12 (‘000’US$)
Commodity Exports Imports Exports Growth (% p.a.)
Imports Growth (%
p.a.) Ceramic
products 41176 65019 2% 33%
Glass and
Glassware 904 82917 -36% 33%
Source: International trade Centre ; http://www.intracen.org/country/bangladesh/
Sector Growth: According to Export Promotion Bureau (EPB), earnings from ceramics export stood at US$ 34.42 million during July-May period of fiscal (2012-13) as against $ 31.09 million during the same period in last fiscal registering a growth of 10.71 per cent. Export Earnings: Ceramic exports brought $33.75 million in the financial year 2011-12, $37.58 million in
2010-11 and $ 30.78 million in 2009-101.
Workforce: Currently employs around One Lakh Workers. Consumer Market: Of different ceramic products, ceramic table wares are exported to about 50 countries including the USA and Canada, tiles to India, Nepal and Bhutan and sanitary ware to the Middle East, especially to the UAE. About 75 per cent of the total exports of the products go to Europe, about 15 per cent to the US market and remaining 10 per cent to other markets Trade Associations:
Bangladesh Ceramic Ware Manufacturers
Association (BCWMA)
Sector 3: Ceramics and Glass Sector
4.3.1 General Description:
The global ceramic industry is worth of US$20
billion. Global production increased from 9,515
mn sq. m in 2010 to 10,512 mn sq. m in 2011.
However the most noticeable trend in the
production is the geographical shift in
manufacturing from the traditional European
base to the nascent economies of Asia, North
Africa and the Middle East. This is on account of
the fact that traditionally ceramic industry is a
labor-intensive sector and companies in
developed countries face difficulties in
remaining competitive due to rising labor cost,
energy and economic slowdown due to recent
global financial crisis.
This shift in production has benefitted
Bangladesh, which is a gas rich country, possess
has high quality, cost ratio due to cheap labor
and conducive trade policies (Bangladesh had
also enjoyed the benefits of generalized system
of preferences (GSP) that allows duty-free
exports without any quota restrictions to Europe
and USA). Country‘s ceramic products enjoy
good reputation in the international like North
America and EU countries. So it is perfectly
positioned to be a strategic partner in production
and supply of ceramic goods globally5 .
Currently ceramic products (including stone
tableware, porcelain tableware, bone china
tableware, tiles and sanitary ware) have a $20 billion world market of which Bangladesh's share
is only 0.17 per cent. Meanwhile, the country has emerged as one of the successful
manufacturing and exporting countries of quality ceramic tableware. With the traditional skill
and craftsmanship handed down from generation to generation and the favourable environment
5 Board of investments, Bangladesh
40 A Bankable report on Energy Efficiency finance program - Bangladesh
created for investment and export, Bangladesh has now reached such a stage of development that
it is rated as one of the best in the world.
The growth in overall
investment projects in
Bangladesh registered by BOI
is shown in the Figure 1.
Glass industries had also
flourished in recent years in
Bangladesh. Almost all the
producing units have
succeeded in establishing
their brand names in the
international ceramic
tableware market. To ensure
proper quality and goodwill,
all the ceramic tableware
producing units use high quality raw materials. The machinery and equipments are also modern
and conform to the latest technology and standard. The rise of Real Estate and Housing business
in the last decade has led the demand for sheet glass to increase considerably. With access to the
advance bone china technology and creative human resource, ceramic and glass industries are
one of the top gainers in the foreign trade.
4.3.2 Type of Industries
The sector features prominently with units/factories in two major areas:
1. Ceramics Industry.
2. Glass Industry.
Ceramics Industry: The first ceramic
factory in Bangladesh was established by
Tajama Ceramic Industries in the year 1962.
Presently, there are 47 ceramic industries
throughout the country which includes Table
wares, Tiles, sanitary ware, insulator and
firebricks etc. There is a local demand for
ceramic products of worth BDT 20,000
million. According to the Bangladesh
Ceramic association, during the Fiscal year
(FY 11/12) local industries produced 50,000
Metric tons of ceramic Table wares, 64
0.89% 2.35% 0.27% 0.38%
11.66 %
1,94,154.43
1,73,246.60
2,74,978.43
558806.05 5,39,075.57
02
00
00
04
00
00
06
00
00
0
2007-08 2008-09 2009-10 2010-11 2011-12
Millio
n Taka
TotalInvestment inCeramics &Glass Sector
TotalInvestment inAll Sectors(Million Taka)
Figure 5: Total Investment in Ceramics and Glass Sector
2007 2008 2009 2010 2011
Export 35,779 46,184 35,862 38,833 41,176
Import 24100 34209 39590 53904 65019
0
20
40
60
80 '00
0' m
illion
US$
Ceramic products
Figure 6: Import details of Ceramics Products
41 A Bankable report on Energy Efficiency finance program - Bangladesh
million square meter Tiles and 21,900 Metric tons of sanitary ware.
The prime raw materials of ceramic products are white clay and sand. About 95% of raw
materials for making quality and exportable ceramic products in Bangladesh are imported from
abroad. The materials are imported mainly from Japan, Germany, New Zealand, South Korea
and India. At present, there are 15 ceramic producing plants (12 private, 1 state owned and 2
joint ventures) in the country producing over 40,000 tons of ceramic products per year.
Big industrial houses such as Monno Bone China, Shinepukur, Bengal Fine, Standard, Peoples
and National Ceramic are engaged in tableware while RAK, Dhaka Shanghai, Fu Wang, China-
Bangla and Mir are engaged in tiles and sanitary ware. Most of the companies are export
oriented. As for instance, the local tableware industry has the capacity to feed the Tk 3.0 billion
domestic market but local manufacturers account for less than Tk 500 million domestic market.
This is because overseas demand is going up and country‘s major manufacturers are pumping 80
per cent of the production into the international market, thus creating a demand-supply gap in
Bangladesh. Major competitor for Bangladesh ceramic industry is from cheap ceramics produced
in China. The trend has shown increasing imports of ceramic products in Bangladesh are
increasing very fast parallel to the growth in export. Figure 1 illustrates the total export &
imports in ceramic industry till 2011.
Glass Industry: By the end of 2002, Bangladesh‘s entrepreneurs took the first move about
manufacturing glass locally noticing the growth of high-rise buildings and the dearth of quality
glass as a consequence of the growth in real estate business and construction of huge
establishments. Previously the country was fully dependent on imported glass, whereas by 2008
local sector grabbed 95% of total domestic
demand and only 5 per cent of its local
demand for coloured and luxurious
designed glass were imported from China,
Thailand, Malaysia and Indonesia. Local
Entrepreneurs started to establish glass
industries in the private sector to capture
this opportunity. Presently there is a
market demand for glass products of BDT
2,000 million with an increasing trend.
Nasir glass industries, PHP float glass
industries Ltd., Usmania glass sheet
factory ltd. and MEB glass industries ltd
are the main glass product producers in
Bangladesh. Out of these Usmania glass sheet factory ltd. is in the Public sector and the others
are in the private sector. The daily production capacity of Nasir Glass Industries is 250 Metric
Ton, which serves around 48% of the domestic demand, PHP float glass industries Ltd. produces
150 Metric Ton of glass daily. Besides these industries, some factories produce mirror glass,
tampered glass and glass containers as value added items.
2007 2008 2009 2010 2011
Export 3,745 6,587 3,682 3,515 904
Import 26144 41715 44155 68298 82917
0
20
40
60
80
100 '00
0' m
illion
US$
Glass and Glassware Products
Figure 7: Export Import details of Glass & Glassware Products
42 A Bankable report on Energy Efficiency finance program - Bangladesh
Most of the raw materials, including dolomite, limestone and chemicals, for float and sheet glass
need to be imported from abroad. However, the specialized sand, another essential material for
producing glass, is available in the local market. The local glass companies are also exporting
their produces mainly to South Asian countries, including India, Nepal, Bhutan and Sri Lanka.
4.3.3 End Products:
Ceramics are product made from a non-metallic mineral hardened at high temperatures.
Industrial ceramics comprise all industrially used solid materials that are neither metallic nor
organic. Major ceramic products include glass, earthenware, porcelain, and white-ware,
porcelain enamels, brick tiles and terracotta, refractories, cement, lime and gypsum and certain
abrasives. The ceramic products which are used for fine art of dining & showcase are called
ceramics tableware products. The tableware market can be put under three categories:
Dinnerware: Plates, bowls, cups, saucers and mugs
Glassware: Beverage ware, stemware and barware of both glass and crystal
Flatware: Eating utensils
In the tableware ceramic industry, companies are delivering almost same types of products. In
domestic market different types of ceramic tableware products are marketed; i.e., Bone China,
New Bone China, Ivory China, Porcelain and High Alumina Porcelain6.
4.3.4 Description of Technology:
Ceramic sector in Bangladesh produces sanitary ware, table ware, tiles and insulator. Naturally
occurring inorganic substances are heat-treated after adjustment of the grain size and moisture,
and some of them are completely molten to be formed into ceramics; while others are formed,
heat-treated and made into the ceramic products in the sintered state immediately before being
molten. The former product formed in the molten state is known as glass, and the latter product
finished in the sintered state includes pottery, refractories, sanitary ware, tiles and cement. These
ceramics are called traditional ceramics. In contrast, extremely fine particles of high-purity
inorganic substances such as alumina (AL2O3,), silica (SiO2,), zirconia (ZrO2,) and silicon
nitride (Si3N4.) are sintered at a high temperature and made into ceramics; they are called
advanced ceramics. These advanced ceramics are used in electronic parts and mechanical parts.
Almost all the producing units have succeeded in establishing their brand names in the
international ceramic tableware market. To ensure proper quality and goodwill, all the ceramic
tableware producing units use high quality raw materials. The machinery and equipments are
also modern and conform to the latest technology and standard. Each of the units has its own in
house laboratory facility for quality control and testing mechanism. The natural gas that is used
6 Bangladesh Tableware Catalogue, 2007
43 A Bankable report on Energy Efficiency finance program - Bangladesh
in the kilns of the Bangladesh's ceramic industry does not contain any Sulphur and that is why
the country's ceramic products look brighter. All these arrangements have contributed to the
production of world class ceramic table wares in Bangladesh.
The following figure depict the manufacturing process of ceramics in Bangladesh
Figure 8: Manufacturing and Production Process of Ceramics in Bangladesh
Process Used in Ceramics Industry
S. No. Process Description
1. Raw
material
Natural raw materials contain mixtures of various components. The
quality of ceramic products will deteriorate if much iron and titanium are
contained, so it is necessary to use the materials containing the least of
these elements. The components of the natural raw material vary
according to the lot to be produced; therefore, it is essential to set up
material acceptance standards to inspect chemical components,
refractoriness, ignition loss and other related factors.
44 A Bankable report on Energy Efficiency finance program - Bangladesh
2. Crushing: The ore is crushed to get raw materials, and forming and sintering
properties vary according to the grain size. The material should be
crushed to finer particles.
Forming Sintering
Coarse Poor Poor
Fine Good Good
3. Blending
and
kneading:
Technical know-how is the most important in this process second to the firing
process, and the final product depends on this blending process. The yield,
quality and workability are also affected by this process. The major points in the
kneading process are how to knead the material uniformly with water and how
to mix various materials.
4. Forming: Metal molds and plaster molds patterns are used in most cases of
ceramics forming. Since the ceramics will shrink when fired, it is
necessary to take it into account when determining the shape of these
molds. Thus, special production know-how is required to produce a mold
with a complicated shape.
5. Drying: The drying process is an important process affecting the product yield,
and requires a longer time than many of other processes. Inappropriate
drying may cause the products to be cut or broken; this makes it essential
to find out appropriate conditions of temperature, humidity and time. The
waste heat of the kiln is generally used as the heat source for drying. If
this is insufficient, the hot air generator is also used to make up for the
insufficiency.
6. Glazing:
The purpose of glazing is to provide a smooth, shiny surface that seals
the ceramic body. Not all ceramics are glazed. Metal oxides, such as
chromium oxide, cobalt oxide, and manganese oxide often are used to
color glazes. Glazes generally are applied by spraying, but dipping or
flooding also is used for glaze application. Depending on their
constituents, glazes mature at temperatures of 600° to 1500°C (1110° to
2730°F).
7. Firing: Firing for the pottery and refractories is actually sintering which causes
the crystals to be combined with one another. Firing is terminated before
the material gets molten. In contrast, temperature is raised until the fired
product is molten completely; this is called glass. A kiln is used to
manufacture the former product, while a furnace is used to produce the
latter.
Table 9: Process Used in Ceramics Industry
45 A Bankable report on Energy Efficiency finance program - Bangladesh
4.3.5 Sources of Energy:
Ceramic industry majorly uses following sources of energy:
S No Sources of Energy
1 Electricity
2 Natural Gas ( Primary)
3 High Speed Diesel (HSD)
4 Compressed Natural Gas ( CNG)
5 Furnace Oil ( very limited)
Table 10: Sources of Energy (Ceramics sector).
Almost every industry has facility to get electric power from national grid (through different grid
service providers) at different voltage level i.e.33KV/11KV. However it is mostly used as back
up when Gas supply is interrupted or its pressure is low. It has also been noticed that the few
companies resort to using CNG or HSD in case Natural Gas connection is not available. HSD is
predominantly used for lighting purpose and is kept as a source of back up supply
Common practice adopted in ceramic plants is to generate electricity through own generators and
use it for continuous factory production. 80% of the units have their own captive power plant.
