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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

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Page 1: A Bankable Report on Energy Efficiency Finance Program ... jain/A... · SUMMER INTERNSHIP REPORT A Bankable Report on Energy Efficiency Finance Program - Bangladesh ... Fertilizer,

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

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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

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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.

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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

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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

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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

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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

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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

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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.

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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.

.

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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.

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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.

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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.

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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

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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

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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

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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:

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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.

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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:-

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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.

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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.

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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)

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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

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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.

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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.

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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.

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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

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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

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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

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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)

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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:

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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

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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

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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

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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.

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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

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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

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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.

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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

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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

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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

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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

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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.

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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

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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/

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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.

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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

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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

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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)

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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

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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.

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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

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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

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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

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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

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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

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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/

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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

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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

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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.

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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

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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

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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.

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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

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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

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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.

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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

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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.

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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

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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

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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.

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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:

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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

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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

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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

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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

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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

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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

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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

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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

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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.

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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.

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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:

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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

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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

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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

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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

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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:

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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

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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

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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

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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

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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

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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

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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

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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

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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.

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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

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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

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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

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