ARTICLE
Different Thoughts on Energy Demand & Supply in Bangladesh
 
Saleque Sufi

Having gone through very attentively the write up of respected Nuruddin Mahmood Kamal it has natuarally put me into serious puzzle why an accomplished person like him open several issues and never close these with proper and achievable recommendations. Let me start quoting from his concluding paragraph.

“The people of Bangladesh are faced with formidable challenges in the energy sector harnessing its energy resources for sustained, long term socio economic development and more immediate challenge of overcoming energy shortages. It has to more quickly add production and pipeline transmission capacity to eliminate these shortages and ease the demand supply scenario. This implies taking decision at the quickest possible time. The earlier the better for the nation.”

He also wrote, “The goal of energy demand and supply is achievable when ethics based strong commitment can be displayed. Nevertheless active support and cooperation of donors may be needed to achieve the demand supply goals………”.

He listed extensive actions to comfort our situation and create surplus for crisis management.

Mr. Kamal is a patriot, an honest man no doubt about that. He knows to offset our current huge deficit of energy we need massive investment at every segment of energy value chain. He knows we do not have capacity for that. No donor agency and development partner will put substantial money in the upstream exploration and production sector and even if they agree to put some these will not be from their soft lending window. We have to do commercial borrowing at very high interest rate. The only other option is Foreign Direct Investment from private sector as our own investors do not have capacity for that. But when private sector will invest they will obviously consider what the investment risks in Bangladesh are? Whether they will get proper rate of return? How big is the domestic market? What are the other dynamics here? 

Mr. Kamal mentioned there is a great demand of Gas and coal in the country. So both the natural resources should be consumed domestically for meeting the demand of Bangladesh and NOT EXPORT.

Now energy giants will come to Bangladesh. They will take the country’s risk, investment risks, political risk, project implementation risks and when they will strike substantial reserve will have to wait for years for monetizing the reserve.
Question naturally arises how big is our domestic energy market? How big it will grow in another 15 years? According to Mr. Kamal the Natural Gas may run out as early as 2015. Bangladesh now produces about 3200 MW of power against a demand of 5000 MW. Our Gas production capacity is 1850 mmcfd and demand is about 1750 -1800 mmcfd. If in next 5 years we add another 4000 MW and if all those are gas based these will require about 500 mmcfd gas. In the mean time another 200 mmcfd will be required for other sectors. So in 2012 the national gas demand may rise to 2500 mmcfd. Bibiyana is now producing about 300 mmcfd .It may be in a position then to produce @ 800 mmcfd from 2008, which is an increase of 500. The remaining gas has to be sourced from others. If Cairn explore in Mognama and Hatiya more than what we need will be achieved. But Mr. Kamal thought government should not have gone for quick development of Bibiyana and instead should have allowed Bapex to drill more wells at Titas, Habiganj, and Rashidpoor in a short time. May I ask him can depleting Rashidpoor support a single additional well? How much more Habiganj can produce? We must not use our prolific Titas for crisis management. We should preserve it for our future as it is the closest gas field to main transmission hub. Bibiyana was discovered at least 7 years from now. How long an IOC would wait to recover its investment? We should be injudicious in our thoughts. Moreover, we could not arrange to produce another 300 mmcfd from any other alternative so soon. The author has managed many successful gas projects in Bangladesh. So it is from practical hands on experience and not tales.

I remember how the development of Moulvibazar and Bibiyana were initiated. Mr. Khairuzzamn Chowdhury was our Energy Secretary. He came to visit the works of Habiganj- Ashuganj loopline construction works, which the author was Project Manager. After daylong visit we spent the night at Habiganj Gas field .We were due to visit the remaining gas facilities in the greater Sylhet Region including Bibiyana next day. A team of excitng colleagues (Mr. Mukhtadir Ali, Mr. Rahman Morshed, Late M.A. Based, Raihanul Abedin) accompanied the Secretary. We discussed the various options to meet the gas supply challenges over dinner. Among various options we proposed to bring Moulvibazar to production soon, which was ready for it and required minmum actions to evacuate to national grid. That was not the game plan of Chevron for many reasons. So we made a strategy to take the Secretary to Moulvibazr during the trip. Next day after visiting Rashidpur where Unocal officials met the group we suddenly told them to take the secretary to Magurchhara blow out site. On the way we saw the AGAR Plant. After visiting Magurchhara spot secretary suddenly expressed his desire as per our game plan to visit the other two wells of Moulvibazar. Andrew of Unocal was caught off guard. We visited and Secretary was convinced that Moulvibazar could be the immediate relief for gas shortage. Later on we visited Bibiyana and the Bibiyana development also took off. Remember if Bibiyana was not developed Bangladesh could be in greater energy crisis now.
If we like aggressive exploration of coal and gas we can not insist that we will not let the explorer to market its discovered commodity to recover their investment. On the other hand if we do not want them to work here we will never be able to aggressively explore and exploit our resource. Mr. Kamal do not want AEC to develop Phulbari, he does not want Tata to make investment. He should have suggested what need to be done to make this investment to happen. 

If we want to get out of our terrible energy situation we have to be realistic. We know our capacity. We have absolutely no capacity to mine or manage mining, our capacity for drilling and exploration for gas is also bare minimum. We desperately need FDI from private sector. WB or ADB will no longer provide substantial loan for this be sure of that. We can not say we will not allow open pit mining even if it is the most economic way of exploiting the resource, we can not say we won’t allow coal export even if we can not absorb 20 percent of the economic mining volume. We cannot say that we will not allow any export-oriented industry to be set up here using our gas and coal. Still we will want development partners and donors will fund unviable projects, still we will want some one will come here with wonder lamp to mitigate our crisis. Are we not daydreaming?

Mr. Kamal was in EMRD when the controversial contract with Scimiter was signed and if I am not wrong he traveled to Dubai along with Late Habibur Rahman, Chairman Petrobangla to initial the contract. Can I politely ask where was his logic and commitment then? Wonder why he is also not vocal against plundering of national resource in Barapukuria.

I still have great respect for Mr. Kamal for his continued brain storming and personal honesty. Hope he will change his vision and become more realistic. We are at a cross road of national life. This is the best time to act with vision and right commitment. Such opportunity we may not get again in our lifetime. Let us suggest the correct action plan for this willing government to shape our development agenda of energy sector.

We need coal exploration. We need to do it in the most economic and environment friendly manner. We may ensure the proper rehabilitation of our affected people in case of surface mining. Well royalty issue can be renegotiated and export should be only allowed after meeting our actual need. Remember production rate should also be logical .We need Industrial giants and others to set up industries here for utilizing our manpower and resources. If our domestic market can utilize the product well and good. If not these can be exported. It will childish to think if someone invests billion dollars here to throw away the same. But we must see we get the proper value of our resources.