The captive generation is up to 300% times cheaper than the electricity from the grid. (Electricity
generation from Gas is around 2 BDT as compared to Grid Electricity of 6.95 BDT).
The ceramics industry is uniquely vulnerable to low voltage of electricity and low gas pressure.
Ceramic manufacturers lamented that they had to lose a portion of the export market as its output
witnessed a sharp decline, which resulted from low voltage of electricity and low gas pressure. In
fact, the industry needs uninterrupted power and gas supply round the clock to maintain the
required 380-degree temperature in a ceramic tableware factory. When power voltage or gas
pressure is low, such temperature reduces and when the temperature falls it takes at least 12
hours to bring it back to previous level, causing a huge loss. A low heat in any plant causes fault
to colour and quality. Country's competitors like Sri Lanka, Malaysia and Thailand are capturing
its export markets as it is losing competitiveness.
New gas connections have been suspended from March 2009, causing the newer factories to
remain idle, while existing factories have been hit hard due to the government directive to not
supply power to industries for 12 hours each day7
7 http://www.bangladesh-business.net/
46 A Bankable report on Energy Efficiency finance program - Bangladesh
Ceramic manufacturers also urged the government to reduce tariff on gas, used in the ceramic
factories. It will help them compete in the international market. Ceramic manufacturers pay high
tariff on gas compared to other sectors. Presently, average gas tariff is Taka 2/cubic metre for
fertilizer factories, Taka 5.13/cubic metre for ceramics factories and Taka 3.5/cubic metre for
gas-based power plants.
4.3.6 Opportunities for Energy Conservation:
Significant opportunities for energy conservation exist in Ceramic sector in terms of processes
and practices followed in Bangladesh when compared internationally. Major savings can come
through installation of Roller press in Ball mill, use of Vertical Roller Mills (VRM), efficient
motor and drives, maintenance of induced draft (ID) fans, efficient light, maintaining air flow
etc. The details about the present practice and scope are illustrated in the following Table 11:
Table 11 : Present Practice in Bangladesh - Ceramic Industry
Bangladesh Ceramic Industry - Equipment’s/Machineries currently in use
S No Machinery Present Practice Proposed System
1 Ball Mill - Particle size is an
important factor in all
ceramics processing and it is
sometimes necessary to grind
or mill raw materials to
achieve both the correct
absolute particle size and
particle size distribution
Mills operate without a pre grinder
with efficiency often less than 10%.Ball
mills thus possess a huge potential for
energy saving.
Use of Pre Grinding Roller
Press: Help in reduction of
feed size to the ball mills, and
has a greater impact on ball
mill SEC (where size is
reduced to between 2-0.08
mm, leading to a reduction in
SEC of 25-65%). Use of Vertical Roller
Mill (VRM): VRM helps
in pre grinding the feed
and increases the
production by almost
28% for the same energy
consumption. 2 Mill Air Flow: A major factor
in energy consumption is the
volume of air used. If there is
too much airflow, then energy
can be wasted. However,
dryers do not function without
adequate air and, if the airflow
is too low, then temperature
and humidity will not be
distributed evenly. A consistent
airflow pattern can lead to
inconsistent drying -
Currently it’s been observed that the
airflow at the outlet is higher than the
design values
Suitable measurements
should be placed to maintain
air flow at the design value.
Redirecting airflows can
improve consistency and
reduce drying time.
Intermittent airflow patterns
can reduce drying time and
improve yield.
47 A Bankable report on Energy Efficiency finance program - Bangladesh
Bangladesh Ceramic Industry - Equipment’s/Machineries currently in use intermittent airflow is
preferred.
3
Utilize Waste Heat: Exhaust
air from a dryer will not be
fully saturated, i.e. less water
will be removed than is
possible and more energy will
be used than necessary.
Utilization of waste heat from
kilns, heat pumps, generators
can improve efficiency. The
capital cost of this measure is
low and it can be applied to all
types of dryers.
Most of the factories do not deploy
waste heat recovery mechanisms
Waste heat from other areas
can used as a heat source for
drying. Possible methods
include:
• Heat pumps
• Recuperators
• Hot air from the kiln cooling
zone (optimum operation is
not to let any
heat escape from the kiln but
use it all in the kiln).
4
Variable Frequency Drives:
VFD is typically used in
motors drive system to control
AC motor speed and torque by
varying the motor input
frequency. VFD is used for
drives for pumps, fan,
compressors etc. If the
application does not require to
be returned full speed, then the
energy requirement can be cut
down by controlling the motor
speed with a VFD.
At present most of the motor drives
used in Bangladesh are fixed speed
motors. These types of drives are not
energy efficient during low load and
off load periods. During off load these
motors consumer about 30% of the full
load power requirement.
It is suggested to install VFD
control the motor speed as
required to meet the desired
torque by varying the motor
speed, which lead to savings
of electrical energy. If
installed with an air
compressor motor during
unloading period about 30%
of the energy can be saved.
4.3.7 Human Resource Skill Assessment:
According to Bangladesh Ceramic-ware Manufacturers‘ Association (BCMA), this sector
employs as many as 35,000 skilled people. Still, the ceramic sector has been facing shortage of
skilled manpower due to not having sufficient related educational institutes in the country. Also
production is being hampered for shortage of skilled technicians in this sector. Currently the
ceramic sector suffers a 25 per cent manpower shortage. Since ceramic industries are not able to
employ their necessary skilled manpower from the domestic sources, they deploy expert
manpower from countries like India, Pakistan, Sri Lanka, and China, leading the sector to count
additional cost8.
There are two types of workers engaged in ceramic industry—ceramic technologists and ceramic
designers. The ceramic designers use sand and clay for basic ceramic materials while the
8:http://www.daily-sun.com/details_yes_19-06-2012_Career-in-glass-and-ceramics-engineering_179_1_19_1_0.html#sthash.khR5y6rO.dpuf
48 A Bankable report on Energy Efficiency finance program - Bangladesh
technologists use the materials produced through complex chemical processes. Ceramic
designers play an important part by designing the new product, meeting buyers‘ expectation with
regard to functionality and aesthetic looks to win over competitors.
Ceramic technologists specialized in glass for working in industries involved in manufacturing
tableware, fibre optics, bulbs, window panes and electronic ancillaries or they had an
specialization in structural clay work in the manufacture of enamelled articles and pipes,
artificial limbs or cement used in construction or ceramic wares such as tiles, pottery and
bathroom and kitchen fixtures.
Bangladesh Institute of Glass and Ceramics, located at Tejgaon, Dhaka is the only public
technical institute that offers four years‘ professional education programme leading to a diploma
in glass and ceramic engineering. Established in 1951, it is the oldest of its kind and generates
most of the workforce for the ceramic industries. Other institutes like Rajshahi University of
Engineering & Technology (RUET) have also opened a four-year honour‘s programme on glass
and ceramic engineering in 2010.In addition; Bangladesh University of Engineering and
Technology (BUET) have a post-graduate programme on the subject. Some private institutes are
also opening up the glass and ceramic engineering course. National Institute of Engineering &
Technology (NIET) Bangladesh is one of them and more such institutes are in the pipeline
But still the sector is lacking this valuable component of skilled labor pool as it is not expanding
to meet the expansion in the business. At ceramics association and trade body meetings charges
and counter-charges fly between factory owners about each other luring away skilled workers.
The situation of course is not exactly bad for the factory employees and workers; since those
with high skill levels find themselves in a seller‘s market9.
The readings suggested that the sector requires attention at energy policy level and require
training staff to increase their awareness about energy use, targets, and success stories every
quarter; this will be formalized by their human resources management. Top management of the
company need to drive this process initially until it is implemented and appreciated by lower
staff.
9 http://www.bangladesh-business.net/PageDetails.php?Id=124#sthash.o2vDJTAu.dpuf
49 A Bankable report on Energy Efficiency finance program - Bangladesh
Export / Import Statics of the Sector US$
Commodity Export
s Imports
Exports Growth (% p.a.)
Imports Growth (% p.a.)
Inorganic chemicals
22799 169834 -9% 7%
Organic chemicals
286 415441 -39% 19%
Miscellaneous. chemical products
683 299362 23% 17%
Fertilizers 37355 901177 -10% 32%
Plastics and articles thereof
83055 1008617 20% 15%
Pulp 0 109376 - 21% Paper and articles thereof
3322 462425 2% 17%
Source: International trade Centre ; http://www.intracen.org/country/bangladesh/
Trade Associations:
Bangladesh Chemical Industries Corporation (BCIC).
Bangladesh Plastic Goods Manufacturer and Exporters Association. BPGMEA
BANGLADESH FERTILIZER ASSOCIATION (BFA).
Sector 4: Chemical, Fertilizer, Pulp and Paper, Plastic Sector
4.4.1 General Description:
Basic chemical manufacturing capability is a
parameter of understanding development level
for a country. The production of these
chemicals makes a country independent of
multinational pressure as they are essential for
the manufacturing of other industry products.
In Bangladesh also, chemical industries were
developed to cater Paper, Urea, Textile,
Dying, Leather, Water Treatment, Waste
Water Treatment and other industries with
essential chemicals.
Bangladesh Chemical Industries Corporation
(BCIC) was established in July, 1976 .It is
currently managing 13 enterprises (medium
and large) under its control. Urea and TSP
fertilizer, paper and hardboard, cement, glass
sheet, insulator, sanitary-ware etc. are
produced in the factories of BCIC. BCIC has
been playing a major role in the development
of these sectors, but the recent development
in the private sector during the last two
decades after the introduction of the free
market in 1990‘s has paved a new way in
their growth. Figure 9: Total investment
projects in Chemical Sector registered with
BOI during the period from FY 2005-06 to
Figure 9: Total investment projects in Chemical Sector registered with BOI during the period from FY 2005-06 to 2011-12.
20.18 % 7.71% 11.55% 17.64%
28.19% 11.66% 17.74%
187056.465
198041.625
194154.434
173246.599
274978.434
558806.048
539075.571
02
00
00
04
00
00
06
00
00
0
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Millio
n Taka
Total Investment in Chemical Sector
Total Investment in All Sectors (Million Taka)
50 A Bankable report on Energy Efficiency finance program - Bangladesh
2011-12.Figure 9 below presents the Total investment projects in Chemical Sector registered
with BOI during the period from FY 2005-06 to 2011-12.
4.4.2 Type of Industries:
The sector includes following industries:
1. Basic Chemical and Fertilizers Industries
2. Paper Industries.
3. Plastic Industries.
Basic Chemical and Fertilizer Industries:
Bangladesh is self‐sufficient in urea fertilizer but net importer of other types such as Di-
ammonium Phosphate (DAP) and Triple Super
Phosphate (TSP). Since natural gas is the major
source of energy for urea and fertilizer
industries the production cost is the cheapest in
Bangladesh. There are six urea fertilizer
factories and one DAP factory in Bangladesh
located in northeast and north‐central
Bangladesh. Additionally Karnaphuli Fertilizer
Company (KAFCO), a joint-venture between
the Government of Bangladesh and foreign
companies produces urea fertilizer and ammonia
products for export.
Basic chemical sector was also started by
government sector to produce chemicals for other government owned factories. Gradually all
Government owned Chemical plants were shut and the vacuum was fulfilled by private sector
enterprises .Only four /five companies are there which produces basic chemicals locally. ASM
Chemical Industries Ltd., Global Heavy Chemicals Ltd, Samuda Chemical Complex ltd., Tasnim
Chemical Complex and HP Chemicals are reputed names who dominate in this sector. The
chemicals Industries are mainly Chlor-Alkali Plant, Chlorinated product and Hydrogen peroxide
plants. The raw material used for the chemical plants are Sodium chloride (common salt),
Sulphur, Natural gas. The production capacity and demand of chemicals produced is mentioned
in the Table 2 below.
Table 12: Total Production in last Five Years
Paper ('000' MT)
Fertilizer ('000'
MT)
2007-08 24.08 1581.68
2008-09 24.2 1347.36
2009-10 18.68 1165.21
2010-11 21.01 1013.54
2011-12 53.16 1047.21
Source: Bangladesh Bureau of Statistics
51 A Bankable report on Energy Efficiency finance program - Bangladesh
Paper Industries:
It incorporates one Government mill, Karnaphuli Paper Mills limited (KPML) governed by
public sector parent body, Bangladesh Chemical Industries Corporation (BCIC) and around 80
numbers of private firms. 25 years ago, BCIC (KPML) used to produce around 90% of the total
paper used in Bangladesh, but today it produces less than 5 % of the total paper used in
Bangladesh post influx of the private sector. The major industries in private sector in Bangladesh
have grown in Dhaka and Chittagong regions along the bank of Meghna, the Buriganga, the
Sitalakhya and the Karnaphuli rivers etc. Per capita paper and board consumption in Bangladesh
currently is only 3.5-4 kg compared to world average of 300 kg in advanced countries, and 50 kg
in Asian countries. The Paper Mills are having a total installed capacity of 2500 MT per day with
actual production of about 2000 MT per day fulfilling the domestic demand of Bangladesh.
