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Quamrul Islam Siddique, a former Secretary of the government and now the President of Bangladesh Water Partnership, says that the debate over FDI in the energy sector should be resolved immediately. “We took enough time, now we should resume negotiations with Indian industrial giant Tata and British company, Asia Energy. I think the Energy Ministry, on behalf of the government, should initiate the talks,” said Siddique, who carried out important assignments during his service for the government, including the Chairman of the Power Development Board (PDB).
He said that he believed that the problem emerged over the two investment proposals can be resolved through dialogue. “If there is any technical problem, it can also be resolved in consultation with international experts,” he told the EP.
The Energy & Power Editor Mollah Amzad Hossain talked to Siddique, also a former President of Institution of Engineers, Bangladesh (IEB). Following are the excerpts:
EP: A standstill like situation is prevailing in the energy sector. How can we come out of it?
Siddique: I would say we have to initiate short and long-term planning to come out of the situation. Under the short-term planning, already steps like load management, disconnecting illegal connections and use of energy saving bulbs have been initiated. It should be expanded in phases. An important aspect of the short-term steps is proper maintenance of PDB’s existing units. But two aspects should be prioritized for this: Timely allocation of fund and timely decision by the concerned officials. The main responsibility lies with the PDB, but the ministry should not make unnecessary interference.
Here I would like to mention two examples. After opening the turbine of Ashuganj plant, it was noticed that it requires some machinery. The PDB took the decision and bought the equipments from the producers. The plant resumed operation in time. But, now the former PDB officials are being harassed in the name of corruption. Look, had the PDB initiated a tender process and then went for the purchase, it would take several years to repair the plant. When I was the Chairman of the PDB, the motor ring of Baghabari plant got broken. At that time, we sent it abroad by air and could resume operation at the plant in a month. Similar thing happened later on, but none took the responsibility and that’s why it took a long tome for repair.
However, we got some results following short-term initiative of the present government. The total generation could have been risen to 3,500 MW which had fallen to 2,800 MW. On the other hand, peak hours demand decreased following proper load management.
Still, there is no alternative to increasing generation to overcome the power crisis. I think cancellation of tender process for setting up 10-30 MW small plants was not a right decision. We should not waste time and go for tendering for the small plants. The Bangladeshi businesspeople have the financial and technical ability to set up such small plants. You must understand that companies like Summit or United will get the ability to go for big projects with the experience gathered through setting up SPPs.
Here I want to mention an important aspect: The government will sign agreement to purchase electricity from the SPPs. The main aspect is whether they can supply electricity. There should not be any debate on what kind of plant they are setting up or whether it is a new or old one. At the same time, work for Sylhet, Chandpur and Shikalbaha plants should start without any delay.
Finally, I would like to say steps should be taken for IPPs and joint ventures for big projects like 450 MW plants at Bheramara, Sirajganj and Meghnaghat (2 and 3). I think our local entrepreneurs now work for these kinds of projects under joint ventures with the foreign investors.
EP: But there are allegations of repeated tenders, not getting work order despite qualifying in the tender and imposition of decision by the government. As a result, now qualified entrepreneurs do not take part in the bidding process. How can the government regain the trust and confidence?
Siddique: Right you are. I think the government should hold repeated pre-bid meeting with the willing companies. It will remove the minor problems had there been any, before the tender. Also, minor problems in the tendering process can be resolved through discussions. I think there must be a timeframe from floating the tender to giving the work order. It should be maintained strictly.
In our country there is a bad trend... the bidders will have to accept whatever the government says. We must change the mentality. None will come to invest if it is not win-win for all the parties.
EP: You know our power plants are gas based. But, Petrobangla categorically said that it will not be able to make commitment to supply gas for any new plant if there is no discovery. In that case, we should follow the power sector master plan and go for coal-based power plants. Are we ready?
Sidique: It is true, but where is the coal? The 250 MW Barapukuria coal-fired plant is already in trouble. Extraction of required coal from Barapukuria coal mine is not being possible. As a result, we are running the plant by importing low-quality sulfur-mixed coal from India, that to at a cost of 80 dollars per ton. Now it is proved that the decision of underground mining was not correct. We spent 1,500 crore taka for development of the coalmine, but we could not extract coal of 100 crore taka. So, the government has to decide now that we will get coal where from. We have to take quick decision for coal extraction and go for coal-based power plants.
EP: In that case what is your recommendation?
Siddique: I think that the this Barapukuria coalmine will never be viable financially. It is a faulty project. It is a big question for me that who approved the project and how. I don’t think we will be able to extract even six percent of total coal reserves in Barapukuria.
