Today’s Crisis: Consequence of Bypassing Bangabandhu’s Strategy

Bangladesh has been celebrating the National Energy Security Day on August 9 for the last 10 years, remembering the contribution of Bangabandhu Sheikh Mujibur Rahman to the country’s energy sector development. Though late, the day has been recognized as per the government's decision. Earlier, the Energy & Power magazine had launched a movement for recognizing the day by highlighting various milestone-setting actions initiated by Bangabandhu. This year, the nation will observe the day when Bangladesh, like the rest of the world, is passing through serious challenges of economic and energy security. The government is endeavoring to contain the situation through the adoption of various instant and contingency actions. It is now expected that the war in Ukraine will be over soon and the present uneasy situation in the energy and power sector will successfully tide over. The government policymakers think that once the hot, humid ambient condition gradually goes, the demand for power will ease. Bangladesh will have the flexibility in catering to power demand. But the sector experts contradict the views of the policymakers. According to them, the flawed policy and strategy of the government have caused an unpleasant situation in the energy sector, and It will not be possible for the government to overcome the situation so easily. Short-term contingency actions may not be enough. Rather, a well-coordinated and comprehensive energy and power policy as well as launching a strategic implementation plan might help overcome the situation gradually. A section of civil society, activists, and left-leaning political parties believe that persistent and unhindered corruption over the last 13 years has led to the present unpalatable situation in the energy and power sectors. These mischief mongers must be identified and brought under the ambit of laws. This write-up marking the energy security day will focus on the reasons leading to the present situation and will explore remedies.

Present Situation of the Power Sector

Generation

Not even a year into the past, Bangladesh emerged as the first country in South Asia to achieve the distinction of bringing the entire country under the coverage of grid power supply to all. Prime Minister Sheikh Hasina ceremoniously announced this achievement. But where actually are we now in the power supply situation as an essential backbone of economic development? Can the prevailing situation leverage achieve the national economic vision of reaching the status of a developed economy?

Let us give a deeper look into the power sector.  Till 31 July 2022, the installed generation capacity was 22,348MW. Besides, the capacity of non-grid captive power generation was 2,800MW. According to Engr. Mohammad Hossain, Director General of Power Cell, the country has a total installed capacity of 25,148MW. But the government sources agreed that the actual present capacity of grid-connected power is a little more than 17,000MW. It is possible to meet up to 16,000MW of demand in the present situation.

It merits mentioning here that the power generation was almost exclusively dependent on indigenous natural gas 20 years into the past. About 96% of the power used to be generated by burning own gas. But for issues related to gas supply to some plants in 2005, initiatives were launched in 2006-07 for generation from imported petroleum products. The initiative got momentum in 2009. Consequently, now Bangladesh relies over 33% on imported liquid fuel - furnace oil and diesel - for power generation. At the initial stage, it was conceived that coal-based baseload power plants would come into commercial production from 2014 and liquid fuel-based contingency plants would be gradually phased out. Unfortunately, Bangladesh grew more and more dependent on liquid fuel, adding more such generation units. That trend still continues.

According to BPDB, natural gas-based power generation capacity is above 11,000MW. According to them, a 2,252 MMCFD gas supply is required for generating this power. But at present Petrobangla companies' supply varies between 900 and 1000 MMCFD. None can even guess when it may be possible for Petrobangla to meet the complete demand of the power sector. Despite this scenario, the initiative has been launched for adding 11,282MW of new gas-based power plants by 2030 with the expectation of RLNG supply. Some gas-based plants will retire by then. Yet by 2030, gas-based power generation capacity may reach 20,000-22,000MW. Gas demand for this will exceed 4,500 MMCFD. The source of gas supply cannot be guaranteed yet. By 2030, coal power generation capacity will grow more than 8,000MW. One such plant having a capacity of 1,320MW is ready to deliver. But the total capacity cannot be evacuated yet. The government expects that by December 2022, a 1,320MW Rampal power plant and another 1,248MW coal power plant will start commercial operation. 1,600MW coal-based power from Indian Company Adani Group may also start flowing into the Bangladesh power grid by then. But neither Adani group nor Bangladesh is ready for meeting the target yet.