The major private sector paper mills include T.K. group (paper, board, and tissue mill units),
Basundhar group (Paper, tissue, and newsprint paper units), Magura Paper Mills, Sonali Paper
Mills,MAQ Paper Mill,Pearl Paper Mill, Hakkani paper mill (Writing, printing/Newsprint paper
units), Hossain pulp & paper mills (Duplex, cigarette paper units) etc.
Plastic Industry:
A UN report describes that Bangladesh can play a significant role in global context by raising its
turnover in Plastic industry to $ 2 billion by 2015 & $ 4 billion by 2020.In last twenty years, the
consumption of plastics grew 50 times, from low 14.000 tons in 1990 to present 750.000 tons. At
present the per capita consumption of plastics in Bangladesh is 5 kg/year as compared to world
average of 20 kg. This symbolizes the huge potential available in the plastic Industry. Domestic
market size is estimated to be around US$ 875 million. Direct export market was US$ 75 million
in 2011.Direct Plastics Exports as a share of total Bangladesh Exports remain modest with
0.26%, while Plastics Imports represent 3.45% of total Imports. Including deemed exports,
plastics products contribute to 1.5% of total exports.
Prominently this industry includes plastic manufacturing and recycling units. There are more
than 3,000 manufacturing units of which 98% are SMEs, producing plastic goods worth over
BDT 80,000 million annually (around US$ 1bill.) and 300 recycling units which produces
recycled products out of about 140 tons/day of plastic waste. According to BPGMEA, of the
3,000 plastic manufacturing firms 66 per cent fall into ‗small‘ enterprise category, 1.7 per cent
into ‗large‘ enterprise category and the rest belong to medium enterprises as defined by the
Bangladesh Bureau of Statistics. All the firms are mostly located in major cities of the country
like Dhaka and Chittagong. Some of the large players are RFL Plastics, Bengal Plastics, Navana
Plastics, Gazi Tanks, Boss Plastic Industries, Leos Plastic, Bismillah Plastics, Dutch Bangla and
Sino Bangla and N. Mohd. Plastics. Small and medium manufacturing firms consist of highly
fragmented clusters scattered around the country with the largest cluster being the Lalbagh-
Islambagh cluster in Old Dhaka.
52 A Bankable report on Energy Efficiency finance program - Bangladesh
The import of polymers has increased from 10,000 tonnes in 1989 to 289,000 tonnes per year in
2007. This is because Bangladesh has no polymer units and therefore their demand relies heavily
on imports. The availability of cheap labor and the fast developing recycling industry of
postconsumer plastic wastes in Bangladesh are potential advantages to provide competitiveness
in the global market. End Products
Paper Industry:
There are almost 80 paper mills. These mills fully depend on foreign pulps and recycle fibre as
they do not produce their own paper pulp. KPML is the only integrated pulp and paper industry
in Bangladesh. KPML produces both bleached and unbleached virgin pulps. Among the
varieties of paper produced by it are - writing, printing, packaging (Kraft/brown sulphate) and
specialty papers.
4.4.3 End Products:
Basic Chemical and Fertilizer Industry: The end products produced in Bangladesh in
chemical and fertilizer industry is illustrated in following table:
Bangladesh Basic Chemical Industry Production (MT/Day)
Product name
ASM
Chemical
Industries
Ltd
Global
Heavy
Chemicals
Ltd
Samuda
Chemical
Complex
ltd.
Tasnim
Chemical
Complex
HP
Che
mical
s
Total
Produ
ction
Present
Market
demand
Caustic Soda
(100% basis
Flake/Liquid)
60
(Expandabl
e to 100)
70 60 100 - 290 250 - 300
Chlorine (Cl2)
From Electrolizer
Membrane
Cell
53 62 53 89 - 257
Cl2 Converted
to Liq. Cl2, HCl,
SBP, CPW,
NaOCl etc.
Hydrogen
Peroxide (50%
Concentrated,
H2O2)
60 - 70 60 28 218 200~250
Chlorine (Cl2)
liquid 10 10 7 15 - 42 10 to 12
Hydrochloric Acid
(32% HCl) 110x2 100x2 100 140x2 - 800 150 to 170
Sodium
Hypochlorite
(NaOCl)
10 10 20 15 - 55 10 to 15
Stable Bleaching
Powder (SBP) 20 15 16 - - 51 15 to 20
53 A Bankable report on Energy Efficiency finance program - Bangladesh
Bangladesh Basic Chemical Industry Production (MT/Day)
Product name
ASM
Chemical
Industries
Ltd
Global
Heavy
Chemicals
Ltd
Samuda
Chemical
Complex
ltd.
Tasnim
Chemical
Complex
HP
Che
mical
s
Total
Produ
ction
Present
Market
demand
Chlorinated
Paraffin Wax
(CPW)
20 10 20 15 - 65 15 to 20
Source: Chemical and Fertilizer Sector in Bangladesh: Challenges and Scope of Development, Journal of Chemical Engineering, IEB
Vol. Ch.E. 26, No. 1, December 2011
Table 13: Bangladesh Basic Chemical Industry Production (MT/Day)
Plastic Industry: Following products line exists in the current Bangladesh Plastic Industry:
Table 14: End Products Manufactured in Bangladesh: Plastic Industry
End Products Manufactured in Bangladesh : Plastic Industry
S No Usage Type Kind of End Products
1 Accessories for RMG Packaging material, bags, hanger etc.
2 Household Items Tableware & Kitchenware: Bucket, jug,
plate, glass, containers etc.
3 Packaging
All kinds of food and non-food packaging
material, Flexible Intermediate Bulk
Containers (FIBC)
4 Health Care
Toiletries (Soap case, tooth brush),
Medical Accessories (blood bag, saline
bag, injection, medicine container)
5 Building and Construction Plastic Pipe, Door, Toilet Flush etc.
6 Electrical and Electronic
Equipment
Electrical cables and wires, switches,
regulator, computer accessories,
telecommunication equipment etc.
7 Agricultural Products Plastic pipes for irrigation, and plastic
films for shedding crops
8 Industrial Applications Engineering Parts
Source: Market Research, TetraTech and Sodev Consult
54 A Bankable report on Energy Efficiency finance program - Bangladesh
Pulp and Paper Industry:
Different grades of paper produced by the private paper mills in Bangladesh are writing, printing,
packaging, liner, media, simplex, duplex, board, newsprint, tissue, cigarette etc. Paper Board is
also produced by many units like Anant Board Mill, Eastern Paper Mill etc.
4.4.4 Description of Technology:
Paper Industry:
The Paper making machines are based on principle of Fourdrinier Machine. The Fourdrinier
consists of a Head box and specially woven plastic fabric mesh conveyor belt, known as
a wire as it was once woven from bronze, in the wet end to create a continuous paper web
transforming pulp, into a final paper. The figure 1 shows the different sections of the machines.
Figure 10: The various sections of Fourdrinier Machine. Source: http://en.wikipedia.org/wiki/File:Fourdrinier.svg
The table below shows the different present practices and machinery used in Paper industry: Table 14: Bangladesh Paper Industry - Equipment’s/Machineries currently in use
S. No Process Present Practice/ Machinery
1
Pulp Making
Usually a Hydrapulper is used.
It is a tank with an agitator installed inside
It is used to melt down the dry sheets & block of pulp.
2 De- Inking Secondary fiber like waste paper treated with some alkaline chemical
when it has some printing on it
3 Refining Normally disc and conical refiners are used in series.
4 Blending Different grades of pulps stored are blended by the mixing pump in
Blend Chest
55 A Bankable report on Energy Efficiency finance program - Bangladesh
Table 14: Bangladesh Paper Industry - Equipment’s/Machineries currently in use
5 Wire Part Wire Part is basically casting pulp for formation of paper
5 Pressing
Consists of three to four presses each having two press rolls of granite of
which one is top roll and other is bottom.
The top roll is pressed on the bottom by pneumatic or hydraulic
pressure ranging from 30 to 60 bars.
Press rolls are driven by electrical motors also.
6 Drying
Consists of twenty to thirty cylinders of carbon steel. The cylinders
heated by saturated steam inside them and paper runs on their surface
making the paper dry.
Each drier sub section is driven by one electrical motor.
7 Calendaring
Done in calendar stacks. A paper machine may have more than one
stack. Each stack has two to four calendar rolls of carbon steel. Every
stack is driven by a motor.
The raw material for these mills is mainly imported waste paper. Because paper making
machines are extremely expensive, many of these mills are using imported second‐hand
machines. Due to the age of these machines, the energy consumption is high. The newer
machines have many heat saving features. The pulping section, which does not require
sophisticated equipment, is either fabricated locally or imported at very low cost from
manufacturers that sell inferior technologies.
Chemical and Fertilizer Industry: The raw materials for urea production are Natural Gas,
Air and Steam. After removal of Sulphur from Natural Gas reaction take place in primary and
secondary reformers, high and low temperature shift convertors, methanators and finally in the
ammonia synthesis convertor. The ammonia and carbon di oxide produced in the ammonia plant
are used in Urea plant to produce Urea. Industries have utilized process technologies for example
CCC (USA) [for ammonia generation], Vetrocoke (for Urea Generation) and Chinese
technologies for carbon di oxide removal.
Chlorine, caustic soda and hydrogen are produced by electrolysis of concentrated Brine (NaCl
solution) using Membrane cell process. Hydrochloric acid is produced from H2 and Cl2 gases,
after their cooling and filtration, in a hydrochloric acid synthesis unit. The HCl synthesis reactor
includes the burner, the hydrochloric acid absorber and tail gas scrubber in order to avoid
atmospheric air pollution. Reaction is highly exothermic.
Sodium hypochlorite is produced by intimate contact between NaOH and Cl2. Reaction takes
place under continuous operation in a liquid jet ejector. Available concentration ranges between
100 and 150 gpl.
Plastic Industry: Prevailing technology level in the industry is considered to be intermediate
and or low. Corresponding automatic machines are largely imported, although semi-automatic
56 A Bankable report on Energy Efficiency finance program - Bangladesh
and manually operated machines are manufactured locally. Injection Moulding machines are
manufactured locally and supplied to small manufacturing units. Large manufacturers operate
machinery imported from China, Taiwan Province of China and Japan and Germany.
The whole industry relies on moulds supplies which are usually imported. Although around 200
units of local moulds manufacturers exists in Lalbagh cluster but still it covers only 10% of
existing demand. Usually small manufacturers are supplied by these cluster‘s mould makers.
Large manufacturers moulds are supplied either from local source or imported from China.
Major types of processing techniques are: blowing, extrusion and injection moulding. Injection
moulding machines produce solid plastic goods, such as buttons and furniture. Blow machines
produce such goods as bottles and polythene. Extrusion moulding is very similar to injection
mouldings and is used to make pipes, tubes, straws, hoses and other hollow pieces. A
combination of injection blow Moulding and extrusion blow Moulding called rotational
moulding are also widely used
Small contract manufacturers acquire raw materials and moulds and subcontract the
manufacturing stage to existing machine owners. Such machine owners lease machine/operators
time for a definite hourly or daily rate. Machine leasers are much sought after and delivery time
may be uncertain due to high demand.
4.4.5 Sources of Energy:
The main sources of energy for Chemical and Fertilizer Industry include following:
S No Sources of Energy
1 Natural Gas ( Primary)
2 Electricity
3 High Speed Diesel (HSD)
Table 15: Sources of Energy (Chemical, Fertilizer, Pulp and Paper, Plastic Sector)
The fertilizer industries are very much reliant on Natural Gas as it is not only the source of
energy but also the main raw material in the production of most basic fertilizer product Urea.
Petro Bangla is the authority to meet the gas supply to these plants.
The Electricity supply situation is particularly bad in the Dhaka area, where the largest clusters
of the plastics sector SMEs are located. Frequently, particularly in summer, the firms experience
five to six hours of ‗load shedding.‘ Productivity is badly affected by sharp fluctuations in power
supply and frequent energy shortages. However, large firms rely on generators (primarily gas-
based) to ensure uninterrupted power supply and hence enjoy higher productivity. Since early
57 A Bankable report on Energy Efficiency finance program - Bangladesh
2009, even large firms have experienced difficulties with their planned expansion projects as the
Government stopped providing new gas supply connections.
Common practice adopted in Fertilizers, Plastic and Paper plants is to generate electricity
through own generators and use it for continuous factory production. 80% of the units have their
own captive power plant. The captive generation is up to 300% times cheaper than the electricity
from the grid. (Electricity generation from Gas is around 3 BDT as compared to Grid Electricity
of 6.95 BDT).
Almost every industry has facility to get electric power from national grid (through different grid
service providers) at different voltage level i.e.33KV/11KV. However it is mostly used as back
up when Gas supply is interrupted or its pressure is low. HSD is predominantly used only as a
backup for emergency purposes.
4.4.6 Opportunities for Energy Conservation
Significant opportunities for energy conservation exist in chemical sector in terms of processes
and practices followed in Bangladesh when compared internationally. Major savings can come
through installation of heat recovery from gas engine generator (GEG) exhaust, improvement of
combustion efficiency, improvement of insulation on hot surfaces, and installation of Variable
Frequency Drives (VFD) for air compressors. The details about the present practice and scope
are illustrated in the following table 1: Table 16 : Present Practice in Bangladesh – Chemical, Plastic and Paper Industry
Bangladesh Cement Industry - Equipment’s/Machineries currently in use
S No Machinery Present Practice Proposed System
1
Heat Recovery from GEG
exhaust - The exhaust gas of
a gas engine generator
(GEG) carries a lot of heat
unless it is recovered by
some means. The average
temperature of the exhaust
gas was found between
4000C to 600
0C.
