Energy Crisis A Legacy of Inaction & Corruption of Alliance Govt.

Mollah Amzad Hossain


While Awami League with its alliance got a thumping majority in the last national election and the electorates, young and old, endorsed the manifesto: “The Charter for Change”, conspirators are stalking in the shadows to undo the beginning of a new era for Bangladesh. Yet the new government, in the face of the worst energy crisis–a legacy of the inaction and corruption of the four-party alliance, left no time to get down to business. With Vision 2021, it started work on short, medium and long-term planning and implementation programs for energy security and supply. If past can be taken as a guide, AL in its 1996-2001 term did overcome such a crisis and its not going to fail this time. Together, We Shall Overcome.
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Editor Energy & Power Mollah Amzad Hossain recently interviewed Dr Tawfiq-e-Elahi Chowhury, BB, Advisor on Energy to the Prime Minister of Bangladesh. The full text of his extensive interview follows:

EP: Energy Sector of Bangladesh is now in serious crisis. What are your plans to confront it? How long you it will take to get out of it?

TEC: It is only three months this government has come to power. Hon’ble Prime Minister has kept this portfolio given the fact that this sector requires the attention of the highest level. We have to start with what we inherited from previous regime. On stock taking, what we observed that over the last 7 years nothing of note has been done for the development of energy sector. The present situation is the consequence of the inaction over the years. Our government has definite programs to address the energy sector issues in the greater interest of the people. The first priority is what we can achieve by 2011.Then comes what we have in our vision 2021. We are endeavoring to plan actions for short, medium and long term to achieve these goals

Planning and implementation of short-term actions will proceed simultaneously. We have initiated a two-pronged strategy. We have to bring the under-implementation small plants into operation as soon as possible and simultaneously, do everything to ensure steady and uninterrupted operation of existing plants. We are also acting for ensuring smooth fuel supply – gas, for these plants. In our current assessment gas supply constraints have been identified as the single most important impediment. There are limitations in gas production and also restrictions in gas transmission. On a priority basis, we have already arranged to evacuate about 50-60MMCFD stranded gas from Jalalabad Gas field through constructing a spur line. This can facilitate generation of additional 200 MW of electricity.

GTCL has been advised to simulate its Gas Transmission Grid to devise ways of optimizing gas supply. This may facilitate to improve gas supply to Shambhuganj Plant at Mymensingh and Siddhirganj. But everyone should realize there is no instant cure for such long ailment.

The 4-party government in 5 years did only plan and implement the lone 80MW Tongi plant. Other power plants which commenced generation during that time were initiated during previous term of Awami League Government. Some other rental plants and small power plants which were initiated during alliance government and caretaker government are at various stage of installation. These are not enough to confront the crisis. If the alliance government had taken appropriate and timely decisions to set up some large power plants the present crisis could have been averted.

Moreover, the 4-party government cancelled the initiative to set up a 450 MW power plant at Sirajganj at the final stage. WB agreed to finance the project. The promised fund was withdrawn following government’s decision to scrap the project. Responsible persons of the 4-party government should be made accountable for such detrimental action.

We have initiated power factor improvement to improve quality of power supply. This will make 10% improvement of supply using the same amount of power and ensure savings of around 300 MW power everyday. You are aware that many of our power plants have already outlived their effective economic life. These have turned into fuel inefficient plants. Actions have been taken to upgrade such old plants. We need to either rehabilitate or replace these with efficient plants. With these remedial measures we will get more power from existing plants. But it will take quite time. We are planning to do these in phases during winter when the demand for power is relatively low.

EP: Power generation and supply is well below demand. People are in great sufferings. Even gas supply for power generation is well below demand. Why alternate fuel could not be made available? What led to this situation you think?

TEC: Indecision of previous governments especially of the 4-party government created this situation. No initiative was taken for about 7 years to explore new gas resource. No new major gas field was discovered after the large Bibiyana Gas field during previous term of Awami League Government. Neither IOCs nor could BAPEX has been steered to explore new gas resource. There is no other alternative to expand or increase gas reserve without new discovery. Alliance government also failed to proceed with the PSCs signed in second round bidding during Awami League government.

