It is 13 years to 2030 when Bangladesh’s energy sector would be 92 percent dependent on import of energy (primary fuel and electricity) in accordance with the government plan. The present government is working on a vision of transforming Bangladesh into a middle income country by 2021 and developed country by 2041. It thinks that relying on domestic primary fuel, the country cannot achieve the targets. Just a decade ago, Bangladesh was exclusively reliant on own natural gas resource. Over the passage of time and keeping pace with the demand growth, the production increased but proven reserve progressively diminished. The deficit of gas supply kept on widening. Though the gas production has increased by 1,200 MMCFD over the last eight years of the present government, the demand almost doubled due to multi-dimensional use. Expansion of 100% gas dependent industries and investment has been completely stalled. Absence of required forecast for long term supply of fuel and pricing is acting as disincentive to the investors. Though the government is proceeding with development of specialised economic zone with pledges for required energy supply, yet it is not being clearly said how and at what price the fuel would be supplied. Especially the government is not telling anything about energy pricing in the future. The government is repeatedly changing the dateline of quality power supply as a replacement of gas supply. The government is working on plans for importing huge volume of LNG for confronting natural gas deficit. On the other hand, power import through cross border trading is also a priority of the present government. Under the circumstance, the government is going to observe the Energy Security Day on August 9, 2017.
To achieve a 7% plus economic growth at a sustainable manner, the power-energy demand would grow at 10% and more till 2030. Energy expert Prof Dr. M Tamim in a recent presentation mentioned that Bangladesh would have to rely 92% on imported primary fuel (Coal, LNG) and power import for achieving its economic development vision. PSMP 2010 set a target for 40,000 MW of power generation by 2030. Coal would contribute around 50% i.e. 20,000 MW. Natural gas and LNG were set to contribute another 25%. Again 50% more of the coal based power was supposed to come from local coal. The government has in the meantime retreated from that plan. A new Power System Master Plan 2016 has been formulated for generation target up to 2041. Achieving 57,000 MW is set as a new target in the under-consideration PSMP 2016. Some 35% each of the new target would come from coal, gas and LNG. Almost the entire coal power in this new plan would come from imported coal. The government has adopted this strategy of now-exploiting own coal resource on excuse of serving the interest of agriculture and protecting environment. This single decision has driven Bangladesh towards imported fuel dependence. This is completely turning around from Bangabandhu’s energy vision. Dr Tawfiq-E-Elahi Chowdhury, Energy Advisor to the Prime Minister, claimed that there is no political reason behind not exploiting the local coal. This decision has been taken into account environment and water management risks. But the government will consider coal exploration if appropriate technology is introduced in future. Dr Ahsan Mansoor, executive director of Policy Research Institute, at a recent seminar of DCCI mentioned that the decision on coal reserve exploitation must be done now. Otherwise it will remain buried underground for ever. Experienced mining engineer Dr Mushfiqur Rahman considers that open pit mining is a well proven technology worldwide. It is possible for Bangladesh mining its own superior quality coal adopting this technology ensuring environmental protection.
It is well known but any discussion on energy security would remain incomplete if it is not repeated. Right from setting his feet on the soil of independent Bangladesh on January 10, 1972, the father of the nation Bangabandhu Sheikh Mujibur Rahman set his vision on the best acquisition and utilization of own resource for achieving the sustained economic development of the country. One of his priority was exploring own petroleum and mineral resources and making economic utilization for energy generation. Bangabandhu’s program got shot in the arm after oil shock of 1973. He attached top priority attention on natural gas as an alternative option to oil. At that time domestic, commercial and industrial use of natural gas was very limited. Only a power plant at Shahjibazar, Habiganj and a cement factory at Chhatak, Sylhet were gas based. The ownership of the gas field was with international oil giant Anglo Dutch Company Shell BV. Of its five discovered gas field, Shell only partially developed Titas and Habiganj gas fields and was producing a limited volume of gas from both. Bakhrabad, Rashidpur and Koilashtila were not developed. Shell discovered the fields and was operating under royalty introduced during Pakistan time. Shell showed reluctance to Bangabandhu government’s advice for further developing their gas fields and expand the gas transmission and distribution networks of Titas Gas Company.