In most of the factories GEG
exhaust is not being utilized.
This is being released into
atmosphere resulting in a huge
misuse of energy and increase
in carbon emission.
Major portion of heat in
generator exhaust may be
recovered by installing a
Waste Heat Boiler. Waste
Heat Boiler can generate
steam to be utilized in
process. The exhaust may
also be used in pre heating
combustion air into a
furnace. It is estimated that
installation of a waste heat
boilers can conserve 40%
of thermal energy in
Bangladesh.
2 Improvement of combustion
efficiency: Any In many of the factories
combustion in boilers and other
An automatic combustion
control system tunes air/
58 A Bankable report on Energy Efficiency finance program - Bangladesh
Bangladesh Cement Industry - Equipment’s/Machineries currently in use
combustion in a
furnace/boiler requires
fuel and air (Oxygen).
An efficient combustion
requires air at a certain
ratio with fuel. Any
deviation from that ratio
creates inefficient
combustion and results
in misuse of fuel. Such a
situation may be avoided
and optimum combustion
may be achieved by
installing automatic
combustion control
system and pre heating
the combustion air.
furnaces are controlled manually
by operators. This is simply
impossible by any man to cope
up with all load changes during
several hours. Even then it‘s not
possible to tune correctly
without monitoring instruments
which is the case in most of the
industries.
fuel ratio all the time
depending on furnace load.
As the load is naturally not
a fixed parameter it needs a
constant monitoring and
adjustment which is
continuously done by
instruments without any
failure. Suggested
installation of combustion
control system and air pre-
heater can improve boiler
efficiency by 5-8%.
3
Improvement of Insulation
on hot surfaces: A hot
surface radiates heat
energy to the
environment. Thus
energy is lost and at the
same time working
environment is
deteriorated a lot. By
applying proper heat
insulation a good amount
of energy may be
recovered.
In plastic industries Injection
Moulding Machines (IMM) and
Extruder machines are
extensively used. These
machines use electrical heaters
arranged inside a barrel for
melting Polypropylene and
similar raw materials. In most
cases the barrel surfaces are not
well insulated. This situation
incurs a good amount of heat
loss. This energy loss may be
minimized by improving
insulation.
The barrel surfaces of
IMMs and extruders
having high temperature
may be insulated with rock
wool or glass wool
blankets. This action will
save around 10% of total
consumed energy from
being lost into atmosphere.
4
Installation of VFD for Air
Compressors: Most of the
industries need
compressed air for
different purposes.
Compressed air is made
by air compressors. In
conventional systems air
compressors operate in
load- unload cycle.
During unload phase of a
compressor it consumes
less energy but without
any output. So this is a
In most of the industries air
compressors run in load-unload
cycle. Longer unload time
increases energy loss. In many
industries under audit unload
time was found to be
substantially high. This indicates
that bigger amount of energy is
being spent unnecessarily.
A factory having a
compressed air demand of
2 compressors is likely to
need actually one
compressor for full time
and one for half time. In
such cases one compressor
may be used as base
compressor and one as
peak load compressor. The
peak load compressor
should have the VFD to
regulate its speed and thus
59 A Bankable report on Energy Efficiency finance program - Bangladesh
Bangladesh Cement Industry - Equipment’s/Machineries currently in use
loss. This loss may be
minimized by installing a
Variable Frequency
Drive (VFD) on the
motor of the compressor.
A VFD is actually a
speed controller of the
motor and thus it
regulates the output of
the compressor.
to avoid unload energy
consumption. It is noted
that when unload time is
more savings are higher.
4.4.7 Human Resource Skill Assessment: The chemical and fertilizers industry are composed of well-organized corporate industries which
offers the standard remittances to their employees. Chemical Engineers have made their presence
felt in several areas of technology absorption and adaptation processes in these industries. The
corporations in the public sector do have Chemical Engineers with long experience in relevant
enterprises. Lately, these experts have been involved in evaluation of technology proposals.
However, institutional arrangements to assess, adapt and absorb the largely imported technology
are still in a rudimentary stage. Thus, the sector in general and chemical industry in particular has
not yet been infused with an innate dynamism which can propel it to reach new heights of
chemical engineering innovation and creativity.
In the last two decades Plastic industry has evolved as the most labor intensive units in this
sector. There are more than 3,000 manufacturing units in Plastic Sector of which 98% are SMEs,
providing direct and indirect employment to half a million people. The plastics recycling
subsector, composed of around 300 small units in Dhaka employing 25,000 workers. The
average employees per firm are 18. Among them 14 are production workers and 4 white-collar
workers. Female workers are almost nil in paper mills, 5% in chemicals and in plastic industries
the workforce is around 50%. The average years of experience of workers in these enterprises are
8.0.
Existing training facilities are scarce and not adapted to industry needs. Existing training is done
on the job but generally poor working conditions stimulate a permanent drain of skilled workers.
Ahsanullah Engineering College during the early fifties provided large corporations in the
public sector the initial thrust for development of chemical and process industries.
The other training institutes in the sector include:
Bangladesh Industrial Technical Assistance Centre, Ministry of Industries (BITAC):
The Plastic Division in BITAC was established with UN assistance .This division still lags
well behind the current needs of plastic industries in Bangladesh. However, mould making
experience of BITAC is there to upgrade the technology.
Bangladesh Institute of Plastic Engineering and Technology (BIPET): Providing
technical education in Plastic sector
60 A Bankable report on Energy Efficiency finance program - Bangladesh
Bureau of Manpower, Employment and Training (BMET) delivers skills training through
37 Technical Training Centers (TTCs) and one Institute of Marine Technology (BIMT). Six
TTCs are reserved exclusively for women.
The readings suggested that the sector requires attention at energy policy level and require
training staff to increase their awareness about energy use, targets, and success stories every
quarter; this will be formalized by their human resources management. Top management of the
company need to drive this process initially until it is implemented and appreciated by lower
staff.
61 A Bankable report on Energy Efficiency finance program - Bangladesh
Sector Export Earnings (FY 2011-12):
US$ 402.70 million;
1.46 per cent of total export earnings
(US$ 24301.90 million) [2]
. Workforce: 63% of available 77
million labor force.
Industry Growth: Less than 2.0% per
year during the first two decades after
independence in 1971 to around 3.0%
during the last decade
Trade Associations:
1. Bangladesh Jute Mills Corporation (BJMC) (Public Sector)
2. Bangladesh Jute Spinners Association (BJSA) (Private Sector)
3. BJMA Bangladesh Jute Mills Association (Private Sector).
4. Bangladesh Sugar and Food Industries Corporation (BSFIC).
Sector 5: Agro-industries, Including Sugar and Jute Industries
4.5.1 General Description
The agricultural sector contributes around 29 per cent
of the country's Gross Domestic Product (GDP) and
generates employment for 63 per cent of the total labor
force10
. The sector is predominant with cultivation of
Rice crops, Jute, Cotton, Sugarcane, Flower,
Sericulture, Horticulture, Fisheries, Vegetables,
Livestock, Soil Development, Seed development and
distribution.
Although the country face challenges due to frequent
price fluctuations in food prices but basic supply of
raw materials, improved marketing techniques
and modern processing facilities has
enabled Agro-processing industries
presence in domestic as well as in
export markets.
Investment interests in Agro-based
industries are highly encouraged and have
grown significantly up to 6 times in last 7 years. Fig.1 illustrates the growth in Local Investment Projects
in Agro-based industries registered with BOI during the period from FY 2005-06 to 2011-12.
10
Ministry of Agriculture, Bangladesh [2]
Economic Survey 2011-12, Chapter 7 Agriculture
9657
8162
9511
8223
23251
52007
61195
0
10000
20000
30000
40000
50000
60000
70000
Local Investment Projects (Million Tk)
Figure 11: Local Investment Projects registered with BOI during the period from FY 2005-06 to 2011-12 in Agro-based industries Source : Board of Investment
62 A Bankable report on Energy Efficiency finance program - Bangladesh
4.5.2 Type of Industries
The sector features prominently with units/factories in two major areas:
1) Jute Mills.
2) Sugar Mills
Jute Mills:
Bangladesh is the largest producer of jute goods in the world. One fourth of the country‘s
population is directly or indirectly involved in different activities of jute sector. The mills are
either government owned or privately managed. Govt. Mills are directly controlled by a govt.
organization such as BJMC (Bangladesh Jute Mills Corporation). Private Mills are controlled by
Bangladesh Jute Spinners Association BJSA and BJMA (Bangladesh Jute Mills Association). ( )
Table 17: Jute Mills in Bangladesh
Source: Bangladesh Jute Mill Corporation A sizeable quantity of locally produced raw jute is used in the local jute industry. Jute mills are
operated with the local raw materials and spare parts. Average internal consumption of raw jute
is around 62% of total production. Bangladesh‘s jute industry is overwhelmingly dependent on
export market, with more than 85 per cent of its total production (which includes raw jute and
jute products) exported every year. According to the Export Promotion Bureau (EPB) of
Bangladesh, during FY2011-12, export of jute and jute products accounted for USD 974 million
with about 40 per cent growth both in terms of value and volume than the previous year. This
rise can mainly be attributed to rise in export of yarn. Yarn export has increased at a compound
annual growth rate (CAGR) of 4.5 per cent over the last six years. Recent export performance of
jute industry can be attributed to the rise in the price of jute products in the global market.
Over the last six years, prices for sacking, yarn and hessian increased by 14 per cent, 8.8 per cent
and 11.1 per cent respectively, while volume of export has increased by 1 per cent and 4.5 per
cent respectively, A part of this price rise is cost-push which is due to high cost of production,
owing to high price of raw jute.
Sugar Mills: Sugar Industry ranks second amongst major agro-based industries in
Bangladesh. In general, it is highly responsible sector. Total land used for Sugarcane cultivation
is 0.17 Million Hectare with average production of Sugarcane of about 7-7.5 million ton.11
11
BSFIC Report on 03-01-2013.
BJSA Mills BJMA Mills BJMC Mills TOTAL
Number of jute Mills 81 UNITS 97 UNITS 27 UNITS 205 UNITS
Number of workers employed (Approx.) 55,868 39,000 61,681 1,56,549
63 A Bankable report on Energy Efficiency finance program - Bangladesh
In Bangladesh there are 21 sugar industries out of which fifteen sugar industries are in public
sector under Bangladesh Sugar and Food Industries Corporation (BSFIC) and the remaining 6
industries are in private sector. The sugar export is very small. Most of their production is still
now for domestic use. The annual production capacity of 15 sugar mills of BSFIC is 210,000
metric tons. The present annual demand for sugar in the country is about 1,400,000 metric tons.
Compared to the actual demand of sugar in the country, the production of sugar in sugarcane-
based sugar mills under government supervision is insufficient. As a result, the shortage of sugar
is met by the sugar refineries established in the private sector and by import. A production target
of 1,35,376 metric tons of sugar was set in FY 2011-12 and 69,346.80 metric tons of sugar
against the target were produced. Production of sugar was less than the target due to high price of
molasses and other competitive by-products of sugarcane for creating significant impact on
country‘s economy especially the rural
4.5.3 End Products:
Jute mills in Bangladesh are mainly concentrated in producing end products like
1. Yarn and Twine: Prominently used in carpet weaving, core in cable/wire, ropes, tapestries and
soft luggage etc.
2. Sacking Cloth: it is made up of low quality jute fibers, sacking cloth is loosely woven heavy
cloth used for packing sugar, food grains, cement etc.
3. Hessian Cloth: It is a plain woven superior quality jute fabric. Also known as burlap, this cloth is
vastly used in wide applications including preparation of sacks, plant bags etc...
4. Other Products: These include Carpet Back Cloth, Tobacco sheets, Hydrocarbon free jute cloth,
Geo-textile, Canvas, and Serim Cloth, Bags and Hessian tapes and gaps.
Utilization of sugarcane in Bangladesh is done by following three means
1. Utilization of sugarcane for sugar production ( 32.6% of total production)
2. Utilization of sugarcane for Gur and Khandari production ( 52.6% of total production)
3. Utilization of sugarcane for seed and Juice purpose (14.39%)
The government owned sugar mills are collect sugarcanes (in some instances also cultivates)
from farmers and process it till the stage sugar is produced. Private sector mills mostly either
import or purchase raw sugar and refines it further to meet the export quality. Gur and Khandari
production is mostly confined in unorganized sector.
64 A Bankable report on Energy Efficiency finance program - Bangladesh
4.5.4 Opportunities for Energy Conservation
Waste Heat Recovery from Gas Engine Generators:
Large quantity of hot flue gases is generated from Boilers, Kilns, Ovens and Furnaces. If some of
this waste heat could be recovered, a considerable amount of primary fuel could be saved. In
case of sugar industry steam is used for refining and
in jute industry usage is in calendaring. Typical
example of usage could be pre heating boiler feed
water or process water in this case
Cogeneration:
In case of Sugar mills it has been observed that
Centrifugal Station is the major power consumption
followed by Boilers and Process Pumps. Most of the
plants, utilizes natural gas in the boiler for steam
generation. The steam is used in the turbo generator
to produce electricity.