If we think of coal - major alternative of gas, underground coal mining on supplier’s credit was taken during the BNP rule. It had two flaws of which one impacted on the other. Local population was not consulted for taking them into confidence for a project like coal mining. Consequently, people were not made aware of the inevitable mine subsidence and the impacts although the operators of the mine were well aware of it.

Another development you must have observed in Phulbari coal mining initiative. Local people were involved in violent protests against the mining initiative leading to loss of lives. It appears contradictory since local people should welcome such a project provided it is designed appropriately taking into consideration their concerns and expectations For such projects to be successful, local people should be convinced that their life and livelihood would be significantly improved while contributing to national development. No major project can be implemented anywhere ignoring the local people.

This is a major failure of the government. The 4-party government as well as the Care Taker Government played hide and seek with local population regarding Barapukuria and Phulbari projects. We must remember taking local people into confidence is the responsibility of the government. In fact, a stalemate situation has been created in the formulation of coal policy and exploration of coal due to lack of faith and confidence of the people in the past governments.

EP: We are lagging way behind PSMP. According to it power demand for 2009 was projected as 7200 MW and generation capacity should be 10% more than that. But during this period power generation never goes beyond 4200 MW. Will it be at all possible to come out of it?

TEC: I have indicated earlier that power generation can be increased to some extent if gas for power can be enhanced. But there is no magic solution which will overcome the present crisis. But demand side management, energy efficiency and conservation can help ameliorate the adverse impacts of power scarcity. We are taking some urgent actions in these regard.

The Prime Minister instructed us to do the needful so that the farmers have the first right to electricity during the Boro season. Under her guidance, we managed the load in such a way as to ensure uninterrupted power supply for agriculture for irrigation. This might have resulted in some extra burden on the urban population, but together we have managed the challenge.

Promoting energy efficiency is another measure. For example, a recent survey has evidenced that about 300 MW power can be saved if traditional bulbs can be replaced with power efficient CFL bulbs in 10 major towns of Bangladesh. That’s as good as setting up power plants of 300 MW!

CFL is use in many countries now. 4.5 million traditional bulbs were replaced with CFL bulbs in one day in Britain. We have taken up a project with the assistance of World Bank and GTZ which will culminate in replacement of 15million (I crore and 50 lakhs) traditional bulbs with CFL throughout selected urban centers and rural areas in Bangladesh early next year. Besides planning logistics and standardization of CFL, we shall seek public support for the initiative including the local government organizations. I am sure media would not be in wanting to lend its mite.

Emphasizing energy efficiency is another strategy to deal with such power crisis. You may be aware that many of our industries have small gas fired boilers. We have gas shortage and these inefficient boilers are wasting our valuable resources. We are considering converting these to liquid fuel and reviewing the possibility of formulating a policy to covert these within a time frame. Energy audit is also under consideration. This will ensure efficient use of energy at all stages. All boilers, chillers and all appliances will be standardized under legal framework with a view to ensuring energy efficiency Capacity of BSTI will be enhanced to deal effectively with these emerging issues.

EP: Awami League Election manifesto includes addition of generation of 1500 MW power by 2011 and 3500 MW by 2013. But existing power plants are not getting the required gas supply now. Considering this situation how the 5000 MW capacity power plants in the pipeline will get fuel supply? Do you have plans to import coal or LNG?

