Asian Development Bank (ADB) stressed the need for raising power tariff in Bangladesh, saying present rate in the country is the lowest not only in South Asia but also in the Asia Pacific.

"It is a business. So, if you incur loss, who is going to give you the money?" said ADB Country Director in Bangladesh Hua Du.

She was speaking at the monthly luncheon meeting of Foreign Investors' Chamber of Commerce and Industry (FICCI) at Dhaka Sheraton Hotel recently.

She said it is very important to make power sector commercially viable and profitable and noted that substantial progress has to be made in the power sector to run things efficiently. “It is always good to keep the government out of business activities.”

The ADB country chief said the entire sector should be unbundled to make different companies efficient. In this respect, she praised the performance of the Power Grid Company of Bangladesh (PGCB) and Dhaka Electric Supply Company Limited (DESCO).

Performances of these two companies have improved tremendously in the last four years, she said adding they are now making profits.

One of the priority areas of ADB in Bangladesh is to support the infrastructure projects, she said. "We do it for the private sector so that they can grow and create jobs."

She noted that some of the big foreign groups like Tata, Abu Dhabi and Asian Energy are working to invest here and that is why she said the ADB is planning to increase its involvement in the infrastructure in Bangladesh.

FICCI President Masih Ul Karim also spoke at the meeting.

EP Report

14-Party Observe 'Electricity Day'

Some 150 people were injured in a clash between BNP and Awami League activists in Sirajganj on April 30 as the AL-led 14-party opposition combine observed "Electricity Day" across the country demanding uninterrupted power supply.

The opposition combine also laid siege to electricity offices in district and upazila headquarters and staged demonstrations in the capital.

During the program, the opposition leaders demanded immediate solution to the power and fuel crises. They also protested the skyrocketing price of essential commodities.

In Sirajganj, the home town of State Minister for Power Iqbal Hassan Mahmood, a violent clash between the ruling BNP and opposition Awami League activists left about 150 people, including eight policemen and 10 journalists, injured.

District AL President Abdul Latif Mirza, General Secretary Hasan Ali, journalists G Mostafa of The Daily Star, Abdul Kuddus of the daily Sangbad, Jakirul Islam of the Ajker Kagoj, Selim Reza of the New Nation and Fazal-e-Khoda of the Ittefaq are among the injured.

The injured were admitted to Sirajganj Sadar Hospital, Bogra Mohammad Ali Hospital and different private clinics in Sirajganj and Bogra.

The clash erupted at about 10 am near Chowrasta intersection in the district town when police and the BNP activists intercepted an AL procession heading towards local electricity office. Both the groups equipped with firearmsa and lethal weapons fought on the streets for about four hours.

Angry protesters attacked a nearby police outpost, ransacked the local Press Club and damaged at least 20 houses and 15 shops during the clash. Police charged batons, lobbed more than 30 teargas shells and fired 20 rounds of rubber bullet to disperse them.

In the capital, the opposition combine staged demonstration and brought out a procession. Addressing the rally, the opposition leaders alleged that the BNP-Jamaat alliance government could not add a megawatt of electricity to the national grid due to corruption and mismanagement.
EP Report

FBCCI Wants Efficient Power Management before Tariff Hike

Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) wants smooth power supply through efficient management before going for any government move to increase power tariff.

The FBCCI made the observation at a roundtable while the government and the Asian Development Bank (ADB) raised a proposal for increasing power tariffs within the power sector reform for encouraging domestic and foreign investors to solve the prevailing the crisis.

Secretary of the Power Division ANH Akhter Hossain said that the sector needs a vast investment and investors should be well paid. He said in the country's investment climate with low tariff line, no investor would feel encouraged to invest in the power sector and the government only could not bear the cost for the power sector's development.

FBCCI President Mir Nasir Hossain, however, said to meet the growing demand of electricity, massive investment is required, which the country could ill afford from its own resources. An efficient power system as well as developed infrastructure is the pre-requisite for overall economic development, he added.

Echoing other FBCCI directors, Nasir Hossain said, the increase of power tariff under the existing weak and inefficient management, the sufferings in the sector would heighten more.