Farsighted Bangabandhu without wasting time established the right of the people on petroleum and mineral resources of Bangladesh by amending the Petroleum Law 1974. Petrobangla was created. As forerunner of offshore exploration in the region Bangladesh entered into the Bay of Bengal for exploration of petroleum formulating model Production Sharing Contract (PSC). In less than one year, the then Bangabandhu government could conclude PSC with 6 companies for oil exploration in eight offshore blocks. US IOC Union Oil Company discovered Kutubdia gas field. Indian Company ONGC is now working on an offshore block which includes discovered Kutubdia field. But gas was not the focus at that time. Also due to subsequent political changes, foreign companies after 1975 gradually left Bangladesh quitting their exploration campaigns.
In the meantime, Shell was advised to sell its assets following its reluctance for honouring Petrobangla request for increasing production and expanding gas transmission and distribution networks. Sensing reluctance again, the government annexed the assets of Shell owned Titas, Habiganj, Bakhrabad, Rashidpur and Koilashtila fields under a section of Petroleum Act 1974. This created an impetus to the discussion for buying and selling of assets between Shell and Petrobangla. This led to Shell agreeing on 4.5 million-pound sterling price and repayment in nine instalments. The final agreement was concluded on 9 August 1975. Till now these fields supply 35% of total gas delivered to the national gas grid.
Initiative for exploring own coal, hard rocks and lime stones was also taken in 1974. North Korean company Nam Nam was engaged to explore feasibility of Madhyapara hard rock and a German company for Barapukuria Coal Mine. But after unfortunate assassination of Bangabandhu and most of his family members in 1975, new games came into play in the energy, power and mineral sectors. For Bangabandhu’s attaching highest priority, the energy and power sector worked first under the direct control of the Prime Minister and then the President.
Works following Bangabandhu’s initiative for hard rock and coal resumed after 1975. Exploration started in Madhyapara, but the feasibility report of the German company for Barapukuria Coal extraction never witnessed the day light. Consequently, coal exploration initiative failed to gather momentum. Gen. Zia tried to follow Bangabandhu footprints. But that too could not advance further. However, following Gen. Ershad ascending to state power in 1982, the energy and power sector got some momentum. An agreement was signed with Scimitar for oil exploration in the Surma basin in Sylhet. Scimitar discovered Jalalabad Gas field while exploring for oil. But due to the dispute with the government, Scimitar left Bangladesh. No further success came in petroleum exploration during this period. After Khaleda Zia-led BNP government voted to state power, PSC was signed with Occidental in 1993 for exploration in petroleum in three blocks in greater Sylhet region. PSC was also signed with Shell & Cairn JV for exploration in the shallow offshore blocks in the Bay of Bengal. During BNP regime at that time, instead of developing own Jalalabad onshore field by itself this was given to Occidental. In merry go round, the operational responsibilities of the three fields at Jalalabad, Moulavi Bazar and Bibiyana were vested on Chevron. These fields now account for 55% of the total gas supply.
