Streamlining Energy sector management to confront and overcome the prevailing and emerging energy crisis was one of the major challenges when Awami League led Grand Alliance formed the government in January 2009. The new government announced with conviction that it had required home works for confronting crisis and improve situation in the shortest possible time. The election pledge government announced included addition of 1500MW new power by 2011 and another 3500MW by the end of the term - 2014. All together about 5000MW new power was their target.
Time rolled on. People accepted with great sufferings unbearable miseries during the irrigation season of 2009 and the following summer. People were conscious that new government had to be given time to confront the situation. In the meantime responsible persons of the government started showing dreams to the nation. Media reports would evidence that the nation was assured by December 2009 that Bangladesh would witness significant improvement in power supply. November - December 2009 whistled by. In another irrigation season from January-April this year the nation encountered the worst ever energy crisis.
To add more miseries and woos natural gas supply draught also hit the nation. In cyclic effect water crisis created great panic. Grand alliance energy sector management failed to make any significant improvement of power generation or create any change in fuel supply scenario. Crisis changed into horror dimension. Nation started getting haunted. The policymakers announced mega plan. It has been announced that 9426 MW new power would be added to national grid by 2015.
In the backdrop of achieving 4000MW effective generation in 39 years after independence 9426MW megawatt new generation in four and a half years appeared very ambitious.
Energy Advisor to PM led a high-powered energy delegation to three Road Shows at Singapore, London and New York using Petrobangla PSC Fund dedicated for training of Petrobangla professionals. No one evaluated the gains of such useless road shows. No one talk about it these days. PM Hasina cancelled the failed experimentation of daylight saving venture in second year. She had to cancel electric pole procurement initiative from the notorious Khamba syndicates as well. But the PM gave green signal to contingency liquid fuel power plant initiative.
Despite poor implementation records of contingency plants the government has initialled contracts for several new plants for buying very expensive power. Now it has to bear the huge subsidy. Nation has to pay through the nose for failure of energy sector to act positively in time. In one and a half year government failed to start coal mining at Phulbari or approve coal policy. It failed to sign PSC in the offshore. Not a single gas well could be drilled, not a single gas supply infrastructure completed. Not a single major base load power plant contract signed. Rather Sangu Gas field production further depleted. Coal extraction from Barapukuria started getting riskier in underground long wall mining method. Consequently deficit in power rose above 2000MW and gas grew to 500mmcfd.
On the backdrop of above let us review the performance of the government in the Energy Sector in 17 months. Unfortunately morning shows a very bleak day for the government. Country failed to explore and exploit its substantial untapped gas and coal resources to steady fuel supply situation for power generation. Leaving huge domestic resources opportunists are influencing policy makers to enter into suicidal expensive and unworkable venture of coal and LNG import. Port facilities and other infrastructures need massive improvement to support these initiatives.
Contingency Power Plants
The initiative was conceived during the last stage of 4-party alliance government. But they failed to implement the initiative due to excesses of its parliamentarians. Caretaker government in desperate attempt to improve the situation signed a few deals for contingency plants .Some of these came into operation over the last one and half year much later than scheduled. This year from January to May power deficit was over 2000MW. If government fail to reduce it to half through adding about 1200-1500MW by December 2010 people will again have to suffer the ignominy of dry season. It will not be palatable for the government. It is not possible to set up major base load power plant in less than 3 years. Present government did not have any other option but to choose the expensive option of contingency plants. Another 1000MW new power by December-January 2011 will bring partial relief. We must judge the overall impacts of 1000MW new power on national economy. Getting power at this stage at whatever cost would have much greater impacts than having no power. Economic development and GDP growth is getting impacted for power draught.
Gas Supply Situation
Gas supply situation became worst ever during the 17 months tenure of the government. Gas supply from Chevron operated Bibiyana was increased by 300MMCFD during this government without expanding gas transmission capacity through though setting up of pipeline compressor station or loop line. Rather lack of regular maintenance of gas transmission pipelines (On stream pigging) further squizzed capacity. Consequently, efforts to evacuate additional gas through congested gas grid has triggered serious low pressure situation all over gas grid. No gas load management initiative is working. At one stage desperate government shut down 5 out of 7 urea fertilizer plants to divert gas to power plants. Gas rationing has been implemented. Holiday staggering failed to bring any tangible benefits. Continued gas supply crisis has triggered panic among investors. Many export-oriented business are on the verge of getting bankrupt. No new investor is even dreaming to invest in downstream industries. RMG, textile businesses are in desperate crisis. There are no ways to get improvement till gas production increases, new transmission facilities are commissioned and existing facilities are professionally maintained. Gas sector may take three to five years to achieve all these. That will also happen if gas sector management is completely overhauled with doers in place of talkers.
