Dr. Forqan Uddin Ahmed :
An unprecedented long period of high energy prices and supply shortage are exerting tremendous pressure on all economies – developed, developing, and poor countries are facing a serious cost-of-living challenge. Even the US, which is relatively insulated from global energy prices, is experiencing record inflation. Food supply, shipping space/container shortage, and other supply chain issues along with the energy price are threatening recession in many countries.
The Bapex-only local exploration policy resulted in only one drilling a year in the last 20 years, and despite settling the maritime boundary in 2014, offshore activity was questionable and half-hearted. Petrobangla miserably failed to maintain the production plateau reached during 2016-17. Any hope of local coal development was shut down in 2012. Bangladesh started to move away from energy independence at a much faster rate than was needed in the absence of local exploration and exploitation. For fuel and source diversification, and hence better energy security, the import of LNG and coal was needed and should have been started earlier. Our lack of experience in international energy trading was exposed when we opted for a four-tonne long-term contract for the 7.2-tonne LNG capacity. A large option spot portfolio is never recommended in a perpetual supply deficit situation.
We are paying for our past mistakes. We could easily get a six-tonne long-term LNG contract; we should have parallelly given much more attention to local gas development along with import. We were slow in bringing in the large coal-fired power plants (Rampal is taking almost 12 years from inception) extending the life of the oil plants, etc. One can find many more problems. We made some policy mistakes as well as execution delays/mistakes. None of those can be reversed immediately, but a course correction is essential. All avenues for immediate exploration of both onshore and offshore gas prospects must be undertaken, the land-based LNG regasification plant with assured gas sourcing is needed, and a serious impartial examination of local coal development by a third party is needed before we make a final decision.
Many of the country’s power plants are currently not functioning because of a fuel shortage. And the government is apparently now trying to cut dependency on imported fuel and gas-based power plants and rely more on domestic gas production. But this transition should have happened before the crisis. The government’s failure to prepare for such external shocks – which were perhaps inevitable – boils down to mismanagement and a lack of long-term planning. And that has also led to capacity charges skyrocketing. According to data from the Institute for Energy Economics and Financial Analysis (IEEFA), the government has paid a total of Tk 33,970 crore in “capacity payments” to the independent power producers, rental and quick rental power plants between 2017-18 and 2020-21. Instead of burning through so much cash for idle power plants, the government could have easily invested it on gas exploration, which would have provided some buffer to the country’s strategic energy sector. The government should now urgently renegotiate those contracts to save some public funds at this time of crisis.
In the rural areas the demand stands at some 2,400 MW per day but the Rural Electrification Board (REB) can supply barely half of that. In the capital city, the demand stands at 1,400 MW but the supply is an unsatisfactory 600 to 650 MW every day. There is no doubt that this disturbing shortage of power threatens to turn the summer of 2010 into a summer of distressing discontent. Power shortage and too frequent power cuts wreak havoc in people’s lives. One great dimension of citizens’ distress is writ large in the crisis of water. In various parts of major cities and towns pitifully inadequate supply of water is creating an intolerable situation. Insufficient supply of safe drinking water is creating grave hazards for public health. Water-borne diseases are causing distress to people, especially the children and the old.
In fact, Bangladesh is one of the least explored countries in the world in terms of gas resources. There will be no gas shortage in this country if underground gas is extracted through sufficient exploration. It is estimated that production from the current mine will cease in the next five years, i.e. 2027. But then what? Who will supply coal to the power plant? Can additional coal be extracted by open pit mining in Barapukuria, or when will underground mining in another coal deposit supply coal? No one seems to have a clear idea of the government’s policy on coal development in Bangladesh. Currently, Bangladesh is setting up several large-scale coal-fired power plants. These will run entirely on imported coal. If the country’s coal is kept under the ground and the policy of producing electricity with coal imported from abroad, the question arises where is the rationale of this policy?
Developed countries are also rationing to provide affordable electricity. Countries like Japan have now decided to plan two hours of load shedding a day. Our condition is also bad. Because our own gas for power generation is less than half of the demand. Now if LNG and fuel oil have to be imported to meet the electricity demand, the cost of production will increase three-four times. Therefore, appropriate measures should be taken to resolve the crisis.
(The writer is former Deputy Director General, Bangladesh Ansar and VDP).
