5th June 2017
Engr Mizanur Rahman

An energy hub could be developed in the entire areas of Maheshkhali island, but its northern coastal area should be kept reserved for developing a deep sea port to meet the future needs of a developed Bangladesh. On the other hand, the coal power generation target in Maheskhali–Matarbari axis should be restricted to 8,400 MW in accordance with the Power System Master Plan (PSMP). Imported LNG based power plants should rather be set up besides the growth centers.

Engr Mizanur Rahman, Member, Bangladesh Energy Regulatory Commission, put forward the suggestion while talking to Energy & Power Editor Mollah Amzad Hossain. He also observed that Maheskhali deep sea port and energy hub must be developed under a comprehensive integrated planning.

Following is the excerpts:

EP: What are your views about planned energy hub at Maheskhali Island?

MR: A significant portion of primary fuel will be imported under the perspective planning. Coal and LNG would be major imported fuel. The enabling infrastructure for fuel import must be developed in the coastal areas. There is no doubt that Maheskhali is the most ideal location in that consideration. Bangladesh has planned for setting up enabling infrastructures for coal and LNG imports in and around Matarbari and Maheskhali and generating electricity using the imported fuel. There is no question about this priority.

But the top most priority for the country now is setting up a deep seaport which is essential for long term use. Primarily, Sonadia was considered as its location. But considering its vulnerability from geological and environmental point of view, the plan has been abandoned. Consequently, considering Sonadia and Maheskhali south as the buffer zone, the deep sea port can be developed at Southern part of Maheshkhali north. The reason is that the way the economy would be growing after 30-40 years, even Chittagong, Mongla and Payera ports together would not be able to support the growth. The availability of 16-18 meters draft adjacent to north Maheskhali would allow movement of 70-80 thousand tonnes capacity vessels. Side by side, the coal transhipment terminal (CTT) and LNG port can also be set up. But the present plan only confines activities to coal and LNG based power generation plant at Maheskhali. In my opinion, these should be moved to north and costal area meaning southern section of north Maheskhali should be preserved for deep sea port.

We must bear in mind that there is no such suitable place other than north Maheskhali and Matarbari in Bangladesh for developing deep sea port. This location is also suitable for fuel import. That is the reason why I think as a part of comprehensive national development of Bangladesh, Maheskhali should be used for a deep sea port and infrastructure for fuel import under an integrated project after necessary feasibility study. Works must not be done in a hurry for an energy hub only there.

EP:In that case what are your views about the feasibility study now underway for an energy hub in Maheshkhali?

MR: Bangladesh Power Development Board has acquired 8,000 acres of land at Maheskhali. In my opinion, south zone of north Maheskhali should be left reserved for the infrastructure of deep sea port. The locations of power plants should be moved further north. Originally, the total planned power generation capacity for Matarbari and Maheskhali area was 8,400 MW. Now talks are around there for more capacity. It is being told about 3,000 MW LNG based generation capacity as well. But I do understand why gas based power plants should be located so far from growth centers. Considering 30-40 years into the future, the deep sea port is much more important. For this, leaving sufficient land for the deep sea port, the rest of the area should be allocated for the energy hub including power plants.

EP:Are you suggesting not too set up coal transhipment terminal and LNG terminal at Maheshkhali?

MR: According to PSMP 2016, imported primary fuel will dominate fuel mix for power generation in the future. We have to develop fuel import infrastructures. One 1,200 MW power plant is being constructed at Matarbari under JICA financing. Another 1,200 MW is in the planning as well. SAMCROP would construct a coal based power plant. A port will also be constructed at Matarbari under the project. Using conveyor belt, coal will be transported to all coal based power plants at Matarbari and Maheskhali from this port. Sumitomo has completed a study for transforming this coal port to coal transhipment terminal (CTT). The capacity of the terminal would be increased to 14 million tonnes in the first phase and 29 million tonnes in the second phase peryear. Then it will be possible supplying coal for all planned coal fired plants from there.

EP: Is it possible to meet the requirement of coal for all the power plants under planning at Matarbari and Maheshkhali from here?

MR: It is possible to supply coal to 8,400 MW total capacity coal plants planned originally at Maheshkhali and Matarbari. But now dividing the acquired land into 8 blocks, each block is being allocated to 1,320 MW power plants in Maheshkhali. Plants with total capacity of 2,400MW are also being set up at Matarbari. A Singaporean company has been given permission for setting up a 700 MW power plant there. Another public sector company has taken initiative for a 1,320 MW power plant at Pekua. Planned coal terminal at Matarbari cannot meet the coal demand of all the power plants under planning at Matarbari and Maheshkhali.

EP:PSMP 2016 has moved away from fuel mix and other matters as prescribed in PSMP2010. Why?

MR:PSMP 2016 is not an update of PSMP 2010 in any consideration. It is altogether a new plan. Major shift has been made in coal use as preferred fuel. PSMP 2010 provided for 50% coal based power generation. Around 60% of that coal was supposed to come from domestic supply. PSMP 2016 provides for 35% coal fired generation of which almost entirely would come from import. The contribution of gas and LNG has been increased from 25% to 35%. The remaining 30% would come from Nuclear, import and liquid fuel.