According to other FBCCI members, increase of power tariff is not a solution while power shortage is a daily and permanent phenomenon.

They said there is no objection for the tariff increase if the total management system from generation to sale point would become perfect.

Hua Du, Country Director of ADB Resident Mission in Bangladesh, said that the current power tariffs are inadequate for the power utilities to meet their operational expenses, their debt service obligations and to finance new investment.

BPDB and DESA had to incur losses from operational inefficiencies due to high station use and distribution losses and low collection-billing ratio, she said adding, tariffs charged to consumers are too low to recover costs.

The reform process needs to be accelerated to further expand power generation capacity and reduce the cost of supply through greater public and private sector participation, for benefit of the entire economy, she added.

Zahid Hossain, ADB's Senior Economist read out the keynote on the occasion.
EP Report

REB's Reluctant Attitude Makes it Vulnerable: PBS Chairmen

Chairmen of Palli Bidyut Samities (PBSs) have blamed reluctant attitude of Rural Electrification Board (REB), political influence and corruption for making the rural electrification system vulnerable.

Addressing a meeting recently, they also opposed the recent government circular which said no fee will be imposed on the consumers in cases of stealing electric wires and transformers.

Held at REB office in the city, the meeting was attended by the chairmen and general managers of 70 samities from across the country to exchange views on the impact of the government circular issued on April 23 in the wake of Kansat agitation.

Through this circular, the government withdrew meter fare and re-fixed the lowest charge for electricity connections at Tk 78.

The chairmen said in most cases REB imposes decisions that often do not reflect the opinions of the samity, while the samity officials neglect the requirements of the consumers to seek bribes from them.

Asadul Biswas, chairman of Chuadanga-Meherpur PBS, said time has come to investigate why the consumers have taken a stand against the samity and do not pay bills. He said the rural electrification systems should be freed from the clutches of politics in a bid to ensure smooth supply of electricity to rural people.

Abdur Rashid, chairman of Manikganj PBS, said neither the REB officials nor the general manager of the samity paid any heed to the needs of the consumers even after making calls with the board chairman. "The general manager could not secure an approval from the REB in giving connections as he failed to pay them bribe," he alleged.

Manikganj will be another Kansat if the demand of the consumers for electricity is not met within a month, he cautioned.

State Minister for Power Iqbal Hassan Mahmood assured him of forming a ministerial committee to investigate the matter in Manikganj PBS.

Chapainawabganj PBS chairman Monirul Islam identified lack of coordination between the REB and the concerned PBS that led to Kansat killings saying that if the issues of meter rents and load shedding were explained to the locals, 21 people would have not been killed.

Majority of the PBS chairmen expressed concern over the existence of the PBS if the consumers are not made liable for stealing electric wires and transformers.

Shamsul Haque Bokul of Naogaon PBS questioned who will replace the stolen transformers? "The rate of stealing transformers will be increased under the new rule," he said.

Azizur Rahman, chairman of Faridpur PBS, suggested imposition of at least 25 percent penalties on the consumers for stealing transformers.
EP Report

BAPEX’s Success in Well Drilling

After successfully drilling two wells in the Titas gas field, BAPEX is going to drill four wells in the Kailashtila field.

Despite BAPEX successfully drilled the wells, it has to do the assignment with only one-third price of the present market cost.

Investigation shows that Energy Division asked BAPEX to drill two wells of the Titas instead of appointing contractor by tender for the first time ever and an agreement was signed between Bangladesh Gas Fields Limited (BGFCL) and the Bangladesh petroleum Exploration and Production Company Limited (BAPEX).

Despite the market price for drilling a well is US $ 5 million each (Tk 35 crore), BAPEX was given only Tk 25 crore for drilling two wells. Just a few years back, BGFCL drilled a well by an Indian company according to the international market price.

BAPEX started drilling of Titas 16 on August 3, 2005 and ended November 3. This is the deepest deviation drilling at 3,558 meters depth. This well is now producing 25 to 26 million cubic feet of gas (mmcf) each day.

