Crisis management in Bangladesh power-energy sector



Bangladesh managed to achieve an effective power generation capacity of 3500MW till 2009 and three and half years since then present government added 3300MW new power. Without fuel constraint the total generation could be 6800MW. Some persons may not like the way the new power generation has been added but all must appreciate that in a country like Bangladesh it is no mean achievement. But government failed to anticipate impacts of price increase of liquid fuel in volatile world energy market requiring huge subsidy obligation. Government failed to initiate exploration of own sweet coal , government failed to advance traditional fuel based major power plant installation. Fuel constraints restrict power generation to about 5200-5500MW against an increased demand of 7500MW. Consequent deficit does not make visible of positive impacts of new power generation as load shedding continues and people criticize.

Every power plant in the private sector whatever is its size large, medium or small is a rental plant. For private sector power plants Bangladesh has required policies. Liquid fuel based contingency plants, peaking plants should be categorized under small IPP. If liquid fuel based Barge Mounted plant at Khulna could be categorized as IPP why not the liquid fuel based small contingency plants be called small IPP. Somebody somewhere someday called these Quick Rental plants and now everyone has found it a favorite pastime to talk about it in Bangladesh.

When the present government came to state power there was a power deficit of 2000MW at generation level. The coincident peak demand was about 5500 MW and the generation was 3500 MW. In three and half years about 2000MW new demand has been created for various reasons ranging from more and more people acquiring power consuming new electronic gazettes [freezes, televisions, air conditioners, personal computers], new power connections, easy bikes etc. Government theoretically added about 3300 MW new power. Hence raising power generation from 3500MW to 6800MW [Although for fuel supply crisis effective generation is 5200-5500MW] and demand increased to 7500MW. Consequently the deficit of 2000MW continues to remain creating massive load shedding. One can easily imagine the consequences if no new power could be added and government continued on a business as usual like its predecessors.

We find government policy makers trying to respond to the bitter criticism of some quarters with controversial statements. PM’s energy advisor termed his critics as intellectually dishonest persons and anti-state elements. We find some activists talking about government actions as total failures without making in depth technical and financial analysis. Some business community leaders [being direct beneficiary of contingency power generation actions] are talking in favor of it. One Professor of Economics cum activist [claiming to be Energy Specialist] considered rental power strategy of government a total failure. The debate is going on with no side providing a credible analysis of how the government actions over the last three and half years have impacted overall economy, trade and commerce of Bangladesh.

We are aware that the effective power generation when present government took over power in January 2009 was about 3500MW. In three and half years present government has added about 3300 MW new power in various form- some liquid fuel based plants , some gas based and some dual fuel. Maximum Generation recorded on 22/03/2012 was 6066MW. But average generation hovers around 5200-5500MW. If required fuel could be supplied without interruption it would be possible to steadily 6200-6500MW.

Setting aside all other considerations one must not be so unkind to present government in that at least over 3000MW new power could be added to national grid. This new power has definitely made tremendous impact in many areas. Supply of steady power to irrigation pumps has made significant impacts in attaining food autarky through bumper crops; Bangladesh is steadily making over 6% GDP growth despite of global economic recession. BNP led opposition and civil society aligning to them have no reason to criticize present government as during their time from 2002-2006 they could add only corruption ridden Tongi 80MW power plant. All other new power plants coming on stream during their period was the outcrop of previous Awami League led government.

But with the advancement of society power demand is increasing at geometric progression. More and more people are buying freeze, television air condiotiners. Many people are having one or more mobile telephones, personal computers, IPS . Easy bikes are using electricity. It started with a deficit of about 2000MW in 2009. .But in three years power demand has increased about 3000MW. Hence there still exists about 2000 MW deficit. This summer witnessed several round of heat waves raising the power demand still higher .This deficit caused unprecedented load shedding all over the country .

Setting Wrong People in Sectoral Management
Government has serious failures in managing demand growth, arranging fuels for power [failures in exploration of own coal and expediting gas exploration] and advancing implementation of traditional fuel based major power plants. While government failed in these areas it achieved mixed success in power and energy sector. Government could not change the culture of favoring political victimization of competent, experienced and qualified professionals in power and energy sector. Consequently government favored less inefficient professionals failed to make proper planning of power and energy projects, implement key projects on time or manage maintenance and operation of generation, production , transmission and distribution of power and gas supply . There has been no progress in exploration of own sweet coal resources and mine mouth coal plants , only mining operation at Barapukuria has grown sicker , minimum progress has been achieved in gas exploration and development . Government has to continue relying on very expensive liquid fuel based power generation. Wrong professionals misguided government into making wrong planning of importing coal and LNG leaving our substantial coal resources underground and making no sincere efforts of exploring huge untapped petroleum resources at onshore frontiers and offshore.

