Bangladesh Energy & Power Sector is poised for major paradigm shift .Consistent GDP growth at impressive rate of 6% plus has earned the country a place in the group of lower medium income countries. Despite of global and regional recession Bangladesh economy grew steadily thanks to generous inflow of NRB remittances, wonderfully performing agro based economy, diversification of export commodities. Bangladesh is on the cross road of achieving its national visions of mid income country by 2021 and developed economy by 2041 .There are many issues and challenges. The bottom line however is achieving sustainable energy security for encouraging massive investment (local and foreign) for income generation of its dynamic young generation. Energy security however is depended on sustainable supply of fuel for power generation and supply. Bangladesh has initiated many mega projects in the power and energy sector .On the backdrop of depleting scenario of own fuel natural gas and hesitance for taking political decision for mining own discovered coal resources Bangladesh is growing into a net imported fuel based country for achieving its energy vision . Whether that will be affordable or sustainable is another question but for importing fuel Bangladesh needs to do too much in too little time for implementing all mega power generation projects on time and within cost. If some urgent actions are not taken immediately it may not be possible for Bangladesh achieving energy visions and national economic vision. The energy sector governance and power & energy companies structure needs urgent review, fuel choice options needs fresh thinking , competent team of experts must be engaged for sourcing fuel (LNG and coal ) from global market and concluding contracts, extensive capacity building of energy and power sector officials is essential for planning projects , managing state of the art modern technology using projects and up skilling for operation and maintenance . The pricing structures of energy and power needs reviewing and adjusting to make local industries ready for absorbing shocks of imported fuel. Expeditious actions are also required for exploring and developing own gas resources at offshore areas and onshore frontiers. Long awaited political decision for mining own coal must not also be delayed any further .Exclusive reliance on imported fuel for a developing economy like Bangladesh can trigger unbearable circumstance and catastrophic for any issues in fuel supply chains.
Power and Energy sector crisis situation in 2009 required some crash program in the shape of liquid fuel based contingency power generation. Government could successfully manage crisis through rental power plants. But at the same it failed to explore and develop own gas resources , neither could it initiate mining coal purely from political indecision . LNG import initiative got also stuck in quick sand. All these contributed to diabolic fuel supply crisis. The transmission and distribution networks expansion and updating as per PSMP 2010 also failed achieving success. In such situation despite of 12780 MW generation capacity including 600 MW import it is not possible generating over 8890 MW consistently. Arranging required fuel on time and developing transmission and distribution networks for generated power evacuation and transport was a major failure. On the backdrop of above PSMP 2010 required updating.
Government embarked on mega plan for expanding generation, diversifying fuel mix through moving away slowly from mono fuel own gas dependency . As short term contingency planning it went for imported liquid fuel based rental power plant in 2009 for 3-5 years duration. These were programmed to retire with traditional fuel based midterm planned base load power plants. Generous government incentives facilitated successes in contingency rental power generation options. But delay and failures in setting up enough midterm base load power plants compelled government extending tenure of the most of the rental power plants. Moreover, failures in initiating actions for exploiting own coal and diabolic performance of gas sector failing to add new gas resources created major fuel supply crisis . Government had to plan for imported fuel based mega power projects and major infrastructures for fuel import, How many of such projects can be implemented on time is anyone’s guess . In such situation the achievement of Energy sector vision 2021 and 2041 is getting uncertain day by day. Experts believe that if own coal exploitation does not commence soon country may become 90-95% dependent on imported fuel by 2030. Whether Bangladesh can absorb the price shock of imported fuel or what happens if there is interruptions in fuel supply chain for any reason are issues being discussed .
This write up will briefly discuss some issues and challenges that government must address as significant delays has already been made in making energy and power sectors battle hardened for embracing challenges.
Comparison of Planned Fuel Mix: PSMP2010 & PSMP 2015 (Under Approval)
|Fuel Mix||PSMP 2010||PSMP 2015|
Others ( Nuclear ,Import ,Hydro etc)
15-35%( Domestic Coal 1% or above)
|Features||Proposed for prioritized projects (Matarbari Power Plants ) financing||Integrated discussion on energy, power and economy ,power quality|
Comparative Scenario of PSMP 2010 and PSMP2015 ( Demand and Supply)
|Scenario based on macroeconomic analysis|
A significant departure of power demand , supply and planned fuel mix can be observed between PSMP2015 and PSMP2010. The draft document in footnote has a mention of highest policy making level decision obviously referring to domestic coal exploitation.
There must be soul searching why PSMP 2010 failed? Or in other words why in 5 years of a government it required major updating? Government claims to have achieved generation capacity of 12780MW excluding captive generation capacity but why generation never goes beyond 8890 MW? Master plan does not only means increasing generation capacity alone .It also needs balanced growth in fuel supply, transmission and distribution capacity also.