We saw in newspapers that Indian industrial giant Tata has expressed interest to work for the mine as a partner of Barapukuria. I think our government can consider the proposal, start dialogue and go for open cut mining. If so, we will be able to get 90 percent of total coal reserves of Barapukuria mine.
EP: But, local people built huge resistance against open cut mining at nearby Phulbari. Several people were killed in police firing. Still, will you support the open cut mining?
Siddique: It is true. But, you have to consider the ground of the movement. It was said that if there is a mine in Phulbari the water lever of entire area will go down, it was also said that there will be no proper rehabilitation.
I think we should adopt the open cut mining process for 90 percent utilization of the resources. But, at the same time it has to be ensured that the environment is not affected due to the mine. Also, it has to be ensured that water lifted from the mine is properly channeled by the canal and is used for irrigation. Moreover, everyone affected in phases for the mine has to be rehabilitated properly. There must be initiative that the affected people can earn more than that of now. Also, education of their children and health care of the locality has to be ensured.
For Barapukuria and Phulbari, I think we can follow the similar package that Tata offered for Singur project in West Bengal of India.
Furthermore, it has to be ensured that the mine is financially viable. On the other hand, the royalty should be determined considering the experiences of other countries. Whatever remains in the agreement, I think if the government comes up sincerely the Asia Energy will relax its condition.
EP: What do you think... should we export coal after meeting domestic demand? Or anything else?
Siddique: You know, according to the power sector master plan, we will generate 10,000 MW electricity from coal. Of the total generation, 4,000 MW will come from local coal and rest imported coal. But, I think if the government adopt proper planning we can generate the entire planned 10,000 MW from the domestic coal. The present demand of coal in the country is now 300,000 tonnes, I think it will increase in the coming years.
The government can go for mega power projects in northern region from the coal. However, in that case steps have to be taken to transmit electricity to the eastern part from the west. But, if there is proper planning for industrialization the entire coal can be utilized in that part of the country, which will be a major breakthrough for development of deprived west. It can help the government in poverty alleviation program.
If still we do have surplus coal we can consider export of coal. But, in no way resources like coal should not be kept beneath the soil. Also, we should not go for underground mining in the name of so-called environment protection, it is useless. Whatever we do, we have to do following the experiences of countries having coal production. We cannot extract coal following any isolated policy.
EP: The government is saying that it is preparing a national coal policy. Any decision on investment in the coal sector will be taken on finalization of the policy. What is your opinion?
Siddique: I think those who are working on coal policy should look into the existing rules of the country. Also, it has to be ensured that the new policy is not contrary to the mining rules and other laws and regulations. We must give a look that what the other countries ate doing.
As far as I came to know that the draft coal policy recommends formation of a national body named Coalbangla. It will work for development of the coal sector in the country. We can not run the Petrobangla properly, I am doubtful whether we can have enough and proper manpower to run a new institution like Coalbangla.
An important aspect of the coal policy should be that it is acceptable to those who are interested to invest in Bangladesh coal sector. Otherwise, it will be meaningless, it will only waste time and money.
EP: So far we were talking about fossil fuels. Many countries in the world have proceeded much in regards to renewable energies. Where do we stand?
Siddique: Bangladesh showed progress in expanding solar home systems. At present, we are getting five MW from 100,000 solar home systems. Five MW is not a big achievement, but you have to understand that 100,000 families are getting light. It is expected that with the cooperation of the IDCOL the number will reach 1,000,000 in next three years.
Without any major change in infrastructure of Kaptai, we can get another 100 MW. Japan had expressed interest to invest here six years back. If we do not get the assistance now, still domestic private sector can invest here and we can for expansion of Kaptai plant. But, I think the people of hill districts who were affected for the project must get electricity from the plant.
Besides, small hydropower can be implemented in Sangu and Matamuhuri. For this, we do not need to build any dam.
There is a project for wind power, but the success is not mentionable yet. I think we should not go for new projects for wind power before detail mapping of the existing one.
EP: Marked-based energy pricing is being discussed for a long time. How do look at it?
Siddique: I do not think that the energy sector can run with subsidy. But before that a level playing field has to be created through reform. Then the BERC should get the authority to determine energy price. They will fix price based on production cost.
EP: What kind of reform it should be?
Siddique: Total unbundling of the PDB... already the transmission sector has been separated, companies are working for distribution and generation. The target should be that all the companies become profit-making centers.
EP: How do you look into the proposal for oil and gas exploration in the deep sea?
Sidique: Not only the deep sea, for new discoveries we should also go for exploration in western part of the country and the hill districts. For offshore exploration, if we cannot present all information regarding maritime boundary by 2011 we might get involved in disputes with India and Myanmar.
On the other hand, we can allow foreign companies to work with the BAPEX for onshore exploration. If we can do it, many companies will be interested.
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