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Bangladesh is a country dependent on single-fuel, natural gas. “We’ll not be able to ensure energy security if we can’t diversify the energy sources,” said Prof M Tamim, the newly appointed Special Assistant to the Chief Advisor for Power, Energy and Mineral Resources Ministry. He called coal the second energy option of Bangladesh and said “we’ve to develop the coal sector. There is no other alternative.”
In an interview with the Energy & Power, Prof M Tamim talked about entire gamut of the energy sector of the country as well as its problems and prospects. The EP Editor Mollah Amzad Hossain took the interview after the BUET Professor of Petroleum Engineering Department took over the charge of the ministry. Following are the excerpts:
EP: You talked about future energy security soon after assuming the office. Would you please elaborate?
Tamim: We are a country using gas as the only indigenous energy source. But, energy mix is a must from strategic security aspect. It’s not only in terms of using commercial energy; we’ve to bring diversification also in sources of getting energies. I told you many times that there is no alternative to extracting coal. There’s a debate here in the country about the method of the extraction. We’ve to overcome the debate and take decision for the sake of the country, not individual interest. You know, gas has diversified use apart from electricity generation while the prime use of coal is electricity generation.
Here we’ve to understand another dynamics. We must be connected with regional energy network no matter whether it’s gas or electricity. It’ll help us bringing energy from other countries, including our South Asia, for meeting future energy demand of the country.
EP: You’ve emphasized coal extraction. Does it mean you are going for a quick decision?
Tamim: I think we’ve to decide in line with a policy. Since the tenure of the previous government, it was decided that the coal development decision will be taken once the national coal policy is finalized. A set of recommendations has already been submitted to the ministry. I didn’t go through it yet. I can’t tell you right now whether the government can accept it or it will require further evaluation and consultation.
However, we’ve to see that the objections raised about the coal policy are logical and rational. For example, royalty is a much talked about matter. But, only royalty can’t ensure interest of the country. We’ve to decide considering royalty, corporate tax, revenue generation of a project... all the related matters. It is a complete business package. The royalty in Indonesia is 13 percent, but they gave a big discount in tax.
The policy must be realistic so that a financially viable project can be initiated. You’ve to know that the investment in energy sector is risk-investment. If there is no opportunity of reasonable return, no investor will come to invest, whether it’s domestic or foreign investment.
And no policy should dictate the technology because technology is always evolving and we don’t want to miss out on any new technology that may help us extracting and using our resources in the most judicious and optimum manner.
EP: So, following the draft coal policy, have you any plan to go for an experimental open pit mine on north of Barapukuria?
Tamim: I don’t think that the government has scope or capacity for such an expensive experiment. You must know that every operation whether open pit mine or deep shaft has some fixed costs irrespective to size, which is substantial.
EP: You are saying that there is no alternative to coal sector development. But, some economists and environmentalists are saying an environmental disaster will take place. What do you think?
Tamim: You’ve to remember that there’s always a conflict between environment and energy. There’s no way to exploit natural resources without some harm to the environment. But, in the present world there are technologies that minimize the damage to a worldwide acceptable level. The world is following it and also we’ve the option.
EP: Then what’s the fate of the coal policy?
Tamim: I believe that that policy to extract coal will be formulated keeping the highest interest of the country. And if we can adopt a coordinated and balanced coal policy considering the experiences of other countries, I think we can come to formulate a business model that would be acceptable to all investors – local, foreign or joint. The key to this is to set the right policy giving the right direction.
EP: How long it’ll take to go for bidding for offshore exploration?
Tamim: Preparations are on so that oil and gas exploration in the Bay can be started from next winter. I hope to get the approval to PSC document by first week of February. You know it takes time for a company to start working after it gets the permission. Now huge exploration works are going on across the world and a company needs time to mobilize the machinery.
EP: You’re interested for massive exploration. Will you limit it within only the offshore?
Tamim: Obviously not. The BAPEX and IOCs are going to start working for onshore oil and gas exploration. We will encourage BAPEX to get involved as much as possible. If they are unable to expedite the process, we will consider joint venture with BAPEX.
EP: There’s scope for exploration on north of Bangladesh. But, experts think the oil and gas companies should be brought under a package as exploration investment over there’s very risky. Have you any such plan?
Tamim: You’re right that the northern zone is unexplored and at the same time the investment is very risky. Many countries initiated special package for exploration on such areas. Personally I’m in favor of such initiatives. But, it’s not possible in a short time. So, I think such steps should be taken by the next government.
EP: What’s your plan to revive the BAPEX?
Tamim: The exploration history in Bangladesh under different names is of 36 years. But, financing was not adequate. That’s the reason the public sector exploration, in other word the BAPEX came to today’s stage. I don’t expect much from it.
However, Chief Advisor Dr Fakhruddin Ahmed personally wants to make BAPEX an effective body. Following his guidelines, steps have been taken to support the BAPEX. The objective is to develop the BAPEX as a true commercial organization.
If the plan is properly implemented, I hope the BAPEX will achieve success not only in Bangladesh, but also internationally like ONGC in India. Under this vision, the BAPEX has been asked to submit strategic plan. The government is ready to extend all-out support.
There’s no alternative to make BAPEX a self-reliant organization. For this, steps have been taken to raise the price of per MCF gas sold by BAPEX to Tk 50 from existing Tk 7.0.
EP: We’ve been hearing for long that an eligible partner is being looked for BAPEX for a joint venture. Any progress?
Tamim: Works started to formulate a guideline before I took the charge. It’s a good bid. If we get such a partner it’ll help strengthening the BAPEX. It can be multiple partnership as well but everything has to be transparent, open and through competition.
