The year 2023 was the most challenging year for the energy and power sector as well as the Awami League government in its 15th year in office over three consecutive terms. The government was thrown into a deep and intensive challenge of the volatility created in the global fuel market due to the adverse impacts of the Russia-Ukraine war and the consequent devaluation of local currency amid the dollar crisis. These overshadowed the exemplary success of providing access to power for all. Compared to 2019, the reliance on imported fuel and electricity in 2023 grew to almost 50%. The contribution of own primary fuel depleted to the lowest in the past 8 years. Severe stress has been created for about US$5.0 billion in outstanding payments. The power sector owes US$4.0 billion and the energy sector US$1.0 billion. The upcoming government will assume office with this outstanding payment burden. The prevailing circumstance evidences that The Awami League is going to form the government for the consecutive fourth term after the election.
On the excuse of the national election, the government did not adjust the prices of electricity and fuel over the past 8 months. The average cost of power generation has increased from BDT 8.84 to BDT 11.02 over the past year. Against that average power tariff now is BDT 6.70. Petrobangla is in a serious financial crisis for not getting any payment from fertilizer factories following a significant increase in gas prices. As a result, they are also not in a position to make payments for the gas purchases from the IOCs and imported LNG. The Bangladesh Petroleum Corporation (BPC) is also under a great challenge in making payments to liquid fuel suppliers. Their problem remains even after borrowing US$500 million from the Islamic Development Bank (IDB). Now, Petrobangla is also borrowing US$500 million from the IDB. The huge outstanding bills of the power and energy sector were the major topic of discussion. Bangladesh Power Development Board (BPDB), Petrobangla, and the BPC may not get out of the present near-bankrupt situation unless the government provides them with special grant allocations.
2023 was the last year of the third consecutive term of Prime Minister Sheikh Hasina-led Awami League government. After successfully confronting the diabolic energy and power crisis inherited in 2008, achieving enviable milestones in power generation, and ensuring access to power for all, the government was expected to reassess the challenges and consolidate the successes. Looking back, the government could not do much about overcoming the chronic vulnerabilities in fuel supply and failed to take appropriate actions in increasing contributions of domestic primary fuel (gas and coal). The dollar crisis impeded the government's endeavor to import primary fuel. For the fuel supply crisis, the power supply chain continues struggling to meet the demand despite having a huge reserve margin for power generation. However, some successes were made in evacuating the entire capacity of 1,360 MW coal-based power from Payra (though generation was interrupted for coal supply issues). The 1360 MW Rampal coal-fired power plant came into operation but suffered generation problems due to technical glitches. The 1200 MW Matarbari coal power plant’s first unit came into operation. Also, S. S. Power Bashkalhi 1244 MW coal power plant came into operation. The power import from the Adani power plant also started. While these long-awaited large power plants came into operation, many gas-based power plants had to be kept idle for the chronic gas supply crisis. BPDB under compulsion had to rely on dirty liquid fuel-based power generation, originally meant for peak shaving only. Even these suffered as the dollar and taka crisis created impediments to importing liquid fuel. Petrobangla and BAPEX achieved few successes in marginally increasing gas supply through their works of work over and drilling of development wells. However, the absence of gas transmission facilities kept stranded the discovered gas reserve of Bhola. A local company Intraco in December started transporting some gas as CNG from Bhola for industrial consumers in Dhaka.
Much more was expected from a government on the 15 consecutive years in office. But for global crisis and own lack of planning, very little was achieved. Energy security remained extremely vulnerable.
