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‘Energy sector challenges of incumbent government’

Bangladesh is going for general election on the basis of adult franchise on December 30 for electing government for the next five years term.

Present Awami League led government of grand alliance serving two consecutive terms over the past ten years achieved significant milestones in many areas of national interest.

The economy growing consistently at 6.5% plus over has advanced it from least developed country to the lower level of developing country. Food autarky has been achieved, law and order situation improved a great deal, terrorism and anarchy are effectively put under control, power supply crisis is looking much better than ever before.

Many mega infrastructure development projects are at different stages of implementation.  Even the bitterest critics of the government would agree that power and energy sector has witnessed paradigm shift over the past decade.

But at the same time even the staunchest supporters and admirers of the government would agree about many issues and challenges need attending and addressing for achieving sustainable energy security.

Energy security is the most essential ingredient for achieving national vision of reaching developing country status by 2021 and developed country by 2041.

Global experience educated the writer that power and energy are two intra related and inter related sectors which are among the strategic sectors of any developing and developed nation. There exists political consciousness and unwritten agreements for carrying forward policies and programs adopted and undertaken for implementation by one government by successive government.

Present government in 10 years increased installed power generation to over 20,000 MW (including 1,160 MW import and 2,800 MW captive power generation). 

The actual generation increased to about 12,000 MW the access to power has increased to 92% from mere 42% in 2009. Power System Master Plan (PSMP) 2018 (draft) has vision for achieving 24,000 MW capacity by 2024, 40,000 MW by 2030 and 60,000 MW by 2041.  

For different reasons the proven reserve of natural gas started depleting from 2000.  Natural gas used to be almost exclusive contributor to power generation, industrial and other use till 2009. Power System Master Plan 2010 adopted by the present government provided for 50% of the 40,000 MW power generation by 2030 from coal. 29% of this was due to come from local coal. But failure of the government in mining own coal led to revising fuel mix plan in PSMP 2018. 35% of the targeted 60,000 MW power by 2041 would now come from coal (mostly imported), 35% from pipeline gas and LNG and 30% from nuclear, power import and renewable.

Government also adopted short term contingency plan, mid-term plan and long term plan for achieving the vision. Government also adopted speedy power generation and energy supply act for contingency management. This is short of indemnity act indemnifying government officers from any actions they take for negotiating contracts with contractors and investors on the basis of their unsolicited offers in power and energy infrastructure development.

The national procurement law provisions are by passed by this act. Many criticism were made for this non transparent act for lack of competitiveness leading to non transparency.  However, significant success of short term measures like quick rental and rental power plants facilitated confronting effectively for managing diabolic situation of massive power load shedding in 2009. But for poor governance, weak state owned enterprises and lack of technical and managerial efficiency implementation of most of the large power plants under mid-term planning are running three to five years behind schedule. Of the long term plan implementation of 2,400 MW Rooppur Nuclear Power Plant is advancing. Government has achieved a significant milestone of power import through cross border power trading.

Experts have identified some major challenges for the incumbent government for carrying forward the present development initiatives.  These are for sustainable supply of primary fuel and affordable fuel mix, improved governance, stronger autonomous SOEs , enabling policies for integrating private sector in all segments of power and energy value chain, stronger and effective independent Bangladesh Energy  Regulatory Commission (BERC ), extensive human resource development program for efficient management of energy and power sector , comprehensive fuel and power utilization plan.

Affordable Fuel Mix:

The major failures of the present government over the past 10 years were establishing professionalism in the power and energy sector development and operation. Bureaucracy dominated sector planning and management created huge, almost unmanageable fuel supply crisis. No decision could be taken for exploiting substantial reserve of superior quality coal resource. Bureaucracy dominated Petrobangla failed in expediting petroleum resources exploration.

These resulted in prolonged crisis in fuel supply. About 2,000 MW capacity of power generation remains idle for lack of gas supply, all users of gas fertilizer, industrial, commercial and domestic customer suffer from poor gas supply. After prolonged delays 500 MMCFD RLNG supply has just commenced.

PSMP 2018 envisaged fuel mix of greater reliance on imported fuel (LNG and Coal) may not be possible to implement. Absence of deep sea port and existence of shallow drafts in Bangladesh cost makes developing coal ports and LNG terminals prohibitively extensive.  Apart from coal port and planned coal transfer terminal at Matarbari coal port anywhere else would not be possible.

Anchoring mother vessels in deep sea and transshipment of huge coal for large power plants would prove uneconomic .Many imported coal based power plant projects may need to be shelved. For smoother coal supply incumbent government has to take decision of mining own coal on top priority basis and transport coal to power plant through required expansion and improvement of railway networks.

It will also soon be evidenced that FSRUs like contingency liquid fuel based power plants would not be sustainable solutions for Bangladesh. Not more than 3-4 FSRUs should be established. For draft situation land based terminals may not be feasible also apart from Kutubdia and Matarbari. Not more than 3,000 MMCFD LNG import would be technically and economically viable.

Bangladesh must expedite exploration for petroleum in onshore and offshore areas. Fresh PSCs must be invited for