In the formulation of the PSMP 2016 policy, up to date technology and fuel have been taken into considerations. Consequently, energy saving through efficient use and energy conservation has been given priority. 57,000 MW has been set as target for generation in 2041. Use of gas and LNG for power has become popular for easy availability of shell gas at cheaper price in global market. Imported coal has been given priority as government did not want to exploit own coal resource during this period. Power import through cross border power trading also got importance for relatively competitive power price in regional market. Power availability through power import is also included in this PSMP.

EP: Experts say that if PSMP 2016 is followed, Bangladesh would become 92% reliant on imported primary fuel? What are your views?

MR: We will need electricity for keeping the wheels of development rolling. We have to supply energy anyway. Many developed countries of the world including Japan have come to the present state of development through almost exclusive reliance on imported fuel. Bangladesh does not have enough own primary fuel. What other options the government has instead of importing fuel? The pressure on fuel import could be considerably eased if own fuel resource exploitation could be better planned. Our experience in mining own coal is not at all good till now. The extraction cost of own coal from Barapukuria is US$130/tonne now. I do not think that fuel supply would be an issue if fuel transportation can be ensured through developing all import infrastructures in a planned manner through successfully implementing all regional and international agreements. But the government has to assess also how additional export earnings would offset the additional cost to be required for the fuel import. Otherwise there will be a problem with balance of payment.

EP:But import of fuel at higher price would require supplying at higher tariff. Can the local industries remain competitive with higher fuel tariff?

MR: How much contribution you have in fuel price to cost of production?  It is true that fuel intensive industries would lose competitiveness due to higher priced fuel. But many industries like Textile, RMG, Leather and Pharmaceutical would be able to survive higher fuel cost. But few like steel rerolling mills may lose competitiveness. The government has to provide some other financial incentives to these categories of industries to keep them going. We have to bear in mind that fuel and power price in Bangladesh is still much lower than many countries. I do not think industries would be in much greater problem due to imported fuel.

EP:Experts observe that import dependency of fuel could be significantly relieved if own coal can be exploited under integrated planning. But own coal is missing in PSMP 2016. How do you look at it?

MR:You see the government has directive about not considering own coal. That is what has been followed in the formulation of PSMP. Situation would change if the government decides exploiting own coal after 5 years. Just bear in mind that PSMP has only dealt with fuel planning for power generation. Integrated resource management has not been done.

EP:There are allegations that power system development is neither following PSMP 2010 nor PSMP 2016. What is your opinion?

MR:There is some truth in the allegation. We could not follow any PSMP as yet. Every public and private sector companies are tabling new proposal for setting up power plants. Approvals are being given caring little about PSMP. Works are also being advanced. These are creating fresh issues for the sector. There could be a problem of over investment in the sector. But one must keep in mind that power plants must come into commercial operation as per targets set in PSMP. If they come early, these will remain idle while in case of delay, the power crisis will be triggered.

EP:Bypassing all the plans, the new liquid fuel-based plants are being developed. All PSMP restricted it to 5% of total capacity. What is your view?

MR:Please note that liquid fuel based power generation is never an economic solution. India and Thailand do not have more than 1% contribution of such power plants. Bangladesh has much greater contribution already now. Many new plants are in the pipeline. These were given priority in 2010 as the implementation of all medium to large baseload power plant projects got delayed. Bangladesh failed to move out of it as planned. Rather the situation is reversed. More plants are being set up. In the past these were set up under 3-5 years’ tenure, but now the 15-year model is adopted. Bangladesh would need to bear the burden of these plants for a long time even after commercial operation of base load plants. This situation is not realistic at all.

EP: Bangladesh is approaching a regime of imported fuel dependency. It is essential for setting up enabling infrastructure and team for the operation. Do you think we are ready for this?

MR: Let us talk about coal first. Around 60 million tonnes of coal would be required for generating 20,000 MW of power. Comprehensive planning about the location of infrastructure, their types, capacity and implementation schedule has not been done yet. A coal import terminal for 3,000-3,200 MW power plant at Matarbari has been planned. Converting it to coal transhipment terminal the capacity would later be enhanced to 29 million tonnes a year for generating around 10,000 MW power. But no works started yet on how to bring coal for Rampal and Payera power plants.

Coal supply management chain and handling are huge job. It is not yet clear whether Bangladesh would manage it themselves or engage specialised company for it. LNG import initiative has also been significantly delayed. It may create fuel supply crisis in future.

EP:What are your views about cross border power trading?

MR: The achievement so far is good. Around 650 MW is now being imported from India. This would be doubled next year. But power import from India and Nepal through cross border power trading is still at primary stage. Again though the alignment of a power transmission line from Assam to Bihar got policy and technical approval yet the source power supply is still under discussion. The future of this initiative would depend on how much power can be generated at Arunachal province of India. But regional power trading is heading towards a potential direction.