Mega Power Generation Plan: Ambitious And Unrealistic



Shikalbaha power plant
The Shikalbaha Power Plant was shut down on 17th July, just after 20 days it started generating electricity. The productivity of two barge-mounted plants of the three plants totaling 116 MW power generation has already expired. One of them went out of order earlier while the other can produce 10 MW at best depending on the availability of gas. Image by Adnan, Drik News. Chittagong, Bangladesh. July 22 2009

Being desperate to overcome the present energy crisis Bangladesh government has worked out a mega power generation plan with a target to add 7000MW new power by 2014. The present effective generation capacity is 3800MW against a demand of 5500MW. Every year the demand is growing @8% (another 400 MW). In 2014 power demand may reach to 7500MW. If even 60% of what government has planned can be implemented 4200MW may be added to national grid which will make the total effective generation capacity in that situation may be increased to 8000MW.

The Government has also planned to make Bangladesh outage–free by 2011. In 2011 the power demand would be 6300MW. To achieve the target Bangladesh has to add about 3000MW by that time. Not only power generation, the Government has to address transmission and distribution bottle necks at the same time to make Bangladesh outage free. Experts have already termed it an ambitious plan and extremely difficult to achieve.

Let us now try to analyze the possibility and probability of government achieving such an ambitious plan.
To achieve such a plan government need huge investment to secure sustainable supply of required fuel from domestic source and abroad, set up power plants, and provide huge subsidy to SOEs to market the power to end-users. All these seem extremely challenging.

About 85% of power generation is now natural gas based. Natural gas is also used in fertilizer production, industrial and commercial fuel and in CNG. Gas system itself is also suffering from huge deficit. The national demand is about 2300MMCFD against which it can supply about 1850-1900MMCFD. Over the last 10years there have been minimum exploration efforts for new gas resources. Neither IOCs nor Bapex has major plan now which can create situation to add substantial gas to gas grid within the next 2-3 years. In fact Petrobangla has already informed its inability to supply gas to new power plants till substantial new development is made. In this situation government has to consider natural gas out of context for new planned power plants in immediate future.

The next fuel option is coal. Bangladesh after several years of inappropriate efforts and wrong vision could enter coal age through an under performing underground coal mine at Barapukuria. This mine developed under Chinese suppliers credit is in a terrible shape now. The poorly conceived mining method suffered several set backs. Water flooding, poisonous gas formation and now mine subsidence. The mining may need to suspend any time to contain massive subsidence impact initiated in mine command zone. In that situation the mine mouth 2 x 125MW power plant will be starving for coal.

The only other coal mine ready for mining at Phulbari is suffering from Government indecision and mishandling from end 2005. The operation of Contract of Bangladesh Government with British Company Asia Energy Corporation has been kept in abeyance after they submitted Scheme of Development proposing strip mining. In any civilized country government would have either honored the contract or terminate it by this time if default or breach of the contractor could be established. It is highly unlikely that either will happen soon as government is wasting time on unnecessary coal policy. Even if government clears AEC impasse and mining starts say in early 2010 coal for commercial use may not be available before early 2014. Other mines, such as Khalaspeer, Dighipara will require extensive feasibility studies to prepare for mining. Extensive study and major decision to relocate mine mouth power plants and demolition of other mining establishment will be required to convert Barapukuria to surface mining. In this situation domestic coal is not expected to play major role in achieving government mega power generation plan.

Government plan includes 4 x 500 MW = 2000MW coal based power plants at Khulna, Chittagong, Meghna ghat and Madaripoor. Perhaps energy mafia syndicate have influenced the policy makers telling them stories that coal will either come from India or countries like Indonesia and Australia. In either case it is improbable. Bangladesh does not have enabling infrastructure, port access for receiving imported coal.

India is not in a position to export coal to Bangladesh. Its own power industry is in crisis of coal supply. In fact India has significantly increased its coal imports to match its growing domestic requirement for power generation since 2005. The situation has worsened now. According to the Indian government there is loss in power generation due to coal shortage and a few power plants are running at critical coal stock of two days. The state-run power company NTPC Ltd is crippled by the coal shortage and incurring huge losses.

So coal import from India for power generation in Bangladesh at this moment is impossible unless Bangladesh accepts the high sulfur tertiary coal which India dumps to Bangladesh under any case.

The only other source may be Indonesia or Australia. But neither Chittagong nor Mongla port channel has required draft for providing access to medium capacity coal carriers. If somebody say large mother vessels will anchor in deep sea and small barge will be used for transhipment it will be wild thinking impossible to achieve considering the volume required for running 4 x 500 MW coal based power plants. Moreover we do not have coal terminal or stockyard to preserve coal. In this situation huge upfront investment is essential to receive imported coal and transport to power plant location. Then we will have to think about all season navigability of inland river system and lack of facilities of Railway to carry coal.

What The Government Can Do?

Yes we agree coal based power will be only viable if we can start surface mining in at least two mines by January 2010 and start setting up two mine mouth coal based plants an one at Ishwardi. If we can create dedicated wagon facilities to carry coal plants can also be set up at Khulna and Chittagong.

To achieve that the government has to act very smart in resolving current impasse of contract with AEC, examine all its submitted document by accredited consultants, renegotiate contract and let it start mining ensuring all environmental and social safeguard. The government must also engage consultant to review Barapukuria situation and depending on Consultants report convert it to surface mining by end 2010.

Power plants Based on Liquid Fuel:

Bangladesh has to import furnace oil to meet the requirements as ERL capacity is limited. The contingency of high cost plants may meet part of immediate requirement if genuine developers can be engaged to set up plants in time. But our past experience does not speak in its favor. Moreover PDB will be under serious stress to buy such expensive power and sale at much lesser price. Government will require providing massive subsidy. In any case liquid fuel or dual fuel power plants may only provide a maximum of 1000-1500 MW by 2010 which will not be enough.

Funding for Power Plants:

Government has approached the World Bank for funding coal based power plants. WB informed that they will raise the issue next December in the world environmental conference at Copenhagen, Denmark. WB may not be in a position to encourage further emission in already endangered region. So it is highly unlikely that development partners will assist Bangladesh in coal plants. Next option is FDI or PPP.

Judging from past proven records it is highly unlikely that major power plant developers will be interested to invest their borrowed capital in a country where corruption, ill governance, protracted decision making are major impediments.

Can The Government Change The Situation?

The billion dollar question is now being asked, Can the government change the culture of our energy sector management? Can we get smart to facilitate FDI or private sector investment rising above personal or political interest? Can government encourage professional development of energy sector eliminating all unnecessary beauracrat control?

The first 7 months of new government does not give positive signal. A party like Awami League failed to find a strong political minister to rely on for the energy sector. A beauracrat had to be relied upon and the usual beauracracy dominance continues.

A very ambitious plan without firm arrangement of financing and definite arrangement of sustained fuel supply may not lead to success.

The government has to try its best. It must go for massive exploration for petroleum resources both offshore and onshore, it must further develop its own gas fields if necessary sourcing strategic partners for Bapex and production companies, it must let coal mining start in the most economic method ensuring safeguards of environmental and social impacts. It must also act to remove all barriers of private sector investment. It must also allow a revamped BERC (Reorganized with proper professionals) to act independently.

Time is running out fast. Very soon the government will have to face another winter and another irrigation season. People will have less tolerance this time. No excuse of 7 years inaction by previous regime will rescue the government from people’s frustration. So the government must leave nothing unturned to improve power generation and supply situation and must not tell tales of mega plans.

Kh A Saleque (Saleque Sufi) is an Engineer by profession and lives in Australia.