Transmission

It is known to all that transmission and segments of the power supply chain lag way behind generation in matters of developing the backbone for integrated power supply security. The government has almost completed its third consecutive term in the office. Yet it could not develop transmission grids and distribution networks matching the growth of generation for the non-availability of required finance. Officials related to power transmission informed the EP that power transmission infrastructure development also suffers from changing and chopping plans of a generation too often. Transmission system development cannot be advanced consistently as the generation plan did not follow Power System Master Plans (PSMPs). Consequently, in some areas, the power supply could not start even after completing evacuation facilities. In some other areas, the situation is just reversed. Evacuation facilities were not ready and generation capacity remained stranded. The COVID-19 pandemic was the worst period for the Power Grid Company of Bangladesh (PGCB) in completing its assigned projects per the revised plan. Consequently, the transmission segment development lagged way behind other segments of the power supply chain. Land acquisition and river crossings are two other major deterrents for power transmission infrastructure development. A major challenge was laying the foundation of 7 power poles parallel to the Padma Bridge in the turbulent Padma River.

Construction of a power transmission line from Matarbari power hub to Modunaghat has been completed. Modunaghat to Meghnaghat 214 KM 400 KV transmission line is expected to be completed by December 2022. Construction of a substation at Matarbari is also advancing smoothly. Power evacuation facilities will be ready by the time the first unit of Matarbari 1,200MW gets ready for commercial operation.  But due to the challenges of the Padma River crossing, the transmission line from Payra to Aminbazar could not be completed on time. Sources at the PGCB informed the EP that contingent upon Padma River remaining calm, the leftover works from Gopalganj to Aminbazar may be completed by December 2022. This will assist in evacuating the entire power generated in Payra power plant. Work on the section from Payra to Gopalganj is complete. Construction of a 400 KV substation at Gopalganj is in progress. Work on the Gopalganj-Rampal line plant is also complete. The Payra-Gopalganj section of the transmission line is ready for operation. Until all the leftover work of the entire transmission line is completed, the Payra power plant cannot be operated at design capacity. Power from Payra is currently being supplied to Khulna region by stepping down the voltage at the 400KV substation at Rampal. For this alternate arrangement, the first unit of Rampal cannot be brought into operation until Payra power plant ceases operation. BIFPCL has set a targeted completion date in November 2022 as 5th revision. BPDB organized facilities for supplying back feed power from April 2022. The Adani Group could not complete the 104 km transmission pipeline inside Indian territories. Adani Group can start receiving back feed power in august 2022. Construction of a 400KV transmission pipeline to import this power to Bangladesh at Bogura point is complete now. Construction of the substation was due to be completed by August 2022. But the COVID-19 pandemic affected imports of substation equipment on time. As such it cannot be guaranteed whether power import can start even in December 2022. It may be possible to receive power from the first unit if Adani Group can implement an alternative plan for commissioning and delivering power from unit 1.

According to the information received from the Atomic Energy Commission, the first unit of the 2X1,200MW Rooppur nuclear power plant will be ready for operation at the end of 2023 and the second unit in early 2024. But the minus 2 redundancy power evacuation and transmission facilities will not be ready for operation before 2025. A huge volume of work of 7 different power transmission lines (230KV and 400KV) is required to be completed in entirety for transmission of power to all areas of Bangladesh power grid. Padma and Jamuna rivers would require to be crossed twice each as part of this work. Prospective bidders responding to tender announced under Indian government finance quoted US$1 billion for the river crossing work. Bangladesh government moved out of Indian LOC and announced bidding under alternate finance. The lowest bidder now quoted US$500 (half of the previous lowest bid). According to PGCB, the contract for the river crossing segments can be completed by October 2022. In case of a successful agreement, the completion of the work may take two years. The other components of works of 7 transmission lines may be completed by the end of 2023. For the complex and critical river crossing works of the power transmission line (N minus 2 redundancy) protocol, the power generated from the nuclear power plant cannot be evacuated before October 2025 at this point. 