TEC: You are aware that the Prime minister herself is in charge of this Ministry. Awami League election manifesto has some specific milestones. PM came to ministry immediately after the assumption of office and gave specific guidelines for implementing the election manfesto. Among others, the exploration and development of gas resources came up for discussion. A two-pronged strategy will be implemented: accelerating the programs undertaken by BAPEX and involving IOCs through a competitive process that serves the best interest of Bangladesh. You are aware that ECNEC under the chairmanship of the Prime Minister has approved over TK 100 crore for BAPEX to purchase a modern drilling rig and other drilling equipments. Alongside, specific actions would be put in pace the enhance and strengthen the capacity of BAPEX. Another exploration program at Mobarakpur has been recently approved. BAPEX will focus in areas which have lesser risks but higher prospects while IOCs will be encouraged to invest in areas which have greater exploration risks

You yourself commented that single-fuel dependent energy generation is not sensible. In the same vein we have stressed upon fuel diversification. From that perspective coal is our second most important energy source. We are trying to design an appropriate model taking into consideration the experiences, the mistakes or lack of attention on important mining issues in case of Barapukuria. This will ensure coal exploration that meshes the aspiration of local community and in particular, those that are adversely affected, with the national goal of energy production and security. The Prime Minister has instructed all concerned to mitigate the problems of the affected community of Barapukuria coal mine while ensuring its uninterrupted operation. While the previous governments had put the problems of local community under the carpet, particularly the land subsidence, the Prime Minister not only instructed her Ministry and its implementing agencies to address the emerging issues but also took out time from her busy schedule to listen to the representatives of Barapukria and gave instant directives. We are acting accordingly. EMRD has formed a committee to investigate all relevant issues and suggest recommendations. We are endeavoring to reach a consensus with the local communities and carry forward the mining that best serves all competing interests.
The mining model evolving from lessons learnt from Barapukuria will be the basis for further customization, fitting specific conditions of different coal mines. In this process we shall consult mining, environmental and energy experts including the non-resident Bangladeshis. We expect that in the next 5-7 years, coal would emerge as one of the major primary fuels for power generation in Bangladesh.

We are planning to go for dual fuel option for the power plants now under planning. If gas is not available these will run with liquid fuel. Please bear in mind the government will not limit its power generation vision on gas & coal only. We are actively considering nuclear power generation although it is unlikely to come on stream within the 5 year-term of the present government.

The PM is very keen on exploiting opportunities for renewable energy, Alongside other measures, we are actively considering the applications from renewable source of energy. We are exploring the possibility of solar power generation in commercial way apart from limited use as solar home system. Especially, the possibility of running irrigation pumps with solar power is being actively explored. If we succeed this will drastically lower power requirement for irrigation.

It was a common belief that Bangladesh is not ideal for wind power generation. Now technology has significantly advanced. Modern wind turbines do not need strong wind flow. We will work to explore the possibility of introducing this technology. Beyond this we are thinking about supporting bio gas plants and also exploring possibility of energy from waste. The challenges for harnessing these diverse sources of energy on a large scale are daunting but we shall keep pursuing and I am hopeful of some success at the end.

Few large IPPs are on the drawing board and donor agencies are prepared to stand by us in the competitive bidding process. But the recent international financial melt down has made their prospects for financing uncertain. While we shall go for the bidding, alternative modalities for implementation would also be developed, should we face limited response.

EP: Our Gas production capacity is 1850 MMCFD against present demand of 2100 MMCFD. Another 60 MMCFD additional production is expected from the end of March. Apart from this is there any possibility of increasing gas production by 2011 and if so from where? What will be the gas scenario in 2013? If we fail to discover new gas reserve we will have no alternative but to rely on coal. Otherwise we will have to import liquid fuel or LNG. How do you view this situation?

TEC: Petrobangla is working on a gas production augmentation program. The goal is to maximize production from existing fields without jeopardizing the structures. This appraisal-cum-development program should yield some positive results. The exploration programs of BAPEX would also put on a fast track. We shall also nudge the IOCs to bring forward some of their exploration programs. All these would lead to increase in gas supply although it is difficult to speculate the number. You are right in suggesting that coal would also have to be developed simultaneously which I have elaborated before. As a contingency measure, we should not exclude the possibility of LNG import in the intervening period.

EP: Cairn will not further explore at Magnama and Hatiya if Petrobangla do not agree for higher price than agreed in PSC or allow them to sell to third parties directly in local market. In this scenario it has been recommended to approve it. There are complaints that it is a major departure of PSC provision. What is your opinion?