There must be additional gas wells drilled in Titas, Habiganj as soon as possible upon completion of 3D seismic survey. Titas gas field gas leakage situation must be remedied with required urgency. Compressor stations at Ashuganj must be built on top priority basis. Another gas transmission loop line from Rashidpur to Ashuganj must be built on top priority basis. It came to our knowledge that GTCL SCADA facility is not working properly. In tight gas demand-supply situation operational SCADA is essential. Professionals must be trained for skill development for operating SCADA and pipeline facilities including compressor stations. Each drop of gas is now turned into lifeblood. The movement of gas must be professionally managed.
Chittagong Situation
Gas and power supply situation in busy bustling industrial hub and major port city Chittagong is all the more critical. Policymakers always ignored gas supply to Chittagong and favoured Dhaka and Titas franchise area. Bakhrabad Gad Field was developed to serve Chittagong region. But in 1984 Bkhrabad-Demra Pipeline was built to meet urgent requirement of Dhaka System. In 1999 while committing gas supply to AES Power plants at Meghnaghat and Haripur the interest of Chittagong was sacrificed. It took lot of struggle for professionals to make policymakers agree to set up gas compressor at Bakhrabad gas field to restore capacity utilisation of Bakhrabad-Chittagong pipeline. But indiscriminate gas production from Sangu gas field has drastically depleted the field causing landslide to gas supply in Chittagong region. Experts were always murmuring about a Bakhrabad–Chittagong loopline to create facility for required gas diversion from national grid. But policymakers did not listen.
The vision of Bangladesh delegation in 2005 in Yangon tripartite meeting favouring tri-nation pipeline routing through Teknaf-Chittagong was to take out gas for Chittagong. But the tri-nation pipeline did not take off due to narrow outlooks. Now Chittagong situation can only improve soon if Cairn–Santos can supply additional gas from Sangu and Sangu south. They have concluded the 3D seismic interpretation. The prospect of supplying additional gas looks brighter now. They had submitted proposal to drill some more wells at Sangu and Sangu south. If the government approves their proposal about 40-50 MMCFD additional gas may be available for at least 2-3 years from residual reserve of Sangu. This gas supply may be available as early as April 2011.
Exploration of Magnama and Hatiya is also subject to review and approval of Cairn-Santos proposals. The developers proposed to increase price of gas or alternately allow them sale their share of gas directly to third party inside Bangladesh. We know that extracting the last bit of gas of a depleted reservoir at Sangu would require additional investment. We do not know how allowing IOC to market its share of gas to third party inside Bangladesh can harm our national interest when Petrobangla cannot supply them as per demand. If the consumers agree to pay higher price it must not bother Petrobangla or the government at all. Authority is trying to impose corporate tax on IOC. Does burdening IOC in intended investment help Bangladesh cause? If IOC does not get the government nod soon, they cannot invest and mobilize rig and drilling accessories in time to complete works by April 2011. Chittagong cannot have additional gas early. The government indecision will make exploration at Magnama and Hatiya uncertain as well.
It is ridiculous to note double standard of Petrobangla. They allowed one IOC to build a transmission component of GTCL creating precedence of stepping beyond PSC/ GPSA provision when Muchai Compressor station was taken out of GTCL. But they are concerned about allowing Santos-Cairn allowing market access to third party. The same government officials travelled to Qatar in search of expensive and unworkable LNG import deals. For argument’s sake let us agree that LNG would be imported. Can it be materialized in less than three to four years? At what cost Bangladesh will buy LNG? Who will invest in LNG terminal and offshore pipeline? Utopian thoughts.
Niko/Bapex is not producing from Feni Gas Field. The government must resolve dispute with Niko. About 20 MMCFD gas from Feni at this stage will bring lot of relief. Bapex must expedite development of Semutang gas field and Karnafully Gas Systems Ltd (KGSL) construction of Semutang Gas Field to Chittagong Ring main gas transmission facility. The missing link of Chittagong ring main must also be redone without delay. The operational; flexibility of Chittagong Ring Main is impeded after pipe failure at Kalurghat Kranaphully riverbed in 2007. It is sad that this could not be redone in 3 years. Government must make KGSL fully operational as soon as possible.
Recommendations
· Government must allow Cairn-Santos to sell their share of new gas to third party in Chittagong. Government must not impose corporate tax on IOC. This will create situation for additional 40-50MMCFD gas flowing into Chittagong by April 2011. Magnama and Hatiya may meet Chittagong requirement by 2015.
· A bi-directional Bakhrabad–Chittagong gas transmission loop line construction must be taken up at urgent basis. Chittagong Ring Main missing link must be refurbished soon.
· KGSL must start business in full swing. Professionals with proven integrity must be placed in KGSL. Chittagong gas marketing is infected with mismanagement and corruption. A synciate of corrupt officials and gas users are involved in theft and pilferage of gas in Nasirabad, Kalurghat, Halishahar and EPZ area.
· Disputes with Niko must be solved and Feni gas field must be developed to full potential soon.
· Semutang Gas Field Development must be expedited.
· PSC for offshore drilling must be concluded at the soonest.