As the gas generator(s) operate continuously and
that too at reasonable loading (≈ 60%) and the
exhaust gas from generators leave at around 500
degree C. This waste heat or thermal energy can be put
in use through simultaneously generating electricity and
useful heat (Cogeneration).
Fig.5 illustrates section wise energy consumption in sugar industry.
Use of Energy Efficient Motors: In agro-processing industry, especially for Jute
Industry, many instances are found for motor
loading of 50% or even below. Moreover in many
circumstances the used motors are found to be
oversized. The energy efficient motor has full load
efficiency higher by 3-7% in comparison to
standard motor and specifically useful for
continuous application. The standard motors have
lower power factor as well as lower efficiency level
during part load operation in compare to energy
efficient motors. It is therefore recommended to
replace the standard motors by energy efficient
motors. Figure 2 illustrated show the typical section
wise energy consumption in Jute Industry in
Bangladesh.
Figure 12: Section wise Energy Consumption - Sugar Industry
Figure 13: Section wise Energy Consumption - Jute Industry
65 A Bankable report on Energy Efficiency finance program - Bangladesh
Variable Frequency drive: Adding a variable frequency drive (VFD) to a motor-driven system can offer potential energy
savings in a system in which the loads vary with time, for e.g. in stitching of garments VFD‘s are
used for changing the speed of sewing machine without stopping it which reduces the energy
loss due to starting of motor again & again. Moreover, the starter is no longer required which
cuts down additional energy loss in motors.
A VFD may be used for control of process temperature, pressure or flow without use of a
separate controller. In general, by controlling speed of a pump rather than controlling flow
through use of throttling valves or nozzles, a speed reduction of 20% can yield energy savings of
50%12. VFD‘s can be installed for washer pump motor, fan motors for the flow control, in
Humidification plant, and Air Compressor.
4.5.5 Description of Technology
Jute Mills: Technology used in the jute manufacturing sector did not change much over the years, possibly
owing to minimal changes in the final demand of products. Most of the machines in jute mills are
old and are running beyond the usual functional period.
Although the major machineries used in each of the sections are fairly similar. For example,
some composite mills are found to use both softener and spreader machines in the production
process; others use trolley for handling output in spreading and carding sections; some mills use
overhead blowers in spinning frame for cleaning and smooth operations; some use flyers and
bobbins to increase production; and yet some have replaced ring flyers with baxter flyers for
attaining higher rotation per minute (rpm).
Similarly, new techniques are applied by the mills. For example, operations of drawing of some
mills take place at four stages; similarly, 110 spindles frame is being used in some mills; yarn
teasers and teaser card machines are used to recycle the wasted fibres; dust shakers are used in
some mills; use of hydrometer at the collecting zone to measure the humidity ratio of raw jute is
another example; rail tracks are available in the premises for the transportation of raw materials.
While old machines dominates the overall composition of machinery used, installation of new
machines either for replacement or expansion of operations is becoming more apparent these
days. A number of jute mill machinery manufacturers like Lagan Engineering Company Ltd,
12
Why Use Variable Frequency Drive? written by Filtrex, Inc. distributed by Paddock Pool Equipment Company, Inc. & Filtrex, Inc. www.paddockindustries.com
66 A Bankable report on Energy Efficiency finance program - Bangladesh
Milltex Engineering (P) Ltd, GSL, India and Zhejiang Golden Eagle Co., Ltd, China
manufacture and supply jute processing machinery to the jute industry of Bangladesh.
Table 18 : Present Practice in Bangladesh Jute Industry
Bangladesh Jute Industry – Process wise Machineries/ Practices currently in use
S No Process Machineries/Practice
1
Batching:
Softener was used to soften the raw jute. Now Spreader is gradually replacing the Softener. The difference is
saving of man-power and space, automatic doffing and ejection of rolls.
2
Carding:
There were three stages in carding: breaker, inter and finisher which has been reduced to two stages breaker
and finisher, but still the industry has not been able to reduce stages of carding or increase the speed of
existing cards. Wooden cylinders have been replaced by steel cylinders with the cards being same
Mackie/JF cards.
3
Drawing
The stages in drawing has remained same (1st drawing, 2nd drawing and 3rd drawing) and speeds have also
not gone up significantly. The only change has been that push bars have been replaced by screw and rotary
gill resulting in productivity enhancement.
4 Spinning:
The speeds of spinning frames have largely remained unchanged. Apron draft has come in place of slip
draft, which improves the yarn regularity, and the two legged flyer has mostly been replaced with Baxter
flyer. Ring spinning has been very limited in the jute industry as it requires better back processing system
and higher quality of raw jute.
5
Weaving:
The industry is still running traditional shuttle looms that are mostly used for hessian and sacking. These looms run
at slower speeds, create a lot of noise and produce a lower quality output compared to shuttle less looms
Sugar Mills:
The industries in public sector are producing ―plantation white sugar‖ from sugar cane for local
consumption by ―sulpho-defication‖ process following three or four boiling scheme. In the
private sector 6 (one of which is closed for want of gas supply) industries are producing ―refined
sugar‖ by carbonation process. The purity of refined is about 99.9%. Limited use of advanced,
automated technology in processes like centrifuging, carbonation and concentration has been
observed.
67 A Bankable report on Energy Efficiency finance program - Bangladesh
Table 19 : Present Practice in Bangladesh Sugar Industry
Bangladesh Sugar Industry – Machineries/ Practices currently in use Sr. No Equipment/
Machineries Current Practice
1. Cane Crushers A wide range of crushers are available for use by the small to medium-scale sugar processors with capacities ranging from 200kg to over 900kg of cane per hour. There are two basic types: the roll mill, which is the most common, and the screw expeller.
2. Roll mills
Roll mills, of various types, are a proven technology which are easy to
use and maintain and are extensively used in the large-scale sector as
well as in the small. These Crushers are driven by animals i.e. single ox
can be expected to process around 50kg of cane per hour and can
also modified to use it mechanically by using diesel or petrol engine.
A 5HP diesel can process around 300kg of cane per hour.
3. Screw expellers
These are more efficient than roll mills. Typically a single expeller will
have the same extraction efficiency as a three or four three-roll mill
tandem. Their use in the small-scale sector had been limited.
4. Furnaces Furnaces for open pan boiling use dried bagasse as fuel but can vary in design and size to suit local conditions and preferences .These are of different type’s i.e.
Simple permanent single-pan furnaces
Simple temporary single-pan furnaces
Permanent multi-pan furnaces Multi-pan furnaces
5. Centrifugal Machines
Two types of Centrifuges are used:
Batch type: used for separating high purity messecuite
Continuous type: used more on lower purity and higher
viscosity materiel.
6. Juice Heaters
They are used for heating raw, Sulphur & clear Juice from 30O to 40OC, 40O to 60OC, 60O to 75OC & 75O to 105OC.
7. Evaporator
These are of three type’s i.e. Robert (having 300 – 4000 sq. meters heating surface), Falling Film (having 300 – 5000 sq. meters heating surface) and Semi kestner
8. Vacuum Pans Batch and Continuous type pans. These are designed for the rapid boiling, uniform grain sizes, and
68 A Bankable report on Energy Efficiency finance program - Bangladesh
Bangladesh Sugar Industry – Machineries/ Practices currently in use
uniform degree of super saturation and large down take for rapid circulation. Batch 30 – 120 MT/Hr. capacity Continuous 15 – 100 MT/Hour Continuous pans are made with floating calandria to have effective circulation and optimum circulation ratio of 1:1. Multiple entry of steam/vapor and efficient use of Low Pressure vapors for pan boiling and with steady consumption, results in stabilized working of evaporators and subsequent steam economy
9. Crystallizers Air Cooled, Water Cooled and Vertical Crystallizers are in use.
4.5.6 Sources of Energy: Major sources of Energy in Bangladesh include following:
S No Sources of Energy
1 Electricity
2 Natural Gas
3 High Speed Diesel (HSD)
4 Compressed Natural Gas ( CNG)
5 Furnace Oil
Table 20: Sources of energy (Agro industries)
Almost every industry has facility to get electric power from national grid (through different grid
service providers) at different voltage level i.e.33KV/11KV/0.4V. However it is mostly used as
back up when Gas supply is interrupted or its pressure is low. It has also been noticed that the
few companies resort to using CNG or HSD in case Natural Gas connection is not processed.
HSD is predominantly used for lighting purpose.
The common practice is to generate electricity through own generators (captive power plants)
and use it for continuous factory production. This practice is popular because of the huge
difference is unit cost of electricity sourced from national grid (usually 6 taka per unit) than the
one obtained from gas generators (4 taka per unit). Its been seen that 80% of the jute and sugar
units have their own captive power plant. The sources of fuel for CPP are diesel and gas .Since
fuel cost amounts to 1-5 per cent of the total cost of production, any possible saving of electricity
prove substantial in reduction of the overall cost.
69 A Bankable report on Energy Efficiency finance program - Bangladesh
4.5.7 Human Resource Skill Assessment:
There is no standard practice for the use of workers in different sections of jute mills (standard
Deviation in the use of workers is estimated to be 22.6 in calendaring sections to as high as
376.3 in Weaving sections). Man-machine ratio is more homogenous in carding, drawing,
spinning and weaving sections; but less in softening, winding and calendaring sections.
In the male-dominated operational practices in jute mills, female workers are found mostly in
drawing, carding and softening sections where the activities are relatively less skill-oriented
and less laborious in nature.
It is important to note that the average number of workers employed in jute mills in 2011 was
found to be about 39 per cent less compared to what was in 2007.The reduction of employment
was as high as 44 per cent in case of spinning mills. This is on account of the difference in
wages between the jute manufacturing sector and the other sectors. The average wage of
agricultural workers in December 2010 was estimated to be Tk. 163, while pulling
rickshaw/van would ensure a daily return of Tk. 300. Although workers in jute mills are
compensated by means of in-kind benefits in terms of housing facilities, schooling facilities,
etc., but those are not considered to be adequate compared to high-paid off-farm jobs.13
A large portion of this value chain is in the unorganized sector and highly fragmented, starting
from the farmer to the market and then to the processor. The organized sector contributes to
about 65% of the value of the output to the sector. The following figure illustrates the profile of
people employed in the jute and sugar industries.
Figure 14 : Profile of People Involved in Agri Sector Segment
13
TECHNOLOGICAL UPGRADATION IN THE JUTE MILLS OF BANGLADESH Challenges and Way Out*; CPD working Paper 100; published by Centre for Policy Dialogue Bangladesh
70 A Bankable report on Energy Efficiency finance program - Bangladesh
The management of jute and sugar mills comprises of professionals, engineers and other
support staff. Number of engineers, professionals and other staff is not well balanced in small
jute mills. Some firms have no engineers and they operate through technicians.
The following table represents the education profile of persons across agro segments of the
organized side of the sector in Bangladesh. As seen, most of the persons employed are
minimally educated and most have studies till 10th
standard or below:
Total Employment Industry Aggregate
Employment with Management Education 1-2%
Post Graduates 1%
Graduates 10%
Diploma Holders/ Certificate Holders 1%
10th Standard or below ( those requiring ‘short
term/modular’ training skills building of some
form or the other)
80%
Daily Wages/ Contractual 5%
Table 21: Distribution of Human Resource by Education Level
It is observed that managers of most of the firms have had years of work experience in the agro
sector. However, such long working experience does not always result in operational efficiency
and better productivity. The methods and processes followed by the mill management for
operations and maintenance seem to be less effective for higher level of productivity and
efficiency. Most of the operations are manually driven and limited automation and
computerization is observed.
Some of the entrepreneurs also bear liabilities for the inefficiency of mill management. In a
number of cases, jute mill entrepreneurs are not ‗enthusiastic‘ towards achieving higher return
by making necessary investments. This is because jute manufacturing is not a high-return
business venture at least compared to that of the RMG, and the revenue often fluctuates due to
various reasons.
There is a dearth of human resources in the manufacturing sector particularly at mid-level
management. This can mainly be attributed to narrow career opportunities, unattractive salary
packages, and better opportunities in textiles and other sectors. Mills suffered from lack of
engineers since most prospective engineers are not motivated to join in jute mills. More
importantly, there is no specialised technical engineering institution in Bangladesh for
71 A Bankable report on Energy Efficiency finance program - Bangladesh
jute sector. Most of the engineers in jute mills have been trained in textile colleges.
Lack of skilled manpower has put the industries in grave situation.
The readings suggested that the sector requires attention at energy policy level and require
training staff to increase their awareness about energy use, targets, and success stories every
quarter; this will be formalized by their human resources management. Top management of the
company need to drive this process initially until it is implemented and appreciated by lower
staff.
72 A Bankable report on Energy Efficiency finance program - Bangladesh
Chapter 5: Financial Analysis
5.1 Financial Analysis Tools: Financial and Economic Analysis for the opportunities of Energy Conservation discussed in the
Chapter 5: Sector analysis, is done with the help of the customized tools developed for energy
conservation measures used. While developing these tools, significant considerations were taken
from the financial model developed by U.S Department of Energy‘s Industrial Technologies
Program (ITP) which in collaboration with Lawrence Berkeley National Laboratory that aimed
to help industries to reduce energy intensity and carbon emissions.
The purpose behind these tools was to conduct limited free-ridership, spill over, and installation
verification analysis. The sample design will support net-to-gross analysis at the program level.
This analysis coupled with tools will allow industry managers to revise the programs as needed
prior to the full-scale impact evaluations.