TEC: We are examining the proposal both in the context of the terms of the PSC, incentives for the contractor and the greater interests of Bangladesh. While exploration for new resources are critical now given the shortage we are in, we have to be equally aware of the longer term energy supply and security of the country. A balance has to be struck.

EP: French Company Total has relinquished block 16 & 17. It is told that their decision is influenced by the gas structures they found are not economically viable to explore. Cairn has also relinquished block 5 &10. Only Chevron has expressed intention to carry on exploration efforts in block 7. So in the next 5 years we can not expect major discovery by IOCs. Do you think it will be possible for BAPEX alone to meet our demand?

TEC: There is no last word in exploration. So do not make conclusive judgment if blocks are relinquished by contractors. We are looking into different options in this regard. BAPEX would be put into fast forward mode to which I have already referred to already. Alongside, we shall examine joint venture with BAPEX and also involvement of IOCs in the future. New policy guidelines would be put in place if conditions so require.

EP: Are you going to approve the Petrobangla proposals to award some PSC s to IOCs to start exploration in offshore? Or you will go for fresh bidding?

TEC: The last Caretaker government took the initiative for awarding exploration contracts to some IOCs for offshore blocks. We are examining the papers and after due diligence, firm up our position. Our government is only 3-month old and you should allow some time for arriving at decisions on such important national issues.

EP: Demarcation of Maritime Boundary in offshore exploration is a sensitive issue. This can create dispute with neighbors. How you are approaching this?

TEC: An expert committee is working on it. We will finalize maritime boundary in the shortest possible time. Ministry of Foreign Affairs is actually handling this matter.

EP: Other than Barapukuria another proposal for coal mining at Phulbari is waiting government approval. Asia Energy is waiting for 3 years after submitting proposal. It has been told since last Alliance Government that decision will be taken in accordance with coal policy. Care Taker Govern echoed the same. But coal policy is not yet approved. Which route you are following on this? Will you also work on coal policy or will start coal mining?

TEC: You should have asked the past governments why even after years they could not finalize a coal policy. Ours is a democratically elected government and we have mentioned our overall stance in the election manifesto. The government has already started evaluating the legacy of past regimes. We shall finalize the policy framework in consultation of all stakeholders. There are of course detractors. But a people’s government as ours is, we shall decide in the best interest of the country. While earlier governments dealt with the Barapukuria mine without taking the local communities into confidence, the Prime Minister took time out to talk directly with them. This amply demonstrates the overall strategy of the government.

EP: Will you to take fresh initiative to implement Tri –Nation Gas Pipeline from Myanmar? Is there any plan to import power from Nepal and Bhutan? If so, when?

TEC: The Prime Minster has on occasions emphasized the benefits of regional cooperation, particularly in the energy sector. Such initiatives can be bilateral or multilateral. We shall initiate discussions with our neighbors soon. Again, in the election manifesto this has been stated clearly.

EP: Some estimates evidence that about 20billion dollar investment is required in the next 5 years for Bangladesh Energy sector. Where from this will come? What are Government plans? How much of this will come from donors, how much from FDI and how much Government will invest?

TEC: Large investments are required, I agree. But I cannot put an exact number yet. One cannot deny that a significant part would have to come as FDI and from multilateral sources. World Bank and ADB have not only agreed to take part in financing these investment programs but also help raise funds from domestic and international sources. Although the current melt down in the international financial markets had cast some doubt about such prospects, the resolve in the recent G20 meeting and in particular, the decision to fund trade and investment, would soon release export financing from the developed countries to facilitate FDI flows in Bangladesh.

You may recall that during the last term of Prime Minster Sheikh Hasina, Bangladesh was able to attract large FDI in the energy sector along with some IPPs with one of the lowest power tariffs. Under her leadership, this time around, we shall do even better.

Source: Energy & Power, Bangladesh
Link : http://www.ep-bd.com/news.php?cat_id=5&archive=24&namee=INTERVIEW
Date: 16 April 2009