Issues and Challenges for Bangladesh Energy & Power Sectors can be categorized under: Governance and Institutional Structure, Investment, Human Capital , Fuel Choice and Sourcing , Infrastructure , Pricing , Corruption and Geopolitics
Governance is a major issue in Energy & Power Sector .Government is everywhere . It makes policies and also implements and regulates. Government is very much in Energy and Power business . There is lack of coordination among different segments of power and energy value chain. State owned enterprises enjoys very little or no autonomies. These are mere extension of government. There is partly functional BERC which is also dominated by bureaucracy .Government is not in energy business in most countries which have advanced in energy. Government formulates policies and facilitates growth of energy and power sectors .Properly structured companies regulated by independent regulators operate in level play ground .Private and public sector companies operate in competitive regime. Government must immediately scrutinize power and energy sectors governance structure. Local and foreign private sectors must be encouraged at all segments of power and energy value chain. Political leadership must ensure that officials of all professions can make contributions as per their skills and aptitude in a transparent reward punishment regime.
State Owned Enterprises must be given autonomy as many are registered under company’s act. The board of directors must have proper authority without undue interference of governing ministries. Retired line professionals of proven track records and representatives of civil societies may be included in company boards to run the SOEs as commercial entities.
Power and energy sector has acute shortage of qualified and experienced human capital for planning mega projects , managing implementations and operation . Academic institutions hardly have any linkages with industry. Most of the university graduates mainly from technical universities go abroad and many experienced professionals abandon government job for better opportunities .Government must recruit qualified professionals, implement comprehensive capacity development plans and create incentives for quality professionals for staying in the job. Bureaucrats won’t build projects but technocrats will. Bangladesh has planned several mega power projects adopting modern technology. Consultants and foreign experts are available for development stage but Bangladeshis will have to operate these. Bangladesh needs trained professionals for negotiating fuel supply contracts , managing projects and operating Ultra-Supercritical technology using thermal power plants ., Nuclear Power plants.
Government has secured some investment to the extent of MOUs with China, Japan and India in some mega power and energy projects . But negotiation for concluding agreements are often stuck in protracted process . On the other hand geopolitics and lack of transparency under Power and Energy Sector Emergency act is acting as disincentive for major private sector investment in power and energy sector .
Experts believe that Bangladesh is pursuing flawed strategy in adopting almost exclusive imported fuel dependency, Negligence in exploration of own natural gas resources for over a decade now has triggered major depletion of proven gas resources . Government did not allow any IOCs exploring for gas in onshore for several years . National E&P company handicapped with human capital constraints could do very little for shouldering exclusive responsibility of exploration in onshore areas . Activities of IOCs have also been monitored and managed very poorly allowing Chevron dominating the gas sector over the last 10 years . They dictated terms and almost got away with what they liked to develop Bibiyana and Jalalabad Gas fields and produce above the permissible limits within their cost recovery period . After recovering their inflated costs they are planning to leaving handing over allegedly depleting resources. Gas supply crisis looming large as replacement LNG or new gas from future exploration would take several more years. Bangladesh also remains reluctant to explore own discovered coal resource. Own coal should be and could be much better alternatives.
Bangladesh opting for importing coal and LNG has taken huge risks . Without having experience of modern coal fired power plants and LNG use going for many such projects at a time may prove counterproductive .Bangladesh lacks experience in sourcing fuel from global market , negotiating contracts , administering project management. It must expedite exploration for gas at offshore and onshore and definitely start mining own coal for achieving at least 40:60 fuel mix of local and imported fuel by 2041.
Pricing and Fuel Efficiency:
Bangladesh has already enjoyed lower hanging fruits .Every ounce of new energy will have higher price and must be used efficiently. Energy pricing structure must be carefully reviewed and pragmatically adjusted. Pipeline Gas to domestic, commercial and CNG must be phased out and replaced with LPG . Gas use in Urea Fertilizer plants and power plants using outdated technologies must also be discouraged. Gas from LNG will be primitively higher priced. This should be supplied to value added industries only in special economic zone.
Private Sector Involvement & PPP:
All segments of power and energy value chain may be gradually opened to private sector carefully for creating competitions .If necessary private sectors can operate under PPP with SOEs. Many activities of SOEs can be outsourced for efficient operations. Government must gradually move away from business assuming the role of policy makers and facilitators. BERC must be strengthened with industry professionals for ensuring enforcement and compliance of laws, acts , policies and regulations. It must carry out regular efficiency and safety audits.
Information Dissemination: Most of the government adopted mega projects are suffering from lack of proper information dissemination.Negative mindset is being created from media gossip and hostile propaganda of a section of ill motivated civil society .Government projects must have properly structured public realization system. Very few persons are still aware why the mega power projects have been adopted? Why local fuel utilization is not getting priority attention? Who will operate so many mega power projects ? How price shock would be absorbed?
Bangladesh for achieving national visions must confront issues and challenges. Right people must be placed in right areas .In certain areas enough damages have already been done favoring politically blessed persons in critical infrastructure projects . There is still time to recover .
Feature image courtesy: The Daily Star
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