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Energy Security of Bangladesh – Issues and Options November 16, 2008

Posted by Bahadir Sahin in English, Haber (News).
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Bangladeshis are getting increasing concerned about energy security. It is getting from bad to worse with very little signs of improvement in near future. There have been so much of discussions about the nature and type of the problem as well as about its serious adverse impacts on trade, commerce, business and economic development that mere repetition may sound irritating.

Bangladesh is a small but one of the most densely populated country of the world. About 150 million people live in 58000 square kilometres. More than 80 % of the population have daily income less than $ 2 a day. It has got finite natural resources. Moreover, the country is frequently devastated by cyclone, tidal bores, flood and other calamities. But it has fertile land and very hard working an innovative farming community which grows bumper crops at every possible opportunity to feed the huge population with very limited support. Bangladesh has very vibrant Ready Made Garments Industry which earns huge foreign exchange. Pharmaceutical, Ceramics, Tobacco, Raw hides & Leather Goods, Jute, Tea, Shrimp, Vegetables are other principle export commodities. Hard working Bangladeshi labour force as principal wage earners also keep our economy floating in difficult times. Bangladesh has enormous potential – huge prospect to develop into economic tigers of Asia if the country has proper democratic, honest and committee government of vision. It can turn its population to human resource and also harness and utilize its natural resources much more effectively and economically to accelerate the pace of economic development if it can choose proper leadership through transparent democratic process. Bangladesh has very talented and highly efficient expatriate community, much focussed professionals who can be utilised in a planned manner to plan appropriate development strategy and utilize modern technology.

Energy is the prime mover of national economy. The agro based national economy needs fertilizer, diesel, and electricity for irrigation. Manufacturing industries need stable power supply. In fact smooth supply of energy is the building brick of economic development. But energy situation of Bangladesh is now very uncertain. Hardly 30 % of the population has access to power supply and about 8 % have direct access to gas supply. The energy demand is growing at a rate of about 8% over the last 10 years. But the generation of power did not grow at all to match the growing demand. To maintain our GDP growth of 6% we need to ensure smooth energy supply. But unfortunately we can hardly meet 60% of our power demand. The quality of supply is also very poor. The energy generation is predominantly natural gas based. For lack of appropriate policy, poor vision and bureaucratic control gas sector also did not grow as expected. Poor vision and negative perception has created wide spread frustrations. Consequently security of supply in national power grid, security of supply in national gas grid has become extremely uncertain. Bangladesh needs about 5200 MW electricity per day against which our generation capacity is about 4000 MW. Technical loss and theft & pilferage make economic utilization still more pathetic. Effective power generation capacity of Power Development Board (PDB) is about 2800 MW and Independent Power Producers (IPPs) produce about 1200MW. Private sector captive generators can also produce 1000MW most of which however remain underutilised for most of the time. Most of the PDB power plants have already outlived their economic operating lives and are being run through cannibalizations. These are fuel inefficient. IPP plants are modern and fuel efficient. Power generation is predominantly gas based 90 % power is generated from Naural gas. Coal, liquid fuel and Hydro produce the remaining power. Solar, Wind and Bio fuel generation is still insignificant. Country does not have any Nuclear power generation facilities.

Natural gas demand is about 2200 MMCFD against which our production capacity is 1838MMCFD and transmission capacity is 1750 MMCFD. Pertobangla companies produce 60 % of national demand and IOCs 40%. Cost of Electricity and cost of Gas of IPPs and IOCs are much higher than national producers. PDB and Petrobangla have to buy costlier power and gas from IPPS and IOCs and sale at much lower price lower price. The energy prices in our local market are one of the lowest. The economic pricing of energy is one of the major areas which require careful attention. Otherwise our public sector energy companies will not become self sustaining and energy sector development can not achieve its objectives.

These huge deficits of power in national grid cause massive load shedding. For years people have been discussing about these problems. There have been hundreds of seminars, round table discussions. People know about the reasons for this miserable situation. But there no meeting of minds among people who matters.

