People seem to be happy with the assurance of the key persons of Bangladesh energy sector management to the Bangladesh media that there will be no energy crisis in the country by 2012. Natural gas production will be doubled in two years.
But the reality is in November 2009 Bangladesh is suffering from the worst energy crisis of its history due to lack of security of supply to the national power grid and national gas grid. It can only generate about 4000 MW power against national demand of 5500 MW and can produce about 1950 MMCFD gas against national demand of 2400MMCFD. In 3 years from now at the present rate of growth, power demand will grow to 7000MW and gas demand will grow to 3000 MMCFD. To avert power crisis the country will need to add 3000 MW power and at least 1000MMCFD gas by 2012. Here is an objective analysis assessing the assurance of the think tanks of the energy authorities.
It took Bangladesh 38 years after independence to reach the present power generation capacity as mentioned above. Can Bangladesh power and gas sector management provide miracle to achieve doubling of the power generation and gas production capacity in three years? How these will be possible?
What the present government achieved in 10 months from January – November 2009? Could they arrange any contract for any new power generation? Could they start exploration or development of any new gas resource? Could they take decision on additional coal mining? Any major power plant installation and commissioning will take at least 3 years. The lone power plant initiative the 450 MW at Nabiganj beside Beanibazar Gas field is still in evaluation stage. The government is also evaluating some bids for some high cost liquid fuel (diesel & furnace oil) contingency power plants with a target to bring these on streams between March- June 2010. In Bangladesh no developer have successfully installed and commissioned such plants in such a short time. Media has already reported that several inexperienced bidders with apparently non reliable documents have been identified as successful bidders. The chances of most of these planned contingency power plants coming on stream by June 2010 is remote.
The government had very little to do to address power crisis during the irrigation season and summer of 2009. People were sympathetic considering that government inherited the crisis and could only address the situation through load management. Now with irrigation season again knocking at the door, the government has no additional resources now to confront the crisis of January to April 2010. the grand alliance government will be seriously embarrassed when it will have to resort to several hours of load shedding in city areas to address additional power supply required for irrigation.
Bangladesh Awami League the major component of the grand alliance made an election pledge to add 1700 MW power by 2011 and 3400 MW by 2014. After only several rounds of brain storming over enthusiastic Energy think tanks announced mega plans of creating revolution in the energy sector and power sector. Several large power plants – liquid fuel based, coal based, nuclear are in the plans. They talked about public private partnerships, IPPS, plants on donor funding. But until the poor governance, bureaucratic legacy, corruption of ruling party leaning energy syndicate are eliminated will any sensible developer risk their borrowed investment in Bangladesh?
Major donors are so much aware of the foul plays that they will not support power sector efforts till transparency and accountability are established to credible level. Major power developers are equally concerned about protracted delay in decision making, bureaucratic barriers at all levels, hostile attitude of a section of civil society to foreign investors. Foreign investors are also worried about week independent regulator, absence of economic pricing structure of energy.
Power and energy are such sectors where local private sector has very limited capacity to invest. Even state owned enterprises are weak and sick. Crisis of fuel is another major problem. We have finite natural gas resource. Absence of required exploration and development and very weak and not competent enough Petrobangla has landed energy sector to such a stage that natural in near future can not remain the dominant fuel for power generation. Any substantial new gas discovery will require at last 5 years starting commercial production. Substantial transmission infrastructures will also need 3- 5 years to come into operation.
The situation of coal, the other most feasible option, is also messy now. Lone under operation under-performing Barapukuria mine has already experienced all adverse impacts of inappropriate mining method. The government is contemplating to go for surface mining at Barapukuria after 2011. This will require major works major decisions. Extensive feasibility study must start soon. BNP- Jamat alliance and Care taker government wasted four years in useless debates on unnecessary coal policy formulation. The grand alliance (Mahajote) government is also sitting on it. 65 Tcf equivalent high heating value, low ash, and low sulfur coal is lying unexplored which if mined properly and utilized can produce 10,000 MW powers for 50 years. Yes we agree there will be environmental and social impacts. But if proper mining companies are engaged and regulated applying appropriate modern technology all impacts can be professionally addressed.
Bangladesh is hibernating with its coal resource. Burning coal for power is not environment friendly. Time to use coal economically is progressively getting diminished. After Copenhagen Climate Change Summit soon there may be restrictions on coal burning. Bangladesh has a coal mine at Phulbari discovered by the largest mining Company BHP Billiton in 1994 under exploration license and Mining Lease awarded by BNP government. The contract was later reassigned to Asia Energy Company (GCM Group) during Awami League Rule. AEC carried out extensive feasibility study engaging worlds leading consultants and submitted Scheme of Development proposing surface mining in end 2005. Contract with AEC required Bangladesh government approve or return AEC proposal within 60 days. But three different governments in almost 4 years did nothing.
AEC contract may have several grey areas. Government can always renegotiate contract or even terminate the contract risking international arbitration where it can be guaranteed Bangladesh has no merit to win. But wonder why the government is not taking any action. Do you think international community is not monitoring how sovereign Bangladesh Government is managing the contract with Asia Energy Corporation?
Bureaucrat dominated energy think tank has influenced policy makers for road shows to attract investors in London, New York and Singapore. Potential investors are so much aware of unhealthy investment climate of Bangladesh Energy Sector that road show may prove waste of time. In this time of digitization we do not need to go anywhere. Teleconference, Skype can address investors sitting in Dhaka. We wonder whether road show becomes a pleasure trip of some bureaucrat and business trip of few. In any case issues that investors may bring about in Road show may be
- Fiscal Incentives- Tax structure, Repatriation of Profit.
- Pricing Mechanism of Energy, Regulatory Structure – BERC and Other Regulators.
- Local borrowing – Interest Rates.
- One stop approval facility- BOI.
- Capacity of Stock Exchanges
- Market Access.
- Private Public Partnership Structure also needs to be explained.
We also have anxieties for Bangladesh. For different reasons we were not allowed to continue contribution for Bangladesh Energy Sector. But we sincerely want it confronts the present crisis and comes around. It is good to be optimistic. But responsible people must not talk about unrealistic dreams. Eliminating Energy crisis completely by 2012 and doubling gas production in tow years are impossible parleys. Those who are telling these are trying to fool all. All that glitters is not gold. One must be realistic give the best try and see what can be achieved. The hell of energy sector can not be turned into heaven so soon. But the process must start as soon as possible.
Kh. A. Saleque (Saleque Sufi) is the ex-Director ( Operation) GTCL and writes from Australia.
[Read all posts by Kh. A. Saleque]