The intention of using the tool is to support industry owners with high potential Energy
conservation option suggestions (for example boiler replacement etc.) and help them to identify
the payback for same. We intend to capture the data as per exhibit of the software tool utilized
and Based on the percentage of energy savings estimated per unit produced we will conduct a
cost benefit analysis. The attributes for this analysis include:
Pay Back Period.
Projects Internal Rate of Return.
Net Present Value (NPV).
Savings in Gas.
Savings in Electricity.
Carbon Emission.
5.2 General Description of the tools Financial and Economic Analysis Tool for Energy Efficiency Projects provides the Economic
Analysis and a Summary of the indicators essential for the financial viability in the
implementation of the Energy Efficiency measures.
The Tool provides Five Menu options on its Home page, through which the user can access
directly to these options by just clicking on the buttons provided as shown below:
73 A Bankable report on Energy Efficiency finance program - Bangladesh
Figure 15: Home page of a random Financial and Economic Analysis Tool
The home page provides the access to the following sheets: Instructions
Input Technical parameters.
Financial Input Sheet.
Financial analysis.
Summary
In the two input sheets (Input Technical parameters & Financial Input Sheet.) the user has to fill
the required values in the Yellow Cells. As a valid entry is done the cell colour will change to
Green otherwise it will show an error message. The guidance for entering values in every cell is
provided in the message box which pops up as an individual cell is selected.
Input Technical Parameters: This sheet consists of technical specifications which are to be entered by the user. This sheet is
customized depending upon the energy efficiency measure used. These specifications are used to
calculate the overall cost savings which determines the viability of energy efficiency measure in
the industry. This sheet also includes some tabs to facilitate the ease in input process and to make
the tool more user friendly i.e.
HOME: On pressing this tab, user can access home page
74 A Bankable report on Energy Efficiency finance program - Bangladesh
Input New Parameters: On pressing this Tab all the input cells will get reset to Zero for new
Data Entry.
Show Assumptions & Calculations: User can see the technical assumptions taken for
calculations and significant calculated values just by clicking this Tab.
Edit Parameters: This Tab enables the user to modify the values specified in assumptions. The
cells under Calculations subheading cannot be modified since their value is assigned to specific
formulae.
Hide Assumptions & Calculations: This will hide the Assumptions and Calculations displayed.
Figure 16: Technical Input Sheet showing specifications in a Financial and Economic Analysis Tool.
Quantity of water required per hour litre/ hour 0.00
Temperature of water required 0C 0.00
Total Operating Hours of furnace in a year. hours 0.00
Gas consumption per hour in producing hot water Cub. M/ hour 0.00
Gas Tariff BDT/kWh 0.00
Annual Monetary Savings/Benefits BDT 0.00
Investment BDT 0.00
Pay Back Months 0
Specifications Unit Values
Input New Parameters
Home
Show Calculations & Assumptions
75 A Bankable report on Energy Efficiency finance program - Bangladesh
Figure 17: Assumptions and Calculations in Technical Input Sheet
Input Financial Parameters: It consists of financial parameters which are to be entered by the user. These parameters are
necessary for the calculation of the financial indicators. The Values in Green cells are already
provided with respect to Bangladesh scenario, the user may edit these values at his convenience
by clicking on “Edit Existing Entries”. The user may switch to the Financial Summary sheet or
financial analysis Sheet after entering the required values by pressing Tabs i.e. "Show
Summary of Financial Analysis” & "Show Financial Analysis".
Figure 18: Financial Input Sheet
Cost of installing Solar Water Heater BDT/100 litre 15000.00
Annual Gas Consumption Cub. M 0.00
Assumptions
Calculations Used
Hide Assumptions & Calculations Edit Parameters
Specifiacations Unit Value
Life of T he Project Year 5.00
Cost of Engineering and Civil work (10%) % of Investment 10.00%
Import duty % of Investment 10.00%
Construction time insurance % of Investment 2.00%
Any other cost % of Investment 1.00%
Contingencies % of Investment 5.00%
Economic variables Unit Value
Real Discount rate Equity % 17.20
Sources of funds Unit Value
Loan Financing % 70.00%
Equity Capital % 30.00%
Loan repayment term Year 5.00
Interest on Bank Loan % 16.00%
Show Summary of Financial Analysis Show Financial Analysis
Home
Edit Existing Entries
76 A Bankable report on Energy Efficiency finance program - Bangladesh
Financial Analysis: The Financial analysis calculates and demonstrates the costs, savings, project analysis and Cash Flow calculations for the project
under consideration.
Financial Analysis
Life time of the project / technology 10
Year
Discount rate 17.20 %
Annuity Factor (Capital Recovery Factor) 0.216 -
Annualized capital investment 0 BDT
Cash-Flow Analysis
Currency Unit: BDT
Annual escalation rate
(+ or - in %/year) 0 1 2 3 4 5 6 7 8 9 10
Costs
Consumption-linked cost
Fuel cost 5% 0 0 0 0 0 0 0 0 0 0
Electricity cost 5% 0 0 0 0 0 0 0 0 0 0
Raw Water cost 5% 0 0 0 0 0 0 0 0 0 0
Other consumption-linked costs 5% 0 0 0 0 0 0 0 0 0 0
Operation-linked costs
O&M cost 5% 0 0 0 0 0 0 0 0 0 0
Salary and Adm. Costs 10% 0 0 0 0 0 0 0 0 0 0
Insurance cost 5% 0 0 0 0 0 0 0 0 0 0
Other operational costs 5% 0 0 0 0 0 0 0 0 0 0
Total Annual Consumption & Operation-linked costs---Baseline 0 0 0 0 0 0 0 0 0 0
Savings
Cost Reductions
Cost reduction from electricity saving 5% 0 0 0 0 0 0 0 0 0 0
77 A Bankable report on Energy Efficiency finance program - Bangladesh
Cost reduction from fuel saving 5% 0 0 0 0 0 0 0 0 0 0
Cost reduction from raw water saving 5% 0 0 0 0 0 0 0 0 0 0
Other Cost reduction resulted from the project 5% 0 0 0 0 0 0 0 0 0 0
Total Annual Cost Reductions/Savings 0 0 0 0 0 0 0 0 0 0 0
Project Analysis
Earnings Before Interest, Tax & Depreciation (EBITDA) 0 0 0 0 0 0 0 0 0 0 0
Depreciation 0 0 0 0 0 0 0 0 0 0
Interests 0 0 0 0 0 0 0 0 0 0
Earnings Before Tax (EBT) 0 0 0 0 0 0 0 0 0 0
Company Tax 0 0 0 0 0 0 0 0 0 0
Earnings after Tax (EAT) 0 0 0 0 0 0 0 0 0 0
Cash Flow Calculations
EAT 0 0 0 0 0 0 0 0 0 0
Depreciation (+) 0 0 0 0 0 0 0 0 0 0
CAPEX (-) 0
Debt (+) 0
Instalment (debt prepayment) (-) 0 0 0 0 0 0 0 0 0 0
Net Cash flow to equity 0 0 0 0 0 0 0 0 0 0 0
Figure 19: Financial Analysis sheet
78 A Bankable report on Energy Efficiency finance program - Bangladesh
Summary: The summary shows the various financial indicators of the project in tabulated Form.
Indicator Unit Values
Project Life time Year 10
Net Present Value (NPV) BDT
million 9.6310098
Internal Rate of Return (IRR) (After tax) % 313.44%
Simple Payback Period (SPP) Year 0.63
Savings in Electricity kWh 415250
Carbon Emission Ton 323.895
Investment BDT
million 1.83
Figure 20: Summary of Results of Financial & Economic Analysis
General Assumptions used for Financial Analysis: Assumptions Value Base year 2013
Lifetime of the project / technology 10 years
Currency unit used in the analysis BDT
Capital-linked payments Unit Values Total equipment cost BDT
Cost of Engineering and Civil work BDT 10% of capital cost
EPC (engineering, procurement, construction) cost BDT
Import duty and Taxes BDT 10% of capital cost
Construction time insurance BDT 2% of the cost of Engineering
Energy Audit Cost BDT 800,000
Contingencies BDT 5% of EPC
Operation-linked payments Unit O&M costs (in first year) BDT 5% of Capital Cost
Insurance cost BDT 1% of capital cost
Economic variables Unit
79 A Bankable report on Energy Efficiency finance program - Bangladesh
Real Discount rate Equity % 17.2%
Sources of funds Unit Loan Financing % 70%
Equity Capital % 30%
Loan repayment term Year 5 years
Interest on Bank Loan % 16%
Real annual escalation rate (Growth rate) Unit Fuel cost (Gas and HSD) % 5%
Electricity cost % 5%
Other consumption-linked costs % 5%
O&M cost % 5%
Salary and Adm. Costs % 10%
Insurance cost % 5%
Other operational costs % 5%
Tax Payment Unit Tax (1st - 5th year) % 30%
Tax (6th - 10th year) % 30%
Tax (11th - 15th year) % 30%
Tax (16th year onwards) % 30%
Any other tax % 0%
Depreciation St. Line over project life
Table 22: General Assumptions used for Financial Analysis
80 A Bankable report on Energy Efficiency finance program - Bangladesh
Chapter 6: Findings & Recommendations
1. Need for a better and rapid Policy framework for Energy Efficiency
implementations :
The Bangladesh is lacks a strong framework for Energy efficiency implementations as BEE
(Bureau of energy efficiency) In India. The concept of energy efficiency is new to Bangladesh
Industry. Energy efficiency and renewable energy are said to be the twin pillars for sustainable
energy. There was no institutional framework for renewable energy before 2008; therefore the
renewable energy policy was adopted by the government. According to the policy an institution,
Sustainable & Renewable Energy Development Authority (SREDA), was to be established as a
focal point for the promotion and development of sustainable energy, comprising of renewable
energy, energy efficiency and energy conservation. Establishment of SREDA is still under
process. Power division is to facilitate the development of renewable energy until SREDA is
formed.
Industries majorly SME‘s are the major contributors in the Energy consumption and the country
doesn‘t have proper guidelines regarding the energy use. Most of the industries from energy
consumption perspective in private sector are in medium to small category. The bandwidth of
energy saving potential will be low. FIs may
not be interested in doing small amount of
financing. Government policies also lack an
edge here.
2. Critical need for Energy
Conservation:
In Bangladesh major energy fuel is gas.
Currently there is about 25% demand supply
gap in gas. As a result many industries are
suffering from loss of production. This is the
major driving force for the industries to
move towards energy efficiency. Very few
industries are utilizing thermal energy Figure 21: Gas Demand and Supply Gap
81 A Bankable report on Energy Efficiency finance program - Bangladesh
exhausted from one process to other process. Most are wasting it by exhausting it to atmosphere.
In most of the industries, there are hardly any instruments or measurement system of energy at
various stages of process cycle. Even, the tapings to mount the instruments do not exist.
The Energy demand supply gap is increasing continuously, currently it is a gap of 14% but it is
estimated to go to 54% by 2030 (Exhibit – Gas Demand Production and Gap 2013-30) and there
is a danger that gas reserve may get exhausted much before that. This increasing gap in demand
supply sought for the measures to implement efficient measures in industries which cosumes
about
3. Proper balancing of The Gas and electricity Tariff:
The difference between the cost of Electricity being supplied to the industries by distribution
companies and the cost of electricity generation by industry using their own gas generator
without any waste recovery is about 200 times less. Therefore to achieve the economies of scale
most of the industrial units have captive generation. The energy produced by these secondary
Captive plants can also be produced 30% more efficiently if it would have been generated by the
primary sources. Thus it is recommended to balance the Gas and electricity tariff to enhance
energy conservation.
82 A Bankable report on Energy Efficiency finance program - Bangladesh
Chapter 7: Conclusion
There is very significant scope to improve energy efficiency in Bangladesh, and reduce GHG
emissions from, industrial facilities. Capturing such opportunities is essential if the world is to
achieve the reductions in global greenhouse gas emissions of 50 per cent or more by 2050 that
are necessary to avoid exceeding the 2°C threshold and to stabilize GHG concentrations between
450 and 550 ppm. Yet energy efficiency policies and measures are not being implemented at
anywhere near their potential and necessary levels. This is due to a range of barriers that prevent
their adoption. Effective industrial sector policies and programmes have demonstrated the more
effective adoption of energy-efficient practices and technologies by overcoming informational,
institutional, policy, regulatory, price, market-related and other barriers. Given the urgency of the
climate challenge, it is important to identify and replicate where appropriate the key features of
the most successful policies and programmes. Short term measures to reduce energy use have the
potential significantly to reduce the longer term cost of mitigating global climate change. A
failure to seize these opportunities will result in much higher costs in the longer term. Overall,
the key message is that energy efficiency and especially industrial energy efficiency in many
countries where infrastructure development is driving energy use can make a significant
contribution to reducing energy-related GHG emissions. It is a relatively cheap option with the
potential to produce rapid, large scale benefits. It should be viewed as the first fuel of choice in
the creation of global low-carbon energy system. Only a handful of countries have strong and
comprehensive industrial energy efficiency policies and measures in place. Successful
experiences from these countries demonstrate the importance of raising awareness of
management attention; establishing ambitious, yet achievable, targets; the adoption of energy
management standards and implementation of energy management systems; and all of these
underpinned by appropriate institutional support. Essential elements of a successful industrial
energy efficiency policy include: support to provide capacity building for energy management
and facility systems optimization; energy audits and assessments; benchmarking; and
information-sharing.