Distribution System

BREB

Bangladesh Rural Electricity Board supplies power to about 80% of the 42.23 million end users through its 80 Polly Bidyut Samity (PBS). BREB among the distribution utilities is lagging way behind supplying quality power on an uninterrupted basis. To come out of the present situation, the challenges of BREB are far greater than utilities supplying power in urban areas. A highly placed official of BREB informed the EP that it may take up to 10-15 years for ensuring a quality supply of modern power on an interruptible basis to all users under the BREB franchise. However, an implementation plan has been finalized for implementing a US$2.5 billion scheme for smooth and uninterrupted power in rural areas by 2027. BREB sources informed that they have 1,228 substations across the country. Many of these are in far-flung remote areas. These need to be brought under AIS and GIS monitoring coverage and taken indoors. The regional SCADA system needs to be set up and automatic fault detectors installed. At the same time, all substations need to be connected with a dual supply source. At the same time, long feeders spread across Bangladesh need to be made shorter. PGCB has launched projects for 30 grid lines and substations by 2030 for strengthening the power supply to BREB franchise areas. By 2041, another 41 grid lines and substations will be added. Providing all the information, the BREB executive also informed the EP that all its facilities will be transformed from manual to automatic in phases. That is why it may take up to 10-15 years.

DESCO

Dhaka Electric Supply Company (DESCO) is responsible for supplying power in Mirpur, Gulshan, Baridhara, Uttara, Purbachol and Tongi areas.Formed under the unbundling process of the vertically integrated BPDB operation in 1998, DESCO now has 1.1 million end users. Half of these have been brought under the prepaid metering system. The peak demand in 2009 was 545MW and now in 2022, it has grown to 1,076MW. System loss over this period has been reduced to 5.58% from a staggering 9.79%. However, to make the system completely free of interruption, all feeder lines need to be buried underground and substations need to connect with dual sources. Above all, it needs complete automation. Engr. Md. Kausar Ameer Ali, Managing Director of DESCO, thought that all these may not be achieved by 2025. According to him, these may take up to 2030 to achieve. He mentioned that interruptions over a significant portion of the total area have been reduced by now. Two feeder lines in the Tongi area, are now completely free of interruptions.

DESCO sources informed the EP that an initiative has been launched for taking all the feeder lines underground in Gulshan, Banani and Baridhara areas under JICA finance. The physical work will start this year. The initiative has been taken in association with a Korean company for taking the power supply system of Purbachol underground. The SCADA system has started operation already in DESCO. It is expected that by 2030 the DESCO system can become fully automated. The present system can cater to the demand till 2025. The system will be upgraded to cater to needs up to 2030 and beyond.

DPDC

Dhaka Power Distribution Company (DPDC) is the first distribution utility starting operation in the unbundling process. Starting as DESA and ultimately renamed as DPDC, it is serving wide areas of Dhaka and Narayanganj. The highest demand so far served was 1,766 MW. In 2009, the system loss was as high as 18.18%. The company through various effective actions could reduce the system loss to 6.69%. Even during the crisis period, the DPDC could manage to restrict impacts to a manageable limit. They are implementing projects for connecting substations to dual sources and in some cases to triple sources. Engr. Bikash Dewan, Managing Director of DPDC, informed the EP that the work will be completed by 2025. He admitted that the system cannot be made completely reliable till the entire system is made automated. Engr. Dewan further informed that the DPDC was to adopt a smart grid in phases. It may take up to 2030.