Nation must now look for all possible alternatives to bail out energy sector from the tight corner. Harnessing and developing own energy resources (Natural Gas & Coal) for economic utilization have suffered from lack of visions, absence of appropriate policy and above all lack of indigenous capacity (Technical, financial and managerial). Bangladesh has also failed to manage the Foreign Direct Investment at various segments of energy value chain due to managerial inefficiency and inherent corrupt nature. It is highly unlikely that these impediments will be overcome soon. Even if the future government addresses the acute energy crisis as one of its top priority national agenda it will take at least 5-6 years to bring things back in order. If contingent actions are not taken in the mean time Bangladesh will progressively loose competitive edge of export commodities in the world market. Agricultural growth, industrial development will become stagnant. Perhaps aspirirant political leadership has started to realise the depth, diversity and magnitude of the energy crisis. The leading political parties and politicians must have learnt bitter lessons from their past mistakes. Everyone must realise that there are no cut short measures, no magic unfortunately to overcome the entire crisis. We must forget about myths and wrong perceptions .Energy sector must be left for the appropriate professionals to plan, mange and operate. Energy world is very much technologically driven .It is not everyone’s piece of cake. Every drop of energy is our life blood. We must not waste or misuse any.

There can be few options for addressing the crisis. At this stage we must go for contingent actions to overcome the widening deficit of power and at the same time plan for mid term and long term options. Bangladesh will progressively drift and slide from its target of achieving millennium development goal – poverty alleviation if power generation and supply situation are not immediately addressed.

Natural gas dominates our energy generation; it is also basic raw material of urea fertilizer. Natural Gas is also main fuel for small, medium industries, CNG. Excessive reliance on natural gas for power generation and failure to explore and exploit our gas resource in a planned manner has created this present critical situation. It is being told that for gas shortage alone 800 MW power can not generate which could otherwise comfort our situation to a great extent. Despite of mono fuel dependence Bangladesh could not adopt a proper gas exploration policy and depletion strategy. Vast area in onshore and almost entire offshore remained unexplored. Even the discovered gas fields have not been systematically developed. The vital elements like reservoir engineering, petroleum engineering is not given importance. People argue over reserve resource of gas without doing the necessary reservoir study. Theoreticians and non professional dominate gas sector affairs. Many trained, committed and experienced gas sector professionals getting frustrated have left gas sector and gone abroad causing massive brain drain. Consequently gas sector has been suffering from lack of competent human resource to carry forward development an operational activities.

Bangladesh also failed to diversify its fuel option in the energy basket. About 70 TCF equivalent of high quality bituminous coal in Dinajpoor Rangpoor region remains mostly unexplored. A significant portion of the coal is lying at shallow depth. The water saturated dupitilla over burden makes this shallow coal seam unsuitable for underground mining. Modern surface mining can ensure about 85 0-90% coal recovery. Environmental issues, relocation & rehabilitation of affected people can be mange in appropriate manner. Modern method can handle water drainage and subsurface replenishment. But for unimaginative and self destructive miss propaganda and agitation coal harnessing has become uncertain. Proper exploitation of coal can alone ensure our energy security for a longer term; can relieve depleting gas resource from over stress.

Bangladesh can also seriously start implementing civilian nuclear power generation program. These days nuclear power technology has become very safe and it is also very environment friendly. Bangladesh must also aggressively proceed with energy generation from non-renewable sources like Solar, Wind, Energy from municipal waste and bio fuel. The Kaptai Hyropwer plant capacity may also be logically expanded. Other potentials for mini and n micro hydro may also be thought of.

In the next 10 years we have to completely overhaul our energy sector if the nation is to march towards progress and prosperity. We must work unitedly utilising our capacity and experience, utilising our domestic and expatriate expertise to achieve the following fuel mix by 2020.

Natural Gas: 40%

Coal : 30 %

Nuclear : 10%

Others : 10%

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