83 A Bankable report on Energy Efficiency finance program - Bangladesh
Annexure 1: Financial Analysis of Energy Conservation Measures This Analysis is carried done by taking the live cases from one of the Industries Audited in
Bangladesh – Industrial Energy Efficiency Finance Program. The Analysis is done by using
the Financial and Economic Analysis Tools. The name and other details of the Client cannot be
revealed.
A brief explanation of Financial Analysis is as Follows:
1. Installation of High Efficiency Motors
The majority of electrical energy consumed in most industrial facilities is used to run electric
motors. Energy-efficient motors now available are typically from 3 to 6 per cent more efficient
than their standard motor counterparts. The price premium for an energy-efficient motor is
typically 15 to 25 per cent above the cost of a standard motor. About 80% of the electrical
energy is used by the Motors for manufacturing equipment and utilities. These motors are
operated for more than 6000 hours to 7000 hours in a year. Thus, these higher efficient Motors
can save considerable amount of electricity while operation.
In a Leather Tannery audited in Bangladesh the following situation was found:
Present System There are 49 motors (1 of 5.5 kW, 10 of 7.5 kW, 4 of 30 kW, 4of 45
kW, 30 of 15 kW capacities). The motors are more than 15 years
old. The consultants have found their efficiency less than 80%. On
an average motors operates 6000 hrs/year at a load factor of 0.6
Proposed System It is suggested to replace these motors by high efficiency motors of
92% efficiency. However, in the analysis on conservative scale we
have considered efficiency of new motor as 90%.
Using the Financial and Economic Analysis Tool the following calculations are done:
84 A Bankable report on Energy Efficiency finance program - Bangladesh
Input Technical Parameters:
Specifications Unit Motor Motor Motor Motor Motor
1 2 3 4 5
Rating of the Existing Motors defined in Kilo Watts KW 5.50 7.50 30.00 45.00 15.00
Rating of the Existing Motors defined in Horse Power
HP 0.00 0.00 0.00 0.00 0.00
No of Motors - 1.00 10.00 4.00 4.00 30.00
Existing efficiency of the Motor % 80.00 80.00 80.00 80.00 80.00
Efficiency of the New motor % 90.00 90.00 90.00 90.00 90.00
Load factor of the Motor - 0.60 0.60 0.60 0.60 0.60
Running Hours of the Motor in a year Hour
s 6000.0
0 6000.0
0 6000.0
0 6000.0
0 6000.0
0
Electricity Tariff BDT/KWh 6.95
Annual Monetary Saving BDT 19112.50 260625.00 417000.00 625500.00 1563750.00
Investment BDT 12100.00 165000.00 264000.00 396000.00 990000.00
Pay Back Months 0.63
Assumptions and Calculations:
Assumptions
Cost of New Motor BDT/kWh 2200.00
Calculations Used
Specifications Motor Motor Motor Motor Motor
1 2 3 4 5
Connected Load of the Motor in KW KW 5.50 75.00 120.00 180.00
Input Power to the existing motor KW 6.88 93.75 150.00 225.00
Input Power to the new motor KW 6.11 83.33 133.33 200.00
Annual Energy Consumption kWh 36666.67 500000.00 800000.00 1200000.00
Annual Energy Saving kWh 2750.00 37500.00 60000.00 90000.00
85 A Bankable report on Energy Efficiency finance program - Bangladesh
Financial Analysis:
Financial Analysis
Life time of the
project / technology 10 Year
Discount rate 17.20 %
Annuity Factor
(Capital Recovery
Factor) 0.216 -
Annualized capital
investment 3,95,056 BDT
Cash-Flow Analysis
Currency Unit: BDT
Annual
escalation rate
(+ or - in %/year) 0 1 2 3 4 5 6 7 8 9 10
Costs
Consumption-linked
cost
Fuel cost 5% 0 0 0 0 0 0 0 0 0 0
Electricity cost 5% 7,215 7,576 7,955 8,352 8,770 9,208 9,669 10,152 10,660 11,193
Raw Water cost 5% 0 0 0 0 0 0 0 0 0 0
Other consumption-
linked costs 5% 0 0 0 0 0 0 0 0 0 0
Operation-linked
costs
O&M cost 5% 0 0 0 0 0 0 0 0 0 0
Salary and Adm.
Costs 10% 0 0 0 0 0 0 0 0 0 0
Insurance cost 5% 18,271 19,185 20,144 21,151 22,209 23,319 24,485 25,709 26,995 28,344
Other operational
costs 5% 0 0 0 0 0 0 0 0 0 0
Total Annual
Consumption & Operation-linked
costs---Baseline 25,486 26,760 28,098 29,503 30,978 32,527 34,154 35,861 37,654 39,537
Savings
Cost Reductions
Cost reduction from
electricity saving 5% 28,85,988 30,30,287 31,81,801 33,40,891 35,07,936 36,83,333 38,67,499 40,60,874 42,63,918 44,77,114
Cost reduction from
fuel saving 5% 0 0 0 0 0 0 0 0 0 0
86 A Bankable report on Energy Efficiency finance program - Bangladesh
Cost reduction from
raw water saving 5% 0 0 0 0 0 0 0 0 0 0
Other Cost reduction
resulted from the
project 5% 0 0 0 0 0 0 0 0 0 0
Total Annual Cost
Reductions/Savings 0 28,85,988 30,30,287 31,81,801 33,40,891 35,07,936 36,83,333 38,67,499 40,60,874 42,63,918 44,77,114
Project Analysis
Earnings Before Interest, Tax &
Depreciation
(EBITDA) 0 28,85,988 30,30,287 31,81,801 33,40,891 35,07,936 36,83,333 38,67,499 40,60,874 42,63,918 44,77,114
Depreciation 1,82,710 1,82,710 1,82,710 1,82,710 1,82,710 1,82,710 1,82,710 1,82,710 1,82,710 1,82,710
Interests 2,04,635 1,63,708 1,22,781 81,854 40,927 0 0 0 0 0
Earnings Before Tax
(EBT) 24,98,642 26,83,869 28,76,310 30,76,327 32,84,299 35,00,623 36,84,789 38,78,164 40,81,208 42,94,404
Company Tax 7,49,593 8,05,161 8,62,893 9,22,898 9,85,290 10,50,187 11,05,437 11,63,449 12,24,362 12,88,321
Earnings after Tax
(EAT) 17,49,050 18,78,708 20,13,417 21,53,429 22,99,009 24,50,436 25,79,352 27,14,715 28,56,846 30,06,083
Cash Flow
Calculations
EAT 17,49,050 18,78,708 20,13,417 21,53,429 22,99,009 24,50,436 25,79,352 27,14,715 28,56,846 30,06,083
Depreciation (+) 1,82,710 1,82,710 1,82,710 1,82,710 1,82,710 1,82,710 1,82,710 1,82,710 1,82,710 1,82,710
CAPEX (-) 18,27,100
Debt (+) 12,78,970
Instalment (debt prepayment) (-) 2,55,794 2,55,794 2,55,794 2,55,794 2,55,794 0 0 0 0 0
Net Cash flow to
equity -5,48,130 16,75,966 18,05,624 19,40,333 20,80,345 22,25,925 26,33,146 27,62,062 28,97,425 30,39,556 31,88,793
87 A Bankable report on Energy Efficiency finance program - Bangladesh
Summary:
Indicator Unit Values
Project Life time Year 10
Net Present Value (NPV) BDT
million 9.6310098
Internal Rate of Return (IRR) (After tax) % 313.44%
Simple Payback Period (SPP) Year 0.63
Savings in Electricity kWh 415250
Carbon Emission Ton 323.895
Investment BDT
million 1.83
88 A Bankable report on Energy Efficiency finance program - Bangladesh
2. Installation of Air Compressor with VFD Controller
An air compressor is a device that converts power (usually from an electric motor, a diesel
engine or a gasoline engine) into kinetic energy by compressing and pressurizing air, which, on
command, can be released in quick bursts. It operates in loading and unloading condition. The
unload power consumption of screw compressor is 40% of load power and it runs for on an
average 30% of total running hours in unload conditions
It is suggested to install variable speed drive controllers for the compressor which will save
about 80% of the power consumption during unload conditions. This tool provides an insight
towards the financial viability of the energy efficiency measure used.
In an Industry audited in Bangladesh the following situation was found:
Present System The plant has installed one air compressor of 44 kW. It is running with
loading and unloading condition. The unload power consumption of screw
compressor is 40% of load power and it runs for on an average 30% of total
running hours in unload conditions. The compressors run for average 6,000
hours a year
Proposed System It is suggested to install variable speed drive controllers for the compressor
which will save about 80% of the power consumption during unload
conditions.
Using the Financial and Economic Analysis Tool the following calculations are done:
89 A Bankable report on Energy Efficiency finance program - Bangladesh
Input Technical Parameters:
Specifications Unit Values
Rating of Compressor Motor - 44.00
Total Running Days for motor in a Year Days 365.00
Compressed Air Unloading Time per day hours 4.93
Electricity Tariff BDT/kWh 6.95
Annual Monetary Savings/Benefits BDT 176140.80
Investment BDT 264000.00
Pay Back Months 17.99
Assumptions and Calculations:
Assumptions
Power savings using VFD % 80.00
Cost of installing VFD per rating of Motor BDT/kW 6000.00
Calculations Used
Unloading Power kWh 31680.00
Annual Electricity Savings by using VFD kWh 25344.00
90 A Bankable report on Energy Efficiency finance program - Bangladesh
Financial Analysis:
Financial Analysis
Life time of the project / technology 5 Year
Discount rate 17.20 %
Annuity Factor (Capital Recovery Factor) 0.314 -
Annualized capital investment 1,05,361 BDT
Cash-Flow Analysis
Currency Unit: BDT
Annual escalation rate
(+ or - in %/year) 0 1 2 3 4 5
Costs
Consumption-linked cost
Fuel cost 5% 0 0 0 0 0
Electricity cost 5% 2,537 2,664 2,797 2,937 3,083
Raw Water cost 5% 0 0 0 0 0
Other consumption-linked costs 5% 0 0 0 0 0
Operation-linked costs
O&M cost 5% 0 0 0 0 0
Salary and Adm. Costs 10% 0 0 0 0 0
Insurance cost 5% 2,640 2,772 2,911 3,056 3,209
Other operational costs 5% 0 0 0 0 0
Total Annual Consumption & Operation-linked costs---Baseline 5,177 5,436 5,707 5,993 6,292
Savings
Cost Reductions
Cost reduction from electricity saving 5% 1,76,141 1,84,948 1,94,195 2,03,905 2,14,100
Cost reduction from fuel saving 5% 0 0 0 0 0
Raw water savings 5% 0 0 0 0 0
Other Cost reduction resulted from the project 5% 0 0 0 0 0
Total Annual Cost Reductions/Savings 0 1,76,141 1,84,948 1,94,195 2,03,905 2,14,100
Project Analysis
Earnings Before Interest, Tax & Depreciation (EBITDA) 0 1,76,141 1,84,948 1,94,195 2,03,905 2,14,100
Depreciation 67,109 67,109 67,109 67,109 67,109
Interests 37,581 30,065 22,549 15,032 7,516
Earnings Before Tax (EBT) 71,451 87,774 1,04,538 1,21,764 1,39,475
91 A Bankable report on Energy Efficiency finance program - Bangladesh
Company Tax 21,435 26,332 31,361 36,529 41,843
Earnings after Tax (EAT) 50,016 61,442 73,177 85,235 97,633
Cash Flow Calculations
EAT 50,016 61,442 73,177 85,235 97,633
Depreciation (+) 67,109 67,109 67,109 67,109 67,109
CAPEX (-) 3,35,544
Debt (+) 2,34,881
Instalments (debt prepayment) (-) 46,976 46,976 46,976 46,976 46,976
Net Cash flow to equity -1,00,663 70,148 81,575 93,309 1,05,367 1,17,765
Summary:
Indicator Unit Values
Project Life time Year 5
Net Present Value (NPV) BDT million 0.19
Internal Rate of Return (IRR) (After tax) % 76.48%
Simple Payback Period (SPP) Year 1.90
Savings in Electricity kWh 25,344.00
Carbon Emission ton 19.77
Investment BDT million 0.34
92 A Bankable report on Energy Efficiency finance program - Bangladesh
3. Replacing old inefficient boilers
Manufacturing plants require steam for process heating purposes. Steam is generated in boilers at
10 – 15 Kg/cm2. Many plants have old 2-pass package smoke tube boilers which have much
lower operating efficiency compared to modern 3-pass package boilers. The new boilers are also
provided with air-preheating and better combustion control facilities.
Replacing the old boilers with modern high efficiency boilers will reduce gas consumption in the
boilers without affecting the process.
In a Chemical factory audited, the following situation was found:
Present System The industry has an installed boiler with generation capacity of 10
TPH. The installed boiler is a two pass 2-pass package smoke tube
boilers which has a generation pressure of about 15 kg/cm2 and an
operating efficiency of 82% with gas consumption of 582 Cub. M
per hour with total of 7000 running hours annually.