DPDC sources confirmed that the industrial zones are now supplied from dual sources. The company has started implementing projects for taking distribution lines underground from Dhanmondi to Bangabhaban via Jahangir Gate, Azimpur to Gabtoli along the roadside. They expect to complete the work by 2023. Work has started under an EU loan for making the entire distribution system in the Dhanmondi area entirely automated by adopting a smart grid. A US consultant has started working.

Engr. Bikash spoke about the challenges of making the distribution system interruption-free with overhead networks. Again the cost of underground lines is 3-5 times higher than overhead lines. Hence before making investments, it is essential assessing the capacity of the company. We take projects for implementation but the time frame is contingent upon getting city corporation permissions on time. It is also essential to coordinate with other organizations for managing the operations of underground lines. Felling trees around our distribution lines is a great challenge now. DPDC utilizing modern technology is trying to serve its customers with the least interruptions. We are also quickly responding to situations as and when these appear.

BPDB Distribution Unit

BPDB serves the second largest group of end users after BREB. They serve about 13-14% of total power users in Chattogram, Sylhet, Cumilla and Mymensingh areas. Several projects are under implementation in Sylhet and Cumilla for system expansion and improvement. The distribution in Mymensingh is handicapped by the constraints of the power transmission grid. Different projects are also under implementation for upgrading and modernizing the distribution system in Chattogram. BPDB engineers are of the opinion that the system is not yet ready for 100% reliable supply of quality, uninterrupted power. Work may not be completed by 2025. However, by 2030, the BPDB distribution system will grow 100% reliable and dependable.

WZPDCL

Western Zone Power Distribution Company (WZPDCL) is entrusted with the task of power distribution and supply to the urban areas of 21 districts of the greater Dhaka, Khulna, Barishal regions. It started operation in 2005. The company now serves about 1.5 million customers. The company was formed by transferring employees from BPDB. It has the second lowest system loss (7.88%) among the BPDB companies. It is not in a good position among power distribution utilities as far as customer services are concerned. The area of operation is disaster prone and there have been regular events of natural calamities. The opening of Padma Bridge has ushered in great possibilities of expedited expansion of power distribution. Keeping that as a focus, the company has planned required expansion programs and started implementation.

Southern Bangladesh is a priority area preferred for future industrial growth. On that consideration, the IIFC has been engaged as a consultant for planning and prescribing guidelines for developing WZPDCL as a smart distribution company. On their prescribed guidelines, plans for 2025, 2030, 2035 and 2041 will be worked out. However, he said WZPDCO is not keeping fingers crossed as far as making the system interruption free. 75% of the substations have already been brought under double sources of supply. Within the next two years, all substations would have at least two sources of supply. But the system is still being managed manually. Work on making the system automated through burying the lines underground, installing SCADA and monitoring substations under GIS monitoring are ongoing.

NESCO

Northeast Supply Company (NESCO) is the latest distribution utility to join the BPDB. It started operation in 2016. The company is serving 1.7 million customers in 17 districts of Rajshahi and Rangpur divisions. Among the distribution utilities, it has the highest (10.48%) system loss. The greatest challenge is supplying quality power to the irrigation pumps during the intensive irrigation period. Zakiul Islam, Managing Director of NESCO, told the EP that all must bear in mind the reasons for power interruptions. Trees around our lines, frequent events of cyclones, adverse climate, and overhead lines are major reasons. Of our 100 substations, we could set up GIS monitoring for 34. We have undertaken projects for SCADA and shortening long feeders. The entire system will be made automated in phases. We are working towards achieving that. We cannot wait with fingers crossed for the entire work to be completed. Our present priority is quickly bringing back into operation a disrupted system from weather impacts or others.

Power Generation Perspective Plan

We have mentioned that the installed capacity of grid-connected power is a little more than 22,000MW. There is a plan in place to retire about 7,000-8,000MW power plants, including oil-based ones, by 2030. BPDB intends to reach 32,000 MW generation capacity by this time. The present plans, if implemented, will bring into operation 19,000 MW capacity inclusive of 11,000 MW coal power plants. Besides, there is a plan for importing solar power from India and hydropower from Nepal and Bhutan. 2,400MW nuclear power will also be added during the period. Work on a second nuclear power plant will start following the successful commissioning of the first one.

