Challenges of Petrobangla Companies

The greatest challenge of achieving sustainable long term energy security of Bangladesh is ensuring primary fuel supply at an affordable cost. People doing research and analysis on Bangladesh Energy and power sector would also agree that adopting right fuel mix of domestic and imported fuel, harnessing and developing prospects and possibilities of own primary fuel (petroleum, coal, renewable), creating efficiency in energy use and developing core competence of committed and efficient technical and managerial manpower are other challenges. It is where Petrobangla (Oil, Gas and Mineral Corporation) and its 13 companies come into play. Many would agree that Petrobangla and its companies over the past decade or so have failed in many ways in exploiting discovered coal resource, explore and develop petroleum resources at offshore and onshore, creating expertise in efficiently operating and managing gas transmission infrastructure, curbing the menace of theft and pilferage of gas distribution and marketing, managing implementation of LNG import on time and spearheading Petrobangla business development of CNG. Petrobangla has also failed developing efficient leadership for managing development and operation of companies. Policy makers are perspiring to even find 13 competent officials to set as Managing Directors. BAPEX could not be developed as a flagship company in the upstream sector, GTCL is burdened with too many infrastructure development projects which makes them not giving required attention in operation and maintenance, gas production companies are no longer efficient as before and rapid depletion of proven gas reserve is in great confusion what needs doing, gas distribution companies have become dens of fortune seekers for theft and pilferages. This write up will try to analyze the situation and provide some suggestions.

Petrobangla & Its Companies

Petrobangla is a holding company owning and managing 13 companies involved in all segments in gas value chain, LNG, CNG and LPG sector management, mining of coal and hardrocks. Petrobangla has a Chairman and 5 directors – Director (Administration), Director (Finance), Director (Operation and Mining), Director (Planning) and Director (PSC). The situation evolving over a decade or so evidences that the EMRD or MOEMR consider Petrobangla and its companies as an extension of its bureaucracy. The position of Chairman, Director (Administration) and Director (Finance) have become transit destination for senior officials of EMRD. This has effectively plugged the career progression of own officials of Petrobangla and its company officials growing to these positions. The impact is known to all. At present the position of Director (Planning) a very important position requiring deep insight and technical skill is held by a non-technical executive. However, Director (Operation) and Director (PSC) have long experience of working in Petrobangla companies though not in specific areas. Such a composition of Petrobangla has reflected upon the diabolic performance of the gas and energy sector. No visible actions are seen for exploiting own coal resources to its potential. In years, Petrobangla could not take required initiatives for exploring the vast potential of petroleum in the offshore. Exploration and development of Petroleum at onshore is also now standstill. Gas distribution system has huge theft and pilferages. There exist millions of illegal connections. SCADA and telemetry system could not be developed for smart monitoring.

Thirteen companies of Petrobangla duly incorporated under the companies act are designed for owning activities related to development and operation of different segments of gas value chain, development and operation of coal and hard rock mines, activities related to CNG, LNG and LPG sector. Companies are supposed to act according to provision of companies act as autonomous entities governed by the board of directors comprising of relevant experts, academics and representatives of different stakeholders. But the following table would indicate how the EMRD of MOEMR for their exclusive presence in the board has made these companies virtually ineffective. Companies like BAPEX has no person other than present Managing Director having any experience of exploration and development. Of the 9 members of BGFCL board, apart from present MD and Petrobangla directors, there are two secretaries, including former one, two joint secretaries, one deputy secretary, three Petrobangla directors including one former director.  In SGFL board out of 8 members, 5 are from EMRD. Six out of 9 members of GTCL board have general background having no clues of gas transmission system development or operation. Nine members of TGTDCL board traditionally is very well organized having secretary of EMRD as Chairman, Additional Secretary of PMO, Chairmen Petrobangla, BCIC, PDB and Additional Secretary EMRD as members. Despite having such a strong board, TGTDCL has large number of unauthorized gas lines and huge illegal connections.