During the Ershad regime, vertically integrated operation of Petrobangla was unbundled into production, transmission and distribution entities. BAPEX was launched, investment was increased for power generation. Distribution networks were expanded. But unfortunately, theft and pilferage of power and energy also increased. Entire sector nosedived into corruption and mismanagement. International tender was invited for coal exploration at Phulbari in the northern region of Bangladesh in late 1980s. Few leading mining companies including Australian mining giant BHP Minerals Corporation expressed keen interest. But no decision could be taken during Ershad time. During Khaleda Zia regime (1991-96), agreement was signed between GOB and BHP Minerals Corporation for exploration of coal in Phulbari. But BHP after discovery of significant coal reserve in Phulbari assigned, the contract to Asia Energy Corporation during the tenure of Sheikh Hasina-led government of grand alliance (1996-2001). But later during BNP regime again (2001-2006), mine development program of Asia Energy was kept in suspended animation. The works did not proceed for agitation of Oil, Gas, Port Protection Committee (OGPC) among other reasons. Over the two years of caretaker government and eight years in two terms of Awami League-led alliance government decision of mining own coal could not be taken. On the other hand, BNP government (1991-96) hurriedly let a Chinese Company mining coal at Barapukuria. This is the only coal mine under operation now. But cost of mining here is relatively higher in international standard. A 250 MW mine mouth power plant is somehow kept in operation using this coal. Reputed international mining expert Dr Ajoy K Ghosh in a feasibility study on Bangladesh Coal for UNDP office claimed that it is very much possible mining coal adopting open pit mining method from four of the five discovered mine ensuring environmental protection and adopting appropriate water management. Present underground mining of Barapukuria is damaging that prospect.
Bangabandhu had a vision for exploiting domestic coal resource. But Sheikh Hasina’s government over the last 8 years has taken an about-turn. The government in its 1996-2001 term had approved the assignment of the exploration contract and mining lease from BHP Minerals company to Asia Energy. This government adopted PSMP 2010 focussing on power generation at affordable cost. PSMP 2010 stated of 20,000 MW of generation from coal out of 40,000 MW capacity targeted for 2030. Around 12,000 MW of the 20,000 MW coal based power was planned to come from local coal. Now the draft PSMP 2016 has targeted for 57,000 MW of generation in 2041. Some 35% of this is about 20,000 MW planned to come from coal. The government is working to import coal for almost the entire coal based power generation. The then Bangabandhu government had given priority to mining own coal and utilize it for power generation. His government initiated feasibility study for Barapukuria coal mining. When the matter was drawn to the attention of State Minister for Power, Energy and Mineral Resources Nasrul Hamid, he said: “We have not moved away from Bangabandhu’s vision. We had to move way from own coal exploration in the changed circumstance for the greater interest of agriculture and water management. The lower price of coal in international market would facilitate affordable pricing of imported coal fired power generation.”
A section of local experts observed that the government decision for not exploiting local coal resource is political. But contesting this, Energy Advisor of the Consumers Association of Bangladesh (CAB) Dr Shamsul Alam said: “We have objected to implement Rampal Power Plant at its present location. The government is paying no heed to it. But that does not mean that mining of coal in the northern region has anything to do with our protests. Actually, the government has no plan to explore and exploit own primary fuel. They are over enthusiastic about importing fuel. This would put energy security in jeopardy.”
Bangladesh was a pathfinder in offshore exploration of petroleum in the region as per Bangabandhu government’s initiative. But now Bangladesh is definitely in the rock bottom in offshore exploration even among regional and sub-regional countries. Bangladesh could resolve long standing maritime boundary disputes with Myanmar and India in the shortest possible time under the dynamic leadership of Sheikh Hasina. But unfortunately nothing mentionable has been done to consolidate that success. Three companies are now working in five shallow and deep water blocks. Energy Advisor at a recent DCCI seminar claimed that IOCs are reluctant to invest in offshore exploration for lowering trend of oil price in global market. Even then a PSC has been concluded with a Korean Company.
Energy experts do not agree with Energy advisor. The government has miserably failed to acquire required data and information package of offshore prospects for attracting IOCs. The decision for engaging company for multi-client survey could not be taken in three years. The fiscal and financial incentives in the updated model PSC of Bangladesh is much less attractive than even neighbouring countries. That is the principal reason.