Performance in Gas Sector
There is no explanation why Gas based large power projects at Bibiyana could not advance .Government awarded two large projects to Summit –GE JV which failed to make financial closure .Why government awarded them such huge projects without professionally assessing their financial capabilities? Why government actions for fast track gas exploration failed? Who is to be blamed for that? Why the largest gas field Titas is allowed to leak profusely for years? If relatively smaller to Titas field can produce about 1000MMCFD per day why production from Titas could not be increased accordingly? Is there any major difference in production pay sands or reservoir characteristics? Petrobangla after conducting some seismic surveys are ridiculously talking about major discovery of gas and oil and even quantifying the extent of recoverable reserve.
BAPEX made some commendable forward march .It managed to work over and rehabilitate some gas wells and bring some marginal gas fields on stream. It is working on some exploration and development works. But its efforts may bring some trickles in the big sea. Government /Petrobangla made inordinate delays in implementing key gas transmission infrastructures .The gas pipeline compressor stations of GTCL and implementations of some key transmission pipelines has been delayed for several years causing transmission constraints. TGTDCL, BGSL have failed to check unauthorized illegal gas connections, theft and pilferage of gas. There is no valid reason for increase of gas demand over the last 3.5 years as no major new gas consumer has come on stream and gas supply to many major consumers like power and fertilizers are rationed. It is a major failure of Petrobangla companies.

Small IPP/ Contingency Plants / Quick Rental Plants
These were obvious choice given the huge prevailing deficits and time to implement large base load projects. But government planning was flawed. These plants were to give the required relief for the interim period of 3- 5 years till major plants could be installed. Actually the actions for contingency and peaking plants started at the last stage of BNP-Jamat led four party alliance government. But they failed to make any headway due to excesses of HAWA Bhaban and party cadres. Care Taker Government could sign some contracts. But present government made the fundamental mistakes of opening it up for all novices. The qualification criteria was relaxed and first timers got unprecedented sponsorship of getting imported liquid fuel cheaper from BPC and selling power at a relatively higher price . Consequently sold and outdated used machineries made some plants generate much less than rated capacity. Buying liquid fuel and selling at lower price to power plants made BPC bankrupt. Government’s budgetary control was stressed for paying huge subsidy. Government failed to anticipate impacts of price increase of liquid fuel in international market. It should have had a financial model and risks analysis carried out before jumping unguarded to contingency power plant actions. Government should have concentrated more in advancing implementation of large base load power plants and act more positively on replacing old fuel inefficient power plants with new modern plants.

Power / Energy Demand Management and Efficiency
It appears from failures in making positive impacts of additional power to national grid that government action for load management and ensuring better efficiency has failed. What happened to energy efficient appliances installation? What happened to high voltage government actions against delinquent consumers? What happened to installations of pre paid meters? How could power demand and gas demand continue to increase uncontrolled? There must have loopholes in management. Genuine law abiding innocent citizens are suffering while unscrupulous persons are making hay though sun is not shining on power and energy sector. Major Fertilizer plants continue to remain shut down, power plants cannot be supplied with required gas at right pressure, gas supply to CNG is rationed, industries suffering from low gas pressure and lack of supply. Then how can power and gas demand show continued upward curve?

Are Power Plants based on Imported Coal Feasible?
The largest local power company Summit Group has failed to arrange financial closure to Bibiyana Power plant. Yet another local company Orion Group has got awards for setting up three medium to large imported coal based power plants at Maowa, Munshiganj, Rampal, Bagerhat and Anowra Chittagong. They have announced to import coal from Australia and Indonesia. What will be the quality of coal? What will be their price? Mother vessels cannot anchor at Chittagong or Mongla port. Huge coal required for uninterrupted supply to power plants will require to be transshipped through several ligtherage vessels to power plant locations causing crowding. Can the waterways handle that? Self burning coal is not clinker, cement or food grains. It is a hazardous commodity. Can inland waterways ensure all season navigations to carry coal all the way from deep sea to place like Maowa? Has anyone done any deep analysis and risk analysis? Investors have told about supercritical technology to minimize emissions. Are they aware of what quality of coal is required for it or what will be the cost of such plants? It is very easy to confuse novice policy makers and people. But the real world of coal fired power generation has many issues and challenges. We hope our policy makers analyzed these. The present group of policy makers unfortunately may not be there when the imported coal based power plants will be struggling with issues and challenges post 2013.
Power and energy Pricing:

New power using modern technology and new gas using latest techniques obviously increase cost. One of the major reasons for gas and power sector crisis is very poor and uneconomic pricing. Consumers must pay economic price of power and fuel. Taking very low [ lowest even in the region ] price of power and gas there has been mushrooming of energy inefficient medium to large energy inefficient industries in congested power and gas corridors around Dhaka and Chittagong cities . Existing distribution infrastructures could not cope with abnormal pressure of demand. For sustained professional service consumers must pay market price or cost plus price. Present government had no option to increase price of power and gas in several small increments. There must not be any politics here. But at the same time government must ensure better services. Good consumers must be served better and delinquent consumers must get disconnected.

While government can be credited for adding about 3300 MW new power to national grid and about 400MMCFD new gas to gas grid it still failed to manage demand and reduce deficit. While we cannot criticize government for non actions we must make them accountable for flawed actions, poor management and failures in arranging required fuel for power and industries. Policy makers must acknowledge their mistakes and try to learn lessons themselves rather than telling critics to learn. Inexperienced critics must not also blame government for everything .Some wrong actions are still better than inactions.

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