BERC to Decide on Power Price by September
EP Report
Energy Regulatory Commission will decide on power tariff increase for power agencies by late September, the commission said after a public hearing in the issue.
Its Chairman Golam Rahman said: After examining the opinions of various stakeholders and power agencies, the commission will make a decision on September 30 whether power price would be increased and to what extent, if it is increased.
Power Development Board submitted the application for increase in tariff by around 33 percent for the electricity that agencies like Dhaka Power Distribution Company, Dhaka Electricity Supply Company, Rural Electrification Board and West Zone Power Distribution Company buy from the board for supply to consumers.
Stakeholders including representatives of business associations, consumers association and the Transparency International, Bangladesh opposed the power board application for increase in power tariff for power agencies as ultimately the tariff for consumers would need to be increased to offset the burden of the agencies.
Power agencies, however, agreed to buy electricity for higher prices if the commission allowed them to charge higher prices from consumers.
PDB initially submitted applications to the commission for power tariff increase for both agencies and consumers, but the commission on July 3 rejected the application for the proposed increase for consumers.
It said the commission would first make a decision on increase for power agencies.
The stakeholders during the hearing said the board’s application for tariff increase for power agencies contained unrealistic assumptions, unjustified cost analysis and accounting practices and lacked any direction to improve its efficiency and reduce system loss.
FBCCI representative Aftab Ul Islam said the cost of business had increased by around 15 percent as the power board could not ensure proper electricity supply.
“Because of corruption and high price of electricity of independent power producers, the board had incurred a loss of more than Tk 900 crore in the past year while consumers had to pay bribes to get power connections,” said Transparency International representative Zakir Hossain Khan.
He also said the board had an outstanding bill of Tk 6,000 crore to different agencies and it would earn only Tk 2,200 crore more if its tariff was increased.
“Tariff increase may give the board a relief for a short time, but in the long run it has to improve its efficiency and reduce corruption. If it realizes its outstanding bills, it will not need to increase power tariff in near future,” he said.
Power board officials, however, said they would incur a loss of about Tk 2,392 crore if the tariff was not increased.
The commission took post-hearing opinions in writing from stakeholders.
Chief Adviser’s Special Assistant M Tamim said that even if the commission approves price increase for agencies, the interim government is unlikely to allow any increase in power tariff for consumers during its remaining tenure.
BGFCL Wants Double Tariff
EP Report
The country's biggest natural gas provider Bangladesh Gas Field Company Ltd (BGFCL) is asking the government to increase its gas sales tariff to Tk 14 per thousand cubic feet (mcf) from the miserly rate of Tk 7 for the last 17 years.
While the BGFCL is investing huge money to increase gas production by 270 million cubic feet per day (mmcfd) in the next four years to reduce energy crisis in the country, the company is losing money through gas sales due to the low tariff.
For the last five years, the BGFCL has been steadily contributing to the national exchequer more than Tk 1,500 crore a year as supplementary duty, Vat and debt service liability.
Ironically, the same company has been compelled to turn to the Asian Development Bank (ADB) for a $100 million loan to undertake projects to increase gas production and maintain Titas gas field. Side by side, the company is spending around Tk 500 crore from its own funds for various projects to increase gas production.
"Our breakeven cost is Tk 14 per mcf," says a top BGFCL official. "If we can get just price for our gas, we don't need to borrow from donors to undertake development projects."
The Tk 7 well-head gas sales tariff was fixed in 1991. The same gas is transmitted by Gas Transmission company Ltd (GTCL) that is paid Tk 11 per mcf. At consumer end, average sales rate is Tk 93 per mcf.
Increase of BGFCL's tariff will not affect retail gas tariff at consumer's end or its annual contribution to the national exchequer.
Seconding this argument, Petrobangla in May sent a proposal to the government to increase gas sales tariff of the BGFCL and Bapex. The government last month raised gas tariff of Bapex from Tk 7 per mcf to Tk 25. Bapex produces a small amount of gas and made no profit from its sales. So, it needed a major price adjustment. The BGFCL needs a small adjustment, sources said.
"The company now provides 700 mmcfd gas from different gas fields it owns. Of these, Titas field supplies around 400 mmcfd as the main provider," said a Petrobangla source. The BGFCL owns Titas, Bakhrabad, Rashidpur, Narsinghdi and Kailastila gas fields.
The gas company contributed to the national exchequer Tk 1,332 crore in fiscal 2002-'03, Tk 1,551 crore in '03-'04, Tk 1,566 crore in '04-'05, Tk 1,566 crore in '05-'06 and Tk 1,587 crore in '06-'07. Its contribution in 07-08 would also be close to Tk 1,600 crore, sources said.