The drilling for Titas 15 well started on February 3 this year and ended on April 6 at 3,184 meters depth. This is now waiting for production procedures.

Earlier, BAPEX successfully drilled the Srikail exploration and Fenchuganj development wells while it has also conducted workover of the Shahbazpur exploration well.

With continuation of the successes, BAPEX has agreed at a cost of Tk 37 crores for drilling two development wells of Kailashtila field of the Sylhet Gas Fields Limited and to conduct two workovers.

It started the drilling of Kailashtila 5 and workover of Kailashtila 3 on April 16. Next, it will conduct the drilling of Kailashtila 6 and workover of Kailashtila 4.

It has been using two rigs and it is expected that the work would complete by the end of this year.

Experts said awarding the assignments to BAPEX is no doubt an appreciating initiative, but it must be rewarded with price at an international standard so that the institution can save foreign exchange and increase its skills as well.

When attention was drawn, BAPEX Managing Director told BDNEWS that they are getting less amount of money than the market price. "However, BAPEX is drilling for other companies and it is a good initiative. Hopefully, we will get proper price in the future," he said.

BDNEWS

15 Year Agreement to Face Emergency

Under the emergency shortage facing project, the Cabinet Purchase Committee at a meeting on April 24 approved three private barge/skid mounted power plants for 15 years with a total capacity of 125 megawatt.

The projects are Shahjibazar 80 MW, Fenchuganj 25 MW and Bogra 20 MW plants.

Under the set conditions, officials said, the entrepreneurs will begin commercial generation of the plants in 6-8 months.

Bangladesh Power Development Board (BPDB) selected the entrepreneurs through tender.

According to the conditions, the BPDB will purchase electricity from the three plants for 15 years. The tariff of per kilowatt hour (kwh) electricity to be generated by the gas-run plants will be Tk 2.68 to Tk 3.16.

Sources close to the meeting, chaired by Finance and Planning Minister M Saifur Rahman, said that several members of the Purchase Committee raised the question of signing 15-year contracts since the plants are being set up to face emergency.

However, the approval was given without considering the objections.

Sources said that PDB will sign agreements with the entrepreneurs after getting nod from Prime Minister Khaleda Zia.

According to the officials at Power Division, United Neptune Group is going to be awarded with the Shahjibazar 80 MW plant.

Price of per kwh electricity of the plant will be Tk 2.68.

Orlando Services will install the Fenchuganj 25 MW plant. Its per kwh electricity will cost Tk 2.85.

The Cabinet Committee did not consider another proposal to set up a diesel-run 25 MW plant at Fenchuganj. Price of per kwh electricity for the diesel-run plant would have been Tk 12.01.

The GBB Limited is going to get the work order for 20 MW plant at Bogra. Its selling price will be Tk 3.16 per kwh.

However, all the plants will get gas at a price the PDB gets.

According to the draft agreement, the BPDB will have to purchase a minimum level of power as there is a clause of minimum take or pay. On the other hand, the entrepreneurs will have to pay fine if they failed to install the plants in scheduled time.

Officials said that the BPDB sells electricity to its bulk customers at Tk 2.05 and Tk 2.12 per kwh. The purchase price of electricity for the PDB from the three plants will stand at Tk 3.0.

"It means that the BPDB will have to bear the loss for next 15 years," said an official.

The officials said that the BPDB had sought subsidy to overcome the loss, but the policymakers did not consider the matter.

Asked about three new plants, State Minister for Power Iqbal Hassan Mahmood said: Since I signed the proposals, obviously I gave my consent.

"Still I am opposed to selling electricity at a price which is lower than the price at we purchase," he told BDNEWS.

BDNEWS

Petrobangla to Receive Madhyapara Sans Manpower, Preparation

Petrobangla is going to take up the Madhyapara hardrock project in May from the contractor firm NamNam without having any skilled manpower or preparation to run it.

An official at the Petrobanlga told BDNEWS that there is no scope to run the mine without appointing a managing contractor like the Barapukuria. But there was no progress since the initiative was taken a year ago, he said.