EP: Discussions are on to rationalize the price of gas and imported oil. What’s your opinion?
Tamim: The decision has to be taken by not causing sufferings to commoners. But it has to be done sooner than later. The price has to be market based for sustainability of the national organizations as well as energy security. Although some form of diesel subsidy for the farmers and also kerosene have to be administered.
The CNG price must be increased and it’s to be done in shortest possible time. Following CNG conversion, the saving in diesel-run vehicles is 85-87 percent while for octane it’s 92 percent. You can say the private cars are running at the cost of water. The conversion cost is realized in 3-6 months. The maximum saving in CNG for the countries with large gas reserves is 76 percent.
If we don’t raise the price of CNG now we’ll repeat the same mistake we did with our gas pricing in the past (and continuing at the present). Moreover, the privileged class is getting the benefit of CNG.
EP: The bid to make gas price market-based is of long. Why it couldn’t be done? What do you think?
Tamim: In fact, we never considered the economic value of our natural resources. That’s why the gas price always remained subsidy-based. As a result, the companies couldn’t make investment. If we can’t overcome the problem, we’ll not be able to face the challenge in the energy sector and very soon the country will face tremendous energy shortage
EP: Have you any plan to take forward the tri-nation gas pipeline project?
Tamim: In principle, I think regional gas and electricity networks should be developed. But, I don’t know the latest state of proposed Myanmar-Bangladesh-India gas pipeline. At present, we’re in deep problem in gas supply in Chittagong. We can think whether we can bring gas from Myanmar to meet the demand over there.
EP: And what’s about bringing hydropower from Nepal and Bhutan?
Tamim: Look, it’s a multi-lateral matter. If some countries together can make investment in Nepal and Bhutan and come to an agreement sharing the results, it’ll be an excellent idea. But, it’s a long-term affair and quite complex. We can’t get quick result from it even if we succeed in such endeavor.
EP: The regional energy cooperation is being discussed for a long time. What’s the problem that it’s not taking place?
Tamim: It’s very tough to pinpoint the cause. In fact, it’s a problem of economic protectism. The big economies should have been more liberal, but it didn’t happen in this part of the world. However, developing regional energy network is not possible overnight. For this, we’ve to develop subnet. I mentioned about Myanmar-Chittagong gas pipeline. In due course of time, it can be extended up to India. Also, we can go for power purchase agreement in different points of time. If we synchronize the points in long time, it’ll be helpful to develop the regional energy network.
EP: What’s your immediate priority?
Tamim: The main priority in gas sector is minimizing gas crisis in Chittagong. And for power, the first task is ensuring electricity for irrigation and keeping the shortage at a tolerable level in next summer. The government already signed agreements for getting electricity in 120 days. That’s the reason the price was a bit higher, the government has been compelled to buy electricity like rice and pulse. The nation is paying now as a result of prolonged inaction in the past.
EP: Have you any plan to increase production at Feni to meet demand in Chittagong?
Tamim: Here Niko-BAPEX joint venture is working. But, there are legal problems in regards to Niko. I can’t tell you right now before I go through the entire matter.
EP: There are huge oppositions to FDI in energy sector. What do you say?
Tamim: The FDI is being criticized when the question of natural resource extraction is coming up. But, there was no criticism in regards to the IPPs, cell phone or garments. Large amount of profit in these sectors is being repatriated. That is the nature of the world business today. I think the public sector alone is not enough to meet the demand of investment in the energy sector, for this we need foreign investment.
However, at first we need to identify as to what we want to get and how much money we need for it. We’ve to ensure the investment doesn’t take place following interest of a company. And there must be negotiation skills for protecting the country’s interest. There is a fearsome shortage of skilled manpower in both power and energy sector. More so in energy. We will have to address this problem as soon as possible.
EP: There’ll be gas shortage from 2012. What’s your plan to face it?
Tamim: Yes there’ll be shortage from 2012 compared to the demand at that time but it is not going to be finished as reported by some. We need massive exploration to overcome the situation. I believe we’ll get new gas from the exploration. At the same time, we also look into extraction of other energy sources.
Another thing, we’ll use gas through proper management so that we can also ensure skilled use of gas.
EP: When we talk about alternatives, coal is one best option. But, you said quick decision is not possible for coal extraction. So, what’s the solution?
Tamim: There’re debates over the issue. But, all debates should be resolved for coal extraction for national interest. For this, at first we want to formulate a coal policy judging the other countries. And we’ve to extract coal on that basis. If the extraction is delayed and there’s shortage in energy supply, we’ve to bear the damage. That’s exactly what we’re experiencing in the power sector.
EP: Now the entire world is working on efficient use of energy, but we’re lagging behind. Will you take any step for skilled use of energy?
Tamim: Load management is very important for efficient use of energy. The caretaker government already took a good decision of keeping the shopping malls closed after 8pm. Works are also going on for energy saving bulbs and electronic ballasts. Conservation and demand management will be a big source of finding new energy now.
Apart from that, I want to start work for efficient use of gas, although it’s a long-term plan. I want to identify the inefficient power plants and replace them. On the other hand, we shall expedite the process of setting up the planned big power plants based on Petrobangla gas supply commitment.
EP: Skilled manpower is a big challenge in the energy sector. What’s your plan for this?
Tamim: There’s no alternative to ensure skilled manpower in the energy sector. In one side, we’ve to train up the existing manpower and on the other employ skilled manpower. Moreover, we’ve to ensure that they don’t leave the country. We need to identify as to how we can ensure attractive financial package for them. We want to start work as soon as possible. It’s a priority for us.
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