Enhancing Energy Security with Smart Prepaid Gas Meters

Bangladesh is a fast-growing economy that heavily relies on natural gas for its energy needs. However, its domestic gas reserves are depleting. As of December 2021, out of the total national gas reserve of 28.42 trillion cubic feet (tcf), 19.11 tcf had already been extracted, leaving only 9.31 tcf available. Consequently, the government has had to resort to importing liquefied natural gas (LNG) to meet the rising demand. The share of LNG imports in the total gas supply rose from 11% in 2019 to 19% in 2020. However, imported gas is more costly compared to locally sourced gas, which has increased Bangladesh’s economic vulnerability to volatile international gas pricing.

To enhance its energy security, economic growth, and climate resilience, Bangladesh needs to improve the efficiency of gas use, particularly in the residential sector, which consumes 13% of the natural gas demand. Unlike other customer categories, most domestic consumers lack gas meters, leading to non-metered gas usage. Currently, they pay a fixed monthly fee of Taka 1,080 ($9.89) per double burner, regardless of usage. This fixed-rate system encourages inappropriate gas use, such as for clothes drying and room heating, without considering more efficient appliances. Some domestic customers neglect reporting gas leaks in internal pipelines, as it doesn't affect their bills. This negligence contributes to increased system losses and potential hazards. Furthermore, fixed-rate residential customers subscribe to a 'postpaid' service, meaning payment is made after services are used, resulting in delayed payments and causing a service provider's average accounts receivable to reach a duration of 8 months during fiscal year (FY) 2022.

The government has implemented the smart prepaid gas meters installation to enhance gas efficiency in the residential sector. Smart meters are devices designed to measure and record gas consumption, communicating with the utility company via a telecommunication network. This system has significantly altered customers' gas consumption behavior, resulting in an average monthly gas consumption reduction of approximately 26 cubic meters (m³) per customer, or 43%.

Bangladesh aims to have all residential customers equipped with SPGMs within five years, anticipating an annual saving of about Tk29 billion ($263 million) in liquefied natural gas (LNG) imports by reducing gas consumption by 1.2 billion m³. Additionally, this initiative is expected to decrease greenhouse gas emissions by approximately 2.3 million tons of CO2 annually.

As of June 2022, approximately 500,000 out of nearly 4.3 million residential gas customers nationwide have been connected to or are in the process of being connected to prepaid meters.

Scaling up the prepaid meter program

A project funded by ADB will augment the efforts of the Government of Bangladesh by installing 650,000 new smart prepaid gas meters for residential customers, primarily in South Dhaka and Narayanganj district. This initiative includes implementing safety measures and awareness-raising programs, especially in the Titas Franchise Area (TFA), serviced by the state-owned Titas Gas Transmission and Distribution Company Limited (TGTDCL), the largest gas distribution company in Bangladesh.

The project maximizes the following advantages of SPGMs for residential customers and service providers.

• Help customers monitor their gas consumption and expenditure, encouraging them to adopt more efficient and safe gas appliances.
• Facilitate convenient digital payment, allowing customers to pay bills easily using their smartphones without needing to visit a physical booth or use cash. This is achieved by integrating online payment systems like bKash, which is widely available in the market, with the smart meter app.
• Offer flexible data transmission options. A smart meter can utilize various communication technologies, such as telecommunication via mobile company networks or data transmission using an integrated circuit (IC) card dedicated to the meter, to transmit data to the utility company.
• Enhance cash flow for service providers by eliminating accounts receivable, as customers pay upfront for their energy consumption. This approach also fosters customer satisfaction and loyalty by offering them control over their energy spending and reducing the risk of delayed payments.
• Eliminate the problem of under-billing or over-billing, increasing customer trust.
• Reduce the need for manual meter reading, billing, and collection, saving service providers time and resources.
• Enable the service provider to remotely monitor meter status and detect gas leakage or abnormal pressure, allowing for timely action to minimize the risks. Gas leakage is a major issue in Bangladesh, especially in congested areas where gas explosions can cause significant injuries and damages, with socially disadvantaged groups, including women and children, being more exposed and vulnerable.
• Make inspection by service providers easier, as these meters can be installed outside the customers' premises.
• Prevent tampering and bypassing of meters. Smart meters also have a function for real-time detection of illegal gas use and can cut off the gas supply if illegal use is detected.
• Provide hourly or even real-time consumption data, helping service providers design innovative tariffs that reflect customer demand patterns.

Building a smart metering data management system 

The project will enhance the operational efficiency of TGTDCL through transformative and modernized approaches, including the promotion of advanced digital technologies.

The SPGM program is a national initiative supported by multiple international financiers. However, in the past, different financiers had varying technical specifications for the metering systems they funded, which hindered data sharing and interoperability among them. This created operational challenges for utilities and impeded the program's expansion. To address this issue, ADB will design and construct the main Smart Metering Data Management System (MDMS). Its data servers will facilitate communication and integration of data from meters manufactured by different vendors by establishing unified standards and protocols for metering data.

This MDMS will be installed at TGTDCL headquarters to integrate all 2.8 million SPGMs to be installed in the TFA. It will serve as a foundation for potential future expansion of smart MDMS coverage to the entire country. 

Building a customer management system 

The project will also establish a fully automated web-based grievance management system to enhance TGTDCL's client service capabilities. Currently, the company's customer satisfaction levels are low, primarily due to the lengthy response times to customer complaints. Decreased operational efficiency has been attributed to the delayed adoption of modern digital technologies and the tight fiscal situation.

Once completed, the project is expected to achieve several key objectives: (i) deliver significant gas savings and prevent gas wastage; (ii) raise awareness among customers about the safe and efficient use of gas; (iii) enhance the financial performance of the gas distribution company by improving revenue streams and reducing billing, collection, and monitoring costs; (iv) improve management efficiency and enhance customer service for the gas distribution company; and (v) contribute to meeting Bangladesh’s climate mitigation targets for the gas distribution subsector as outlined in the updated 2021 nationally determined contributions.

Moreover, the project is anticipated to reduce approximately 400,000 tons of CO2 emissions annually.

• Data interoperability is crucial in development efforts. Given the reality of having multiple service providers or financiers, it's essential to leverage innovative technology measures to ensure that the contributions or solutions of various stakeholders can be aligned and connected. A unified technical standard for an MDMS is necessary so that the system can integrate meters provided by different vendors. The project will build on this lesson by designing defined technical standards for the web-based MDMS to scale up the installation size.
• Lack of capacity or technical expertise often leads to delays in development efforts and risks the quality of materials procured or the success of project design and implementation. One of the priorities of the project is to build the capacity of TGTDCL through dedicated personnel resources. Likewise, with the upcoming installation of at least 4 to 5 million smart prepaid gas meters nationwide, there is a need to further strengthen the capacity and resources of gas distribution companies to adequately install, operate, and maintain these technology solutions.
• An effective communication and awareness plan, especially about the importance of energy efficiency, the benefits of SPGMs, and the safe use of gas, is an important strategy to get the support of project stakeholders. The main obstacle for the SPGM project in Bangladesh is the poor public perception and low interest of household customers towards installing the new meters. Many residential customers are accustomed to the existing service that charges a flat-rate tariff for gas supply. They are hesitant to adopt a new metered-rate tariff system, fearing higher bills and inconvenience. Regular communication efforts are essential to enable consumer behavior change. 

Asian Development Bank. 2023. Smart Metering Energy Efficiency Improvement Project: Report and Recommendation of the President. Manila.