But the company gets only 10 percent of its total earning. "Given the nature of the company, an annual net earning of Tk 150 crore might not be a big deal. Sometimes, development work might need huge investment, forcing the BGFCL to resort to donors," notes a source in Petrobangla, mother organisation of the BGFCL.
After spending a lot of its funds to stop alarming gas leakage from Titas field, the BGFCL is set to spend around Tk 427 crore from its own funds to drill a new well (No-9) and conduct workover of two wells (2 and 5) in Bakhrabad field, drill two new wells in Titas field (17 and 18) and install gas processing plant. It is spending Tk 19 crore for workover of a well in Meghna.
These work will add 120 mmcfd gas to the national grid. Of this, 30 mmcfd will be transmitted to the national grid from December.This will gradually rise to 150 mmcfd by 2010.
But side by side, the BGFCL is seeking a $100 million loan from the ADB to completely end the gas leakage from Titas field and to drill four wells there. This will increase gas production by another 120 mmcfd from 2012.
This means BGFCL's total output will go up to 970 mmcfd by 2012.
In addition, the company is jointly developing Begumganj gas field with Bapex and Sylhet gas field with an initial investment of Tk 187 crore. Of this, the BGFCL has committed to pump in around Tk 90 crore.
"This gas company has given so much to the nation, it is time the nation helps this company grow further," commented a Petrobangla high official.
“Develop Phulbari Coal Mine to Resolve Power Crisis”
Business leaders of different chamber bodies of northern districts at a discussion in the capital urged the government to move to develop the Phulbari coal mine without any further delay.
They saw the huge coal reserve at the Phulbari coal mine as the only option now to deal with future energy crisis, particularly in power generation.
“We can easily produce 3,500MW of electricity from the coal to be extracted from the Phulbari mine,” said Rangpur Chamber President Mostafa Azad Chowdhury, adding that as the country's gas reserve is depleting fast, coal is becoming the only option for power generation.
Greater Rangpur-Dinajpur Industry-Business Development Forum organized the discussion on 'Industrialization in Rangpur-Dinajpur: Energy Availability' with President of the forum Nazrul Islam in the chair.
Former PDB member Fazlul Haque presented a keynote paper on the topic.
Former lawmakers Mizanur Rahman Manu and Asaduzzaman Noor, leaders of eight chambers of the northern districts -- Rajshahi, Dinajpur, Rangpur, Lalmonirhat, Nilphamari, Gaibandha, Panchaghar and Joypurhat -- also spoke at the function.
The speakers, supporting the open pit mining at Phulbari coal mine as it provides more than 80 percent extraction of resources, urged the government to ensure proper compensation to those who would be affected by the development of the mine.
“The authorities concerned have to ensure that the affected people would be properly compensated and rehabilitated,” said former LGED chief engineer Monwar Hossain Chowdhury.
If the government fails to take the decision in proper time to extract coal from Phulbari mine, Bangladesh might lose the opportunity to use its coal, as there might be a bar on coal extraction worldwide in future, he added.
Former BGMEA president Tipu Munshi expressed his frustration over the poor attention of the government to the development of mineral resources of the northern region.
He further said the people of the northern region should not be deprived of coal resources due to the antipathy by a section of people.
Forum leader MA Majid termed the opposition to coal extraction in Phulbari an international conspiracy.
Editor of the Bangladesh Observer Iqbal Sobhan Chowdhury suggested that those who oppose open pit mining and those support open pit should sit together to reach a consensus through a logical debate.
Govt Likely to Take More Gas from Bibiyana
The government may take more gas from Chevron-run Bibiyana gas fields if found capable to produce more than its present level.
At present, the state-run Petrobangla is taking around 500 million cubic feet per day (MMCFD) gas from the field to meet the growing demand for power generation and other purposes.
According to official sources, a technical committee is evaluating a third party assessment report, which found the gas reservoir size is bigger than initially assumed.
"If the Petrobangla committee is convinced with the report and find it justified extracting more gas than present level from the Bibiyana field, then we'll ask Chevron to produce more gas from the field," said Petrobangla director Muktadir Ali.
He also said the Petrobangla sometimes take 500-plus MMCFD gas to face the nagging crisis of natural gas. "But, after the committee's report, more quantity of gas could be taken on a regular basis if it is found that more gas extraction would not be harmful for the field."
US-based international oil company Chevron also said that producing 500-plus (MMCFD) gas from Bibiyana gas field would not be harmful to the field's original reservoir.
Chevron's Bangladesh operation chief Steve Wilson said that they are producing gas from Bibiyana field in line with different contracts signed with the Bangladesh government.
He claimed that this is "good news for Bangladesh" that reserve of Bibiyana gas field was proven to be bigger than was thought initially.