Coal Exploration
It is ridiculous that even the Grand Alliance government is wasting time in unworkable plan to set up coal based plants at Chittagong and Mongla based on imported coal when Bangladesh has huge volume of high quality coal lying at minable depth in Dinajpur and Rangpur. It is now proved beyond any doubt that underground long wall mining of coal in our situation is a suicidal decision. Srtip mining is the right answer. The most feasible option is to mine coal and set up large base load minemouth coal-fired plants. That is the only way Bangladesh can add about 2000-3000MW coal based new power by 2015 if mining and coal based power plant works start without wasting any further time. Of course we need proper relocation and rehabilitation of affected community in promised modern mine city. We need to adopt modern water management prior to and during mining. Modern surface mining rehabilitates all but the last section to original or better state. It is proven all over the world. Some of the policymakers have eye witnessed. The government must not be misguided by coal mafias and their beneficiaries. Once mismanagement of mining in 1970s caused disaster in Pennsylvania USA. This must not be quoted as example. Mining regulations were not in place at that time. There are always difference between academic research and practical experience.
Recommendation
· Government must again examine AEC Phulbari Mining Proposal with genuine mining experts and allow them proceed with mining and mine mouth power plant installations. Government can talk to all 12 members of the Dr Nurul Islam Committee individually for their opinion. At least 8 of the 12 members had no problem in accepting the technical proposal of AEC.
· Government may engage an accredited mining consulting company to carry out extensive feasibility study for converting Barapukuria mine to surface mine after 2011.
· Government must complete a brief coal policy to address major strategic issues and amend Mine & Minerals Act and Policy to Guide and regulate coal mining. Waiting 5 years on a coal policy by a nation desperately pursuing for fuel for power is not acceptable.
Import of LNG
Import of LNG in Bangladesh in mid term may be an option. But it will require huge investment. Sooner or later government will realize that it is not a viable option for Bangladesh. Setting up LNG terminal at Chittagong or deep sea requires extensive feasibility study. In case of deep sea it will require construction of expensive offshore pipeline. An investment of US 1 billion will be minimum. Bangladesh market cannot absorb at least US$ 10.00/ MBtu LNG at this stage.
Recommendation
If any major regional player can set up a LNG import / export LNG plant and set up LNG based urea and power plant in place like Mongla after comprehensive development of Mongla port that can be a long term plan. Otherwise LNG for Bangladesh within 2015 is a wild dream.
Renewables
Solar, wind, bio-fuel and nuclear options must be vigorously pursued to take care of at least 10% of our fuel mix by 2020. We need preferential feed in or green tariff for solar apart from allowing duty free access of solar appliances, panels. All the government installations, high rise apartments must have solar panels. Building codes must accommodate solar friendly construction, irrigation pumps must be run on solar power. We must plan to use surface water and recycled water more wherever feasible for irrigation. Energy generation from municipal waste, rice husk, and bagasee must be explored.
Signing of an agreement with Russia for nuclear power generation is a milestone achievement by the government. If modern well proven technology can be adopted and Bangladesh can develop capacity to safely operate and maintain nuclear power plants it can be a very useful diversity to fuel mix. By 2020 about 1500MW nuclear power can be added to national grid.
Year 2015 is only 54 months away. It is the second year of the government. By early 2011 this government will surely start panicking if power supply situation does not improve appreciably. Energy crisis is a national issue. Government and opposition must discuss it in parliament and come to agreed national strategy to confront and overcome it. Opposition must say what barriers and impediments they encountered. With so many scandals in energy and power sector in the past we can move ahead until we make a fresh start forgetting the bitter past. The government efforts alone cannot do much.
Private sector both local and foreign must get preference to invest in investment friendly environment. That is only possible if peace and stability prevails in the country and truly committed professionals are in charge. Bangladesh is not yet attractive destination for investment by major power and energy sector players. We know why and we must try to attract them.
The mega plan is required to be implemented. There is no doubt about it. But with present attitude of the government and present state of preparatory mechanism it will be a huge challenge. Private-Public Partnership has no guidelines. Arrangement for fuel supply not ensured. Finacing options are not firmed up, state-owned enterprises are not efficient, and professionals are not getting right incentives. It will be only possible to reach anywhere near the target if we can create dynamism in energy industry inducting a committed professional group with right incentives and encouraging them with right incentives. Our coal our gas must be the backbone to our energy generation. There must be a meeting of mind among major political parties on energy issues. The good signs are evident as the budget proposal of Finance Minister and the alternate proposal of the BNP Chairperson had many common visions on energy sector.
Unfortunately present government in 17 months failed to set up dynamic power and energy sector management. They are following the same tradition of politically favoured talk shops in key position. Bangladesh does not produce competent energy professionals very often. If in that scenario professionals are screened for political allegiance then we are in for a disaster. Look at Petrobangla and you know the answer. None of the key Petrobangla top management has any exposure to manage any gas project implementation or operation. They can only give lip service. It is really impossible for government to realise its mega plans in power and energy sector with such non-performers. The mega plan may get stuck in quick sand.