The development work for the mine, which can provide 1.65 million tons of stones a year, is now at the fag end.

An official of the project said they would have to take the responsibility by June, if not in May. "But there will be no option rather than closing down the mine after its takeover in the present condition," he said.

Hard rock was discovered in the country in 1974 in Phulbari in the northern belt of the country, but it had to wait for a long time till 1994 to see its development.

The government had signed an agreement with North Korean company NamNam projecting the total expenditure for the project at US$ 152 million. The development work for the mine started a year later.

According to the agreement, the development work for the mine was scheduled to have been ended by 2001.

However, NamNam will have to pay a compensation at the rate of 16% for the delay, which will reduce the project cost by 16%. The life expectancy of the mine has been project at 50 years.

According to the agreement, the contractor firm was also responsible for creating human resources pool and skilled manpower for the mine and they trained up 12 workers from Korea, of whom six had already abandoned the project.

Despite that, it was agreed to train up 300 local people more. They first trained 100 people and 94 of them got certificates to run the mine. Training for 200 personnel more was not done in a proper way.

It was also agreed in the agreement that the trained personnel would be recruited for the project, but the reality was different as those trained people are now being lost. Now Petrobangla has no personnel to run the mine.

The only way to continue the work in the mine is to make another agreement with NamNam and run it with their manpower.

Considering the matter, Petrobangla has proposed NamNam to go for an agreement with 65 skilled manpower. But the proposal did not see any progress over last one year.

Concerned sources said, NamNam might go for proposing a higher rate under such circumstances for the proposal.

When his attention was drawn, Energy Adviser Mahmudur Rahman told BDNEWS that since there is no skilled manpower, the service for the mine will have to be provided by the contractors. "I don't think that it will be a major problem once we take the mine because, they did not complete the mine as yet."

BDNEWS

Draft Coal Policy Finalized

The draft coal policy has been finalized with provisions for making mine-mouth power plant mandatory and determining royalty based on its price in the international markets. The draft will be placed before the Cabinet for final approval, officials said.

According to the draft policy, the royalty for coal extraction remained unchanged at 5-6 percent for marketing in the domestic market.

But, in case of export, the royalty will be determined in line with the international price.

The royalty will be 5-6 percent for coal price of up to US$ 25 per ton in the international market. The royalty would increase by one percentage point in case the coal price rises by $ 2.5-3 per ton.

If the current international price of coal, which is $ 50 per ton, is taken into account, the royalty payable under the new policy stands at 16-17 percent.

The donors had insisted on maintaining uniformity in royalty for marketing both locally and internationally.

Asked why the recommendation has not been incorporated in the draft policy, a concerned official said this has been done for encouraging coal's uses in the country. "It will strengthen country's energy security."

According to the draft coal policy, the exploration and extraction will have to be conducted ensuring all aspects - environment, social, health.

The type of production - underground or open pit - will be determined after considering the geological position and socio-economic condition.

The draft policy made mine-mouth power plant mandatory.

It said that in first 10 years of a mine, two tons of coal can be exported against sale of one ton in the local market. After 10 years, one ton can be exported against local sale of one ton.

The draft suggested formulating a coal sector master plan. It also recommended carrying out a coal zone study so that no major infrastructure is developed in the areas having coal reserves, which can obstruct its extraction in future.

In future, if a coalfield, discovered by Geological Survey of Bangladesh (GSB), is leased out it has to be done through open tender, said the policy. In that case, the GSB will get discovery bonus.

There were proposals to incorporate in the coal policy for allowing foreign companies to go for joint venture with local companies and joint venture between public and private sectors of the country. But the draft policy did not accept the proposals.

A coal expert said major elements of the policy - royalty, conditional export and mine-mouth power plant - remained same as those were at the beginning.

"They had taken opinions, but did not incorporate in the draft. This policy will discourage the foreign investors," he said.

However, a senior official of Petrobangla, state-run oil, gas and mineral corporation, said: "We can't entertain any proposal which will go against the country's interest and future energy security."

He said Australia had recently adopted similar royalty provisions.

BDNEWS