22nd January 2022

There is no alternative to exploring and exploiting own primary fuel resources for a intelligent fuel mix in order to ensuring reliable supply at affordable price. But even then price of price of primary fuel like gas would need adjusting. This is an universal situation, not unique for Bangladesh. This would not create crisis in maintaining global competitiveness of export commodities of Bangladesh. But there is no scope for putting the entire stress due to increasing reliance on imported on industrial sector alone. Planned subsidy should be continued for the sector. Price for government owned power and fertilizer industries should also be rationally adjusted. At the exploration campaign for oil and gas must be launched on war footing. Decision for mining of own coal and utilizing it for mine mouth power generation must also be started now upon carrying out economic analysis. That would relieve natural gas from mono fuel dependency.

 

Speakers at Energy & Power Magazine organized webinar titled on Gas Crisis & Price Hike Move: Challenges of Industrial Sector mentioned above. Speakers at the webinar organized jointly by thirty days periodical Rangberang and monthly magazine Food and Pharma also found no justifiable reason for exorbitant price hike proposal for merely LNG import from spot market making only 5% contribution to present fuel mix. They suggested for providing special allocations for carefully crafted 10 exploration wells every year for gas and oil. They also suggested for further strengthening endeavors for importing Hydro power from India, Nepal and Bhutan if necessary through jointly investing in generation and setting up regional power grid.

 

Former Professor of BUET Dr. Ijaz Hossain was the chief guest in the webinar moderated by Mollah Amzad Hossain, editor EP. Engr. Khondkar Saleque Sufi, International Energy Consultant was the principal discussant. Dr. Ahsan H Mansur, executive director of policy research institute, Engr. Mizanur Rahman, former member Bangladesh Energy Regulatory Commission (BERC) and General Secretary Bangladesh Energy Society, Abul Kasem Khan, Chairperson, Business Initiative Leading Development (BUILD), Humayun Rashid, Chairman, standing committee on energy and services of FBCCI and CEO Energypac and Arun Karmokar, Chairman of Forum For Energy Reporters Bangladesh participated in the webinar as panelists.

 

Dr. Ijaz Hossain stressed on eliminating alarming system loss of gas. According to him that is nothing but theft and pilferage. He has been given understanding by sector insiders that the system loss may not be less than 8%. Energy efficiency has marginally increased. But that is not enough. This must be increased. Gas is extremely valuable commodity now. LNG import and supplying at whatever might be the costs is a weird concept. Going for LNG import, leaving our own exploration uncared was a major flawed decision. Not exploiting own coal reserve is another poor decision. Coal mining applying appropriate technology does not cause significant environmental impact. We rather remained almost exclusive depended on natural gas. We have to reviewer whether it would remain economic using expensive gas for fertilizer production. We have to decide which sector would use considerably cheaper Legacy Gas, naturally available. We have decide which among the industrial, domestic, fertilizer or power sectors would continue using depleting own gas resources. Legacy Gas should be used, wherever maximum value addition is made.

 

Dr Ahsan Mansur opined that Bangladesh could not reduce reliance on gas. Our gas resource is not unlimited. Part of the demand is not being catered through importing expensive LNG. But we could make necessary investment for longer-term availability of gas. Not much effective initiative could be directed towards import of power and hydroelectricity from regional countries. We could not also reach 10% contribution of solar energy yet. We have started paying through the nose for exclusive reliance on gas. Subsidy requirement has tripled now. We have to be rational for this. Right balance needs to be ensured. Tariff for industrial sector is the highest and for the domestic sector is the lowest. These can be rationally adjusted. Tariff for industrial sector must be kept at affordable level and increased marginally for domestic use. A special fund for Tariff Rationalization can be created. Some money can be saved when price gets lower. Subsidy can be provided at the time of higher price from this fund. Private sector should be integrated at different segments of gas value chain. Coal must be taken into consideration for relieving gas from over stress.

 

Engr. Mizanur Rahman pointed out that rapid depletion of proven gas resource leveraged Bangladesh for importing LNG. Debate has been triggered for a proposed 117% gas price hike. This initiative for price adjustment has been taken after 3 years.  In my opinion price should be increased once every year. It is not fair making users pay entirely for cost of gas production and imported fuel. This was not considered before and also not being considered now. But situation demands rationalizing the tariff now.

 

Abul Kasem Khan observed that growing into an exclusive imported fuel depended economy would entail huge risks. This may adversely impact economic growth and development process. There remain significant possibilities for finding gas in Bangladesh. But there is also absence of required initiatives. The rationale for leaving substantial quantity of superior quality coal must also be reviewed. Our carbon footprint is nothing mentionable. Many countries of the world developed utilizing own coal resources and many are still relying on it. Coal alone can create 75 years energy security for Bangladesh. It is time for giving it a serious fresh attention.

 

Humayun Rashid reminded all that industrial entrepreneurs have continued investment for efficient use of fuel. But the sector can not bear the burden of one time significant increase of gas price. All must remember that Tk 5 subsidy in industry creates Tk 35 contribution in economic growth. FDI and local investment would be severely impacted if government can not take rational initiatives for longer term supply of quality fuel and electricity at affordable price. On top of all going for exclusive imported fuel dependency neglecting exploration for own fuel cannot be the right strategy.

 

Khondkar Saleque Sufi in his opening statement pointed out that local companies contribute 78% to national gas production and the remaining 22% comes from imported LNG. Of the 22% only 5% is purchased from spot LNG market and to be more specific only three cargoes from volatile global market in the recent past. In such situation there is no rationale for the proposed significant price hike of natural gas for all end users. Import duty, tax, vat can be adjusted for absorbing the price shock of LNG import. The sales tax of gas of Petrobangla companies can also be adjusted. All options must be explored. Without considering all these, significant increase of gas price at the prevailing and ensuing situation would create severe adverse on economic growth and development. The next 3 years would be extremely important for Bangladesh. Government must see that irrational increase of gas price causes no impediment to smooth elevation of Bangladesh economy from LDC to the lower tier of developing economy.

 

From his 45 years of hands on experience (30 years in all segments of Bangladesh Energy Value chain) he assured with confidence that properly planned exploration initiatives on professional implementation can still lead to 8-10 Tcf new gas resources even in onshore areas (including frontier areas and deeper prospects of discovered gas fields). But it is highly unlikely that BAPEX alone policy for onshore exploration would prove productive. He suggested for engaging IOCs through PSCs alongside BAPEX even in onshore creating attractive incentives. Saleque said failure of exploiting own coal resource has boomeranged on Bangladesh. He questioned why there could not be a reliable comparative economic analysis of coal exploitation, setting up about 10000-15000MW power generation against the socio economic as well as environmental impacts of mining? He also suggested for all out drive for eliminating theft and pilferage of gas masked under system loss. He reminded industrial entrepreneurs that for sustainable supply of quality fuel supply they must have to pay the economic price. But for protecting the industry subsidy at rational level must also be provided. However, at all level wastage must be minimized.

 

Arun Karmaker observed that there are no alternatives to eliminating inefficient use of gas and pilferage. Bangladesh has definitely not done it right going for LNG import grossly neglecting exploration of own resources. He thought planned exploration for oil and gas at Surma and Bengal basins may still lead to 8-10 Tcf of new gas resource. He also suggested for all out coordinated drive for eliminating gas theft and pilferages.

 


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