Proposed System The proposed system includes the installation of a modern 3-pass
package boiler in place of the existing one. The new boilers are also
provided with air-preheating and better combustion control facilities
Using the Financial and Economic Analysis Tool the following calculations are done:
Input Technical Parameters:
Specifications Unit Values
Capacity of the Existing Boiler. TPH 10.00
No of Boilers of above mentioned capacity to be Replaced. - 1.00
Please Select the Type Of Boiler Existing In The System. - Two Pass Boiler
Please Select the Type of Boiler to be implemented In The System. - Three Pass Boiler
Gas Consumption Of The Existing Boiler per Hour. Cub. M 582.00
93 A Bankable report on Energy Efficiency finance program - Bangladesh
Running Hours of the Boiler in a year. Hours 7000.00
Gas Tariff BDT/Cub. M 5.86
Annual Monetary Saving for the Improved Boiler BDT 1909891.20
Investment BDT 6000000.00
Pay Back Months 37.70
Assumptions and Calculations:
Assumptions
Increase in Efficiency By upgrading One Pass to Two Pass Boiler system % 0.50
Increase in Efficiency By upgrading One Pass to Three Pass Boiler system % 0.10
Increase in Efficiency By upgrading Two Pass to Three Pass Boiler system % 0.08
Cost of upgrading Boiler from One pass to Two Pass BDT/T 1000000.00
Cost of upgrading Boiler from One pass to Three Pass BDT/T 1250000.00
Cost of upgrading Boiler from Two pass to Three Pass BDT/T 600000.00
Calculations Unit Boiler
Capacity 1
Increase in Efficiency of Boiler by Upgrading system. % 0.08
Gas Savings For the Improved Boiler/ Hour. Cub. M/hr. 46.56
Total Annual Gas Consumption For the Boiler. Cub. M 4074000.00
Total Annual Gas Saving For the Boiler. Cub. M 325920.00
Cost of Upgrading Boiler system per ton BDT 600000.00
94 A Bankable report on Energy Efficiency finance program - Bangladesh
Financial Analysis:
Financial Analysis
Life time of the project / technology 10 Year
Discount rate 17.20 %
Annuity Factor (Capital Recovery Factor)
0.216 -
Annualized capital investment 16,48,895
BDT
Cash-Flow Analysis
Currency Unit: BDT
Annual escalation
rate
(+ or - in %/year) 0 1 2 3 4 5 6 7 8 9 10
Costs
Consumption-linked cost
Fuel cost 5% 2,38,73,6
40 2,50,67,3
22 2,63,20,6
88 2,76,36,7
23 2,90,18,5
59 3,04,69,4
87 3,19,92,9
61 3,35,92,6
09 3,52,72,2
39 3,70,35,8
51
Electricity cost 5% 0 0 0 0 0 0 0 0 0 0
Raw Water cost 5% 0 0 0 0 0 0 0 0 0 0 Other consumption-linked costs 5% 0 0 0 0 0 0 0 0 0 0
Operation-linked costs
O&M cost 5% 0 0 0 0 0 0 0 0 0 0 Salary and Adm. Costs 10% 0 0 0 0 0 0 0 0 0 0
Insurance cost 5% 60,000 63,000 66,150 69,458 72,930 76,577 80,406 84,426 88,647 93,080 Other operational costs 5% 0 0 0 0 0 0 0 0 0 0
Total Annual Consumption & Operation-linked costs---Baseline
2,39,33,640
2,51,30,322
2,63,86,838
2,77,06,180
2,90,91,489
3,05,46,063
3,20,73,367
3,36,77,035
3,53,60,887
3,71,28,931
Savings
Cost
95 A Bankable report on Energy Efficiency finance program - Bangladesh
Reductions
Cost reduction from electricity saving 5% 0 0 0 0 0 0 0 0 0 0 Cost reduction from fuel saving 5%
19,09,891
20,05,386
21,05,655
22,10,938
23,21,485
24,37,559
25,59,437
26,87,409
28,21,779
29,62,868
Cost reduction from raw water saving 5% 0 0 0 0 0 0 0 0 0 0 Other Cost reduction resulted from the project 5% 0 0 0 0 0 0 0 0 0 0 Total Annual Cost Reductions/Savings 0
19,09,891
20,05,386
21,05,655
22,10,938
23,21,485
24,37,559
25,59,437
26,87,409
28,21,779
29,62,868
Project
Analysis
Earnings Before Interest, Tax & Depreciation (EBITDA) 0
19,09,891
20,05,386
21,05,655
22,10,938
23,21,485
24,37,559
25,59,437
26,87,409
28,21,779
29,62,868
Depreciation 7,62,600 7,62,600 7,62,600 7,62,600 7,62,600 7,62,600 7,62,600 7,62,600 7,62,600 7,62,600
Interests 8,54,112 6,83,290 5,12,467 3,41,645 1,70,822 0 0 0 0 0 Earnings Before Tax (EBT) 2,93,179 5,59,496 8,30,588
11,06,693
13,88,062
16,74,959
17,96,837
19,24,809
20,59,179
22,00,268
Company Tax 87,954 1,67,849 2,49,176 3,32,008 4,16,419 5,02,488 5,39,051 5,77,443 6,17,754 6,60,080 Earnings after Tax (EAT) 2,05,225 3,91,647 5,81,411 7,74,685 9,71,644
11,72,471
12,57,786
13,47,366
14,41,425
15,40,188
Cash Flow
Calculations
EAT 2,05,225 3,91,647 5,81,411 7,74,685 9,71,644 11,72,47
1 12,57,78
6 13,47,36
6 14,41,42
5 15,40,18
8
Depreciation (+) 7,62,600 7,62,600 7,62,600 7,62,600 7,62,600 7,62,600 7,62,600 7,62,600 7,62,600 7,62,600
CAPEX (-) 76,26,0
00
Debt (+) 53,38,2
00
Instalment (debt prepayment) (-)
10,67,640
10,67,640
10,67,640
10,67,640
10,67,640 0 0 0 0 0
96 A Bankable report on Energy Efficiency finance program - Bangladesh
Net Cash flow to equity
-22,87,8
00 -99,815 86,607 2,76,371 4,69,645 6,66,604 19,35,07
1 20,20,38
6 21,09,96
6 22,04,02
5 23,02,78
8
97 A Bankable report on Energy Efficiency finance program - Bangladesh
Summary:
Indicator Unit Values
Project Life time Year 10
Net Present Value (NPV) BDT million 1.4159642
Internal Rate of Return (IRR) (After tax) % 25.53%
Simple Payback Period (SPP) Year 3.99
Savings in Gas Cub. Meter 325920
Carbon Emission Ton 619.248
Investment BDT million 6.00
4. Replacing Efficient T5 lights instead of T8 lights
T5 lamps are approximately 40% smaller than T8 lamps and almost 60% smaller than T12
lamps. These are designed to run on the existing 125 W (240 V) series ballast but with a different
gas fill and operating voltage, the tube operated at only 100 W. Increased efficiency meant that
the tube produced only 9% lumen reduction for a 20% power reduction. The apparent increased
efficiency of T5 over T8 tubes is largely due to the use of electronic ballasts over magnetic
ballasts.
A textile industry audited shows the following
Proposed System It is proposed to replace the existing lights by T5 lights e.g. 40
watts tube lights by 28 watts and 20 watts CFL by 11 watts CFL.
Present System
The plant has 1,888 nos. of 40 Watts tube lights with conventional
inductive chokes and 15 No. of CFL lamps of 20 watts. The lights
are in operation for 7,000hrs in a year.
98 A Bankable report on Energy Efficiency finance program - Bangladesh
Input Technical Parameters:
Specifications Unit Values
Type 1 Type 2
Rating of T8 Lamps W 40.00 20.00
No Of Existing T8 lamps in the Industry premises - 1888.00 15.00
Rating of T5 Lamps W 28.00 11.00
No Of T5 lamps to be used in the Industry premises 1888.00 15.00
Total Operating Hours of Lights in a year. hours 7000.00
Electricity Tariff BDT/kWh 3.85
Annual Monetary Savings/Benefits BDT 614217.45
Investment BDT 951500.00
Pay Back Months 18.59
Assumptions and Calculations:
Assumptions
Cost of installing one efficient T5 lights BDT 500.00
Calculations Used
Annual Electricity Consumption using T8 Lamps kWh 530740.00
Annual Electricity Consumption using T5 Lamps kWh 371203.00
Annual Electricity Savings kWh 159537.00
99 A Bankable report on Energy Efficiency finance program - Bangladesh
Financial Analysis:
Financial Analysis
Life time of the project / technology 5 Year
Discount rate 17.20 %
Annuity Factor (Capital Recovery Factor) 0.314 -
Annualized capital investment 3,79,740 BDT
Cash-Flow Analysis
Currency Unit: BDT
Annual escalation rate
(+ or - in %/year) 0 1 2 3 4 5
Costs
Consumption-linked cost
Fuel cost 5% 0 0 0 0 0
Electricity cost 5% 20,43,349 21,45,516 22,52,792 23,65,432 24,83,703
Raw Water cost 5% 0 0 0 0 0
Other consumption-linked costs 5% 0 0 0 0 0
Operation-linked costs
O&M cost 5% 0 0 0 0 0
Salary and Adm. Costs 10% 0 0 0 0 0
Insurance cost 5% 9,515 9,991 10,490 11,015 11,566
Other operational costs 5% 0 0 0 0 0
Total Annual Consumption & Operation-linked costs---Baseline 20,52,864 21,55,507 22,63,283 23,76,447 24,95,269
Savings
Cost Reductions
Cost reduction from electricity saving 5% 6,14,217 6,44,928 6,77,175 7,11,033 7,46,585
Cost reduction from fuel saving 5% 0 0 0 0 0
Raw water savings 5% 0 0 0 0 0 Other Cost reduction resulted from the
project 5% 0 0 0 0 0
Total Annual Cost Reductions/Savings 0 6,14,217 6,44,928 6,77,175 7,11,033 7,46,585
Project Analysis
100 A Bankable report on Energy Efficiency finance program - Bangladesh
Earnings Before Interest, Tax & Depreciation (EBITDA) 0 6,14,217 6,44,928 6,77,175 7,11,033 7,46,585
Depreciation 2,41,871 2,41,871 2,41,871 2,41,871 2,41,871
Interests 1,35,448 1,08,358 81,269 54,179 27,090
Earnings Before Tax (EBT) 2,36,898 2,94,699 3,54,035 4,14,983 4,77,624
Company Tax 71,069 88,410 1,06,210 1,24,495 1,43,287
Earnings after Tax (EAT) 1,65,829 2,06,289 2,47,824 2,90,488 3,34,337
Cash Flow Calculations
EAT 1,65,829 2,06,289 2,47,824 2,90,488 3,34,337
Depreciation (+) 2,41,871 2,41,871 2,41,871 2,41,871 2,41,871
CAPEX (-) 12,09,357
Debt (+) 8,46,550
Instalment (debt prepayment) (-) 1,69,310 1,69,310 1,69,310 1,69,310 1,69,310
Net Cash flow to equity -3,62,807 2,38,390 2,78,850 3,20,386 3,63,049 4,06,898
Summary:
Indicator Unit Values
Project Life time Year 5
Net Present Value (NPV) BDT million 0.62
Internal Rate of Return (IRR) (After tax) % 72.32%
Simple Payback Period (SPP) Year 1.97
Savings in Gas Cub. Meter 0.00
Carbon Emission ton 124.44
Investment BDT million 1.21
101 A Bankable report on Energy Efficiency finance program - Bangladesh
Bibliography
Research Article, Potential of Wind and Solar Electricity Generation in Bangladesh,
Sanjoy Kumar Nandi, Mohammad Nasirul Hoque, Himangshu Ranjan Ghosh,
and Swapan Kumar Roy, Received 29 October 2011; Accepted 11 December 2011
ASA University Review, Vol. 5 No. 1, January–June, 2011; Marketing Strategies of
Tableware Ceramics Industry of Bangladesh: Some Empirical Evidence from
International Players
Why Use Variable Frequency Drive? Written by Filtrex, Inc. distributed by Paddock Pool
Equipment Company, Inc. & Filtrex, Inc. www.paddockindustries.com
TECHNOLOGICAL UPGRADATION IN THE JUTE MILLS OF BANGLADESH
Challenges and Way Out*; CPD working Paper 100; published by Centre for Policy
Dialogue Bangladesh
Research Article, Potential of Wind and Solar Electricity Generation in Bangladesh,
Sanjoy Kumar Nandi, Mohammad Nasirul Hoque, Himangshu Ranjan Ghosh,
and Swapan Kumar Roy, Received 29 October 2011; Accepted 11 December 2011
Chemical and Fertilizer Sector in Bangladesh: Challenges and Scope of Development,
Journal of Chemical Engineering, IEB Vol. Ch.E. 26, No. 1, December 2011
Economic Survey 2011-12, Chapter 7 Agriculture
BSFIC Report on 03-01-2013.
Board of investments, Bangladesh
World Steel Association, 2012
Bangladesh Tableware Catalogue, 2007
http://www.bangladesh-business.net/PageDetails.php?Id=124#sthash.o2vDJTAu.dp
http://www.daily-sun.com/details_yes_19-06-2012_Career-in-glass-and-ceramics-
engineering_179_1_19_1_0.html#sthash.khR5y6rO.dpuf
http://www.bangladesh-business.net/PageDetails.php?Id=124#sthash.o2vDJTAu.dpuf