Source of Fuel

In 2021, imported fuel (coal, LPG, LNG, liquid petroleum products) and power from India contributed 48% to the fuel mix. From the present strategy of policymakers, it appears that gas is the preferred fuel for the foreseeable future. BPDB estimates 2,252 MMCFD gas demand for 11,000 MW power generation (world standard is 1 MMCFD gas generates 6 MW power).Petrobangla companies can supply 900-1,000 MMCFD. Petrobangla for enhancing its own capacity has launched a program for drilling 46 new exploration, development and workover wells by 2025. Petrobangla expects to add about 618 MMCFD new gas from this program. Dean of Engineering faculty, BUET Dr. M Tamim thought that successful implementation of the Petrobangla program may lead to maintaining the production at the present level of 2,200-2,300 MMCFD. Bangladesh has to wait for 7-8 years from signing a new offshore PSC for any success. Bangladesh will have no other option but to go for additional imports if gas-based power generation capacity expands to 22,000 MW by that time. Coal for 8,000 MW of power will also be required to import. The oil-based generation will be reduced from 33% to 5% by this time.

Coal import under long-term contract has started for Payra power plant. Rampal and Bashkhali plants could not ink a deal for coal import yet. Tenders for purchasing coal for the Matarbari project have just been floated. Petrobangla has contracts with Qatar and Oman for supplying LNG. 500 MMCFD equivalent LNG is currently being imported under the above contracts. Two FSRUs together have double capacity. No new source for purchasing LNG under longer terms could be confirmed yet.

Energy experts observed that it cannot be predicted confidently when LNG prices in the global market will become normal even if the war in Ukraine stops immediately. The entire world has planned to use gas and for that matter LNG as the interim fuel of choice. Western Europe is developing LNG import infrastructure for using LNG as an alternative to Russian pipeline gas. The price of coal and oil may gradually drop but the price of LNG may stay high for an indefinite period. Bangladesh may need to encounter a severe fuel crisis from 2025 if in the meantime it cannot work with far more positive intent on exploring and exploiting the domestic coal and petroleum resources.

As per the gas sector master plan, the demand for gas by 2030 would grow to 4,500 MMCFD. We are not sure whether it will be possible to meet the expenses of 2,500 MMCFD LNG imports even if the price in the spot market decreases by then. The government has received no positive response for purchasing LNG under long-term contracts. On the other hand, the government has not yet given a green signal to a proposal of a joint venture between Saudi Arabia and a local company for importing LNG under the private sector LNG policy.

Challenges of Fuel Import Infrastructure

The coastal areas of the Bengal delta are very shallow. There is also no deep sea port. The government has moved out of the plan for setting up a coal terminal beside a deep sea port at Payra, Patuakhali. Coal for the power plant at Payra is now transported by shallow draft negotiating smaller vessels. Consequently, the added expenditure on coal transportation has increased the cost of power generation. The cost of coal transportation for Rampal and Bashkhali power plants will be far more challenging. In appreciation of coal import and transportation challenges, the government had a plan for setting up a coal transshipment terminal at Matarbari under a public-private partnership (PPP) initiative for catering to the demand for 19 coal-based power plants at Matarbari, Maheshkhali and other locations. But now Japanese partner Sumitomo has lost interest in investment. Some areas have been earmarked for CTT at Matarbari. But following the government's decision to scrap proposals for 10 coal power plants, it has now become uncertain whether the investment for CTT will be feasible at all. Without CTT, the cost of coal transportation and for that matter, the cost of generation of power from plants at Maheshkhali and other places will be dearer. This will make the concept of cheaper power from coal questionable. A coal port is being developed at Matarbari to cater to the demand of (2X1,200) 2,400MW coal power plants. The first of the two plants are set to come into operation by January 2024. The Japanese government has recently withdrawn from its commitment to finance the second plant. Consequently, the cost of coal transportation and the cost of power from a single plant will increase.