The government is reluctant to engage IOCs in onshore exploration. That is why BAPEX initiated a project for drilling 108 wells including 53 exploration wells in 5 years by 2021. Two years have whistled by. No success is visible yet. On the other hand, a particular foreign company is being engaged at higher cost for the works assigned to BAPEX. Related experts observe that it is impossible for BAPEX to implement 108 wells drilling program in 5 years. They also believe that even for onshore IOCs should be engaged for exploration through PSC. Former Managing Director of BAPEX Mortuza Ahmad Faruque observed that BAPEX on standalone basis cannot take exclusive responsibility for onshore exploration. He thought BAPEX should have concluded strategic partnership with competent foreign company for exploring and developing petroleum resources in some identified blocks in the greater Chittagong area. We have failed to do that.
Though we have past proven record of acquiring own primary fuel resource, yet we are now getting increasingly reliant on imported fuel. The government is telling that by 2041 about 50 million tons of coal would be imported annually. Around 4,000 MMCFD equivalent i.e. 28 million tonnes of LNG would also be imported annually. The government is also working on a plan for importing 10,000 MW of power from regional countries by then. State Minister for Energy Nasrul Hamid said that besides Bhutan, Nepal and India, the government is also thinking about importing power from China.
The government is saying that import of 7 million tonnes of LNG would commence from 2018. Power import would increase from 660 MW to 1,160 MW. Some 21 million tonnes of LNG per year would be imported by 2030. Even then, the gas demand cannot be met. Prof Dr M Tamim in a recent presentation claimed that the power and energy price will need to be significantly increased for exclusive dependence on imported fuel. Will the Bangladesh’s export commodities remain competitive in the world market absorbing increased power and energy price?
Is Bangladesh drifting away from affordable energy supply? Did we arrive to the present situation for not exploring and exploiting own primary fuel resource? The essence of Bangabandhu’s energy vision was relying mostly on local fuel resources for sustainable energy security. Is Bangladesh moving away from Bangabandhu’s energy vision? Power Cell DG Mohammad Hossain responded, “Of course not, we are perfectly aligned with Bangabandhu’s vision. Changed circumstances have increased imported fuel dependency. Bangladesh has no option but to elevate to developed country league through ensuring sustainable energy security.”
Cover Interviews
100% Dependence on Imported Coal Not Desirable
Professor Badrul Imam
Department of Geology,
University of Dhaka
Bangladesh must not rely 100% on imported coal for power generation. It is not very sure whether Bangladesh is capable for developing enabling import infrastructure for importing 40 million tons of coal per year. It will also create additional stress on the economy. I would suggest maximizing local coal to the extent that modern technology practically supports.
On the other hand, there must not be hue and cry about gas resources running out. There are opportunities for finding new reserve in onshore frontier areas and import from Bangladesh adjacent Myanmar off shore discoveries. We have only explored and exploited simple geological structural troughs in the onshore areas. There also exist opportunities in finding gas in complex stratigraphic traps. There are opportunities for extracting more gas from thinner pay sands of producing gas fields using modern technology and skilled manpower like Chevron. These works in onshore areas can also be done by BAPEX. But initiative needs to be taken to enhance confidence of BAPEX. These works BAPEX can accomplish under the supervision of foreign consultants. This can be similar consultancy services like what British and German consultants provided to BAPEX and Petrobangla in the past.
Bangabandhu’s Energy Dreams Cannot be Achieved with Imported Coal
Humayun Rashid
CEO, Energypac
Ensuring power and energy to all citizen at affordable cost was among the visions of the father of the nation Bangabandhu Sheikh Mujibur Rahman. His competent descendent Prime Minister is also working to realise Bangabandhu’s vision. Bangladesh is still relying on own gas resources as major contributor for power generation. Extensive initiative requires to be taken without any further delay for exploring and exploiting own gas resources side by side importing LNG for meeting the deficit. This is absent now. Perhaps for agitation of civil society and environmentalists, the government relies exclusively on BAPEX for onshore exploration. This will not bring tangible benefits.
We have to conclude win-win PSC with IOCs for exploration in both offshore and onshore through appropriate negotiation. If deemed necessary, representatives of civil society and business community can be included in the negotiation teams. We must not forget that most of the success in the discovery of gas resources in Bangladesh over the past 50-60 years came through foreign companies.