Two mining companies BCML and MGMCL have no member of mining background in the board. Some retired mining engineers of Petrobangla and academics teaching Mining in Universities can be useful contributors. Generalist officials of EMRD have no clues to mining.

Petrobangla company boards heavily populated members of EMRD are not delivering any good for the companies. For improvement of project planning, managing efficient execution of development works, smooth operation and maintenance company boards must be restructured drawing experienced retired professionals, academics and business leaders. For poor oversight of company boards, exploration has come to standstill, gas fields development lost momentum, GTCL system operation is running into crisis and rampant corruption and mismanagement of gas marketing continues unabated.

Petrobangla Companies

The board meetings of companies are mostly held in Dhaka though operation of only TGTDCL is Dhaka based. There is hardly any benefit of having too many representatives of governing ministries in the company board of directors. Experts suggested that the board can better serve if more experienced retired Petrobangla and company officials are included in the board for their expertise and institutional memories. EMRD officials reportedly misuse training facilities of the companies and very often misuse company transports.

Petrobangla companies are suffering from lack of competent senior executives. There are not enough senior technical executives for the position of company chief executives. Moreover, a flawed action of Petrobangla has illogically kept some experienced senior officials at bay for alleged coal scam of Barapukuria Mine. Civilized world know about technical loss in coal value chain, but not the level-headed Bangladeshi policymakers. In this moment of crisis of senior executives, the government must act to relieve senior executives of BCML from the ill motivated case as at least three of the officials of the group are genuine chief executive materials.

Gas Sector at A Glance

The completion of Maheshkhali–Anowra Gas transmission loop-line and Faujdarhat – Feni - Bakhrabad transmission line will let 1,000 MMCFD RLNG injection into national gas grid. There is no chance of any land-based LNG terminal coming into operation before 2025 even if any contract for that awarded tomorrow. By that time own production may deplete below 2,000 MMCFD. No new gas from ongoing and future exploration may also be available before 2025. Consequently gas deficit would continue and grow more acute. The BAPEX is given impractical target for drilling 108 wells, which has failed to deliver. The decision for relying exclusively on BAPEX for onshore exploration has proved counter-productive. Petrobangla has so far failed to start deepwater exploration for new gas resources. Petrobangla struggled in its efforts for engaging contractor for carrying out multi-client survey in the Bay of Bengal for years. Experts believe that it is well beyond the grasp of the capacity constrained Petrobangla managing fresh offshore bidding round. Moreover, experts believe that even the updated model PSC does not have enough incentives for attracting major IOCs for multi billion dollars risk investments.

EMRD compelled RPGCL wasting time in usual excises for two many FSRUs and small scale FSRU. It is great that present Secretary, Energy could realize the reality. The activities for land-based LNG terminal at Kutubdia by Petronet also have been abandoned for technical reasons. The only technically appropriate location for land-based terminal is at Matarabari. But land development and construction there would take at least 5 years. There is no point in dreaming construction of land-based terminal in less than 5 years.

Gas Utilization

Sector Wise Gas Use

Given the present situation and possible future gas availability, it will be extremely risky letting new gas connections. The 1,000 MMCFD RLNG injection from present 600 MMCFD RLNG would marginally confront the deficit. As no additional RLNG and new gas are expected before 2025, at this stage providing new industrial connections may create additional stress on gas grid. Rather existing consumers specially gas based power plants may be given additional gas and gas supply to captive generators may be gradually withdrawn as additional power should make power grid more reliable.

Recommendations

Petrobangla must have senior experienced gas sector professionals engaged as Chairman, Director (Operation), Director (PSC) and Director (Planning). It is impossible for non-technical generalist directors now to manage Petrobangla activities professionally. Petrobangla is not an extension of EMRD. Hence EMRD officials must not consider Petrobangla as a transit. Company boards must also be reconstituted engaging retired gas sector professionals for utilizing their expertise and institutional memory. The suspension of 3 officials of BCML must be withdrawn immediately and Petrobangla should officially send the experts committee report to ACC.

Saleque Sufi;

Contributing Editor, EP