The import of LNG has become a pain in the neck for Bangladesh. The capacity of two FSRUs set up at Maheshkhali shallow offshore is 1,000 MMCFD. Initiative launched for a third FSRU there could not gather the required momentum. Negotiation was ongoing with Summit Group for it. Project proponents cannot get any FSRU for the huge demand for LNG in Western Europe. Talks have ensued for a deep-water FSRU at Payra also. It is also uncertain at this stage when this proposal will gather moss. A proposal for an EPCM mode of project implementation has been sought from the shortlisted bidders for the land-based LNG terminal at Matarbari. EMRD officials expressed optimism about making it operational by 2027. But the present and emerging realities do not give positive indications for its timely completion. 

Conclusion

The energy challenge of the then war-ravaged Bangladesh was unleashed by the Arab-Israel war in 1973. Without wasting any time, Bangabandhu initiated a process for offshore exploration of oil in the Bay of Bengal. At the same time, he took an initiative for increasing the use of domestic gas, which was not a preferred fuel at that time. His initiative facilitated taking over five major discovered gas fields from the ownership of oil giant Shell BV for a mere 4.5 million Pound Sterling. These fields still account for about 30% of the national gas production capacity. Bangabandhu also launched an initiative of exploring local coal resources. His farsighted vision also included a mission for developing the capacity of energy companies and human capital. But his unfortunate demise in August 1975 created a drought in the nation's endeavor for energy sector development. His political party Awami League followed his footprint during its term in state power from 1996 to 2001. But it lost momentum, and the governments derailed from the Bangabandhu-showed path over the past 13 years since 2009. Policymakers started believing that Bangladesh can achieve the national vision of developing its economy by 2041 with imported fuel instead of developing local energy resources to the full prospect. But geopolitics destabilizing the global fuel market has rocked the sustainability of fuel supply in Bangladesh. Skyrocketing fuel price in the global market has grown beyond the capacity of Bangladesh. The government has taken various initiatives for managing energy demand. They have also launched initiatives for curbing fuel use. A decision has been taken for suspending the purchase of LNG from the volatile spot market.

Western Europe, the major proponent of making a transition from fossil fuel to renewables, has started resuming the generation of coal power. The green party and the government in Germany which over the past 40 years were against nuclear power have now decided not to shut down two nuclear power plants in December 2022 for managing the winter peak. Energy experts of Bangladesh believe that imported fuel contribution grew to 48% in 2021. If the present trend continues unabated, it will stress Bangladesh's economy. The right option, they suggested, will be reassessing and reviewing the decision of scrapping coal power generation. The political decision for mining own coal and setting up mine-mouth power plants must not be delayed at all. Open pit mining from Phulbari only can support the generation of 6,600MW mine-mouth power for around 30 years. On the other hand, making a wild guess about our petroleum resources without carrying out required exploration is not proper at all. Former BUET Professor Dr Ijaz Hossain suggested setting up a special fund for investing US$1.0 billion each year over the next 10 years on exploring own petroleum resources. 10 exploration rigs must work in the quest for new petroleum resources every year onshore and offshore like an all-out war mission. Prof Ijaz also suggested giving required incentives to developing solar, wind and other renewables.

Experts observed that the energy crisis this time offers an opportunity for Bangladesh to completely redesign its energy vision and mission. That can be done by following the footprints left behind by Bangabandhu. Of course, Bangladesh has no option but to import fuel from the global market. But the country can no longer delay ensuring optimum use of its own primary fuel for the booming economy. Taking the essential political decision for exploring and exploiting its own primary fuel would be the main vision for getting bailed out of the present situation. That would be a major achievement on energy security day.