Challenges were ensuring a sustainable supply of primary fuel for energy generation. The focus should have been on increasing gas supply from own fields and taking the political decision of coal mining. Instead, the BAPEX-only policy for onshore exploration achieved marginal success. The discovery of gas at Bhola could not be monetized because the government hesitated in deciding to construct a gas transmission pipeline from Bhola to the national grid. The irony was that while the entire gas grid suffered from a gas supply crisis, the transmission pipeline was extended from Bogura to Sayedpur via Rangpur. In 2023 gas production from own fields which once peaked at 2750 MMCFD depleted to 2050-2100 MMCFD. Petrobangla and EMRD concluded new long-term contracts with Qatar and Oman for supplying LNG from 2026. The government also concluded contracts with Summit Energy and Excelerate for supplying LNG. But none of these will start before 2026. The government is finalizing a contract with Summit Energy for the 3rd FSRU at Maheshkhali. Meanwhile, the physical work of the land-based LNG terminal at Matarbari is still being delayed for the finalization of the location of the terminal. RPGCL is in negotiation with CPGCL for handing over the land that was earlier earmarked for the ash pond of the coal-powered plant at Matarbari. Tarm-Sheet signed with Excelerate to supply RLNG from its proposed deep-water LNG infrastructure off the coast of Kuakata. BAPEX continued its drilling campaign in its limited capacity achieving marginal successes. The activities of Petrobangla and BAPEX are barely enough to encounter the expanding gas deficit. The government is negotiating with two consortiums for importing RLNG from India through pipelines. None of these may come into operation before 2027.
BPC has completed the works of SPM facilitating the transportation of bulk crude from mother vessels anchored at deep sea to ERL at North Patenga. The capacity expansion of ERL has also advanced. The Bharat Bangladesh Maitree Liquid fuel pipeline from a Refinery at Numaligarh, India to Parbotripur has been completed. The work of the liquid pipeline from Chattogram to Dhaka is continuing. BPC and Petrobangla must monitor the implementation of this project more intensively.
Work on the Rooppur Nuclear Power Plant has neared completion. Import and delivery to the plant safely of nuclear fuel is a milestone achievement. However, upgrading the national power grid to the N-2 category and completing power transmission lines will delay the evacuation of power from the nuclear power plant.
Petrobangla even after completion of all formalities delayed inviting a fresh bidding round for deep water exploration. The talks with ExxonMobil on their unsolicited offer for all 15 deep-water blocks of the Bay of Bengal also stalled for the ensuing general election.
In the overall analysis, much more extensive activities were expected in the year 2023 towards achieving sustainable energy security. Some large power projects have been completed. But for the continued depletion of proven gas resources, reliance on imported fuel has increased. Import of coal, LNG, and liquid fuel has been impeded by the dollar crisis.
It is expected that the next government in 2024 will take some pragmatic decisions for revitalizing the energy and power sector. The vision 2041 requires a highly dynamic and performing energy and power sector spearheaded by visionary sector leaders.
The government in 2023 took some good initiatives for increasing contributions of renewable energy. About 200 MW capacity Teesta solar plant has been added to the national power grid in 2023. Letters of Intent have been issued to 108 entrepreneurs for setting up solar plants. The total estimated generation capacity is 10,000 MW. In December 2023 four proposals with a total capacity of 420 MW have been approved. The Road Map for solar irrigation is being finalized. Under these, 45,000 solar irrigation pumps are planned for installation by 2031. The target is to replace 1.2 million diesel-driven irrigation pumps in phases.
ADB has completed a study of wind power. In that rather than offshore, some onshore areas have been identified to have greater potential. Summit Group in association with Denmark has been awarded a work for feasibility study for 500 MW offshore wind power generation. They are interested in spending US$3 billion for this.
Finally, in 2023 the government approved the Integrated Energy and Power Master Plan (IEPMP 2023). Under this plan, 40% of electricity has been planned to come from clean sources. The contribution of natural gas has been mentioned as a transition fuel.
The success achieved in the power sector over the past 15 years has been largely shadowed by the chronic fuel supply crisis and the inability to pay outstanding bills. There has been no mentionable success at all in the exploration of primary fuel natural gas and coal over the past 15 years. US energy giant ExxonMobil submitted an unsolicited offer for exploration in the 15 deep-water blocks of the Bay of Bengal. The proposal is in discussion for approval. But the year has come to an end with anxieties and tensions. There are apprehensions that a serious power and energy supply crisis may be triggered in March-April 2024 unless the required money is made available for paying outstanding bills and purchasing fuel.
Review as PDF/userfiles/Review.pdf