Own coal must be extracted ensuring environmental protection. I do not think that it will be at all possible to realise Bangabandhu Energy Vision relying on exclusive imported coal dependency. Highest priority must be given to exploitation of local coal reserve and use it for power generation and supply of power at affordable cost.
Cost of power and energy would increase obviously. For encouraging efficiency in use, all end users must be given incentives through offering fiscal package for using fuel and energy efficient appliances.
Govt, Not The Green Groups Responsible for Failure in Mining Own Coal
Dr Shamsul Alam
Advisor, Consumers Association of Bangladesh
The government alone is entirely responsible for the failure in exploring own coal and gas resources. The government never had any specific plan for exploring petroleum resources and northern region coal. The government has leaned towards imported fuel options for creating business opportunities for local and international private sector companies.
The government often tries to blame the green groups and civil society for impeding efforts to explore coal and gas. There is no pit coal mining in the northern region of Bangladesh. But there was no issue in enhancing production from Barapukuria. The government failed to do that.
The government has launched a 108 wells drilling program through BAPEX. We supported it. But there has been little progress in that effort so far. Rather GAZPROM has been engaged at higher cost for that work keeping BAPEX idle. The government has gone for imported coal based power generation. Other than Rampal, we have not objected any other coal based power plants. But the government is lagging way behind in all coal fired power projects. Now in the excuse of power deficit, initiative has been launched for another 3,000 MW liquid fuel based expensive power generation plants. The government alone is responsible for failure in exploring and exploiting own primary fuel resources .There are no scopes for blaming green groups and civil society for this at all.
Enhanced Power Tariff in 2030 to be Tolerable
Mohammad Hossain
Director General, Power Cell
Holding Bangabandhu’s Energy vision in head and heart, the government is proceeding in implementation of energy sector mega plan. But changed circumstances have directed us towards imported fuel options. This has been done for greater interest of national economic development. It is no way any departure from Bangabandhu’s vision.
According to PSMP, power tariff in 2030 and 2041 would be between Tk 9 to Tk 12 per unit. This may not be beyond affordable limit as the per capita income would grow appreciably by then.
Exploration of gas has been expedited though it lagged behind for many reasons. We are assisting Petrobangla in its import initiative for LNG. But no decision could be taken yet for exploiting discovered coal reserve in the northern region of Bangladesh. The government has to rely on specialists. There exists a huge acquifer above the coal seams. Extraction of coal would create huge impacts in the region. The Prime Minister has priority for agriculture. Consequently, till a technological solution is agreed own coal mining decision cannot be taken.
If Petrobangla wants, it can evaluate and further review the existing studies on coal mines by a genuine specialist instead of going for new studies. Based on that, the government could take decision for extracting coal.
Price Increase to Affect Everyone
Mortuza Ahmad Faruque
Former Managing Director, BAPEX & BCML
Exclusive imported fuel dependency would increase cost of power and affect everyone. The current plan is for generating 21,000 MW power using imported coal. For limiting power tariff within affordable level, a major portion of coal requirement must be made from domestic coal. Not a single country exists in the world which goes for 100% coal import leaving its own coal buried underground. We must note that it is very much possible exploiting own coal resource by ensuring required protection of environment and rehabilitating mine affected communities.
Five years have elapsed since historic resolution of maritime boundary disputes. No achievement could be made in deep water offshore exploration for lack of proper initiatives. Even multi-client survey contractor could not be engaged for data and information of offshore lead and prospects for attracting IOCs. It is not yet certain how long it will still take.
There exists possibility of finding new reserve even in the onshore especially in the deeper horizons. Some structures in the greater Chittagong have also prospects of finding gas. BAPEX cannot do these on standalone basis. It definitely needs a competent strategic partner.
We have enough scope of acquiring cheaper primary fuel through the suggested windows of opportunities. We have to launch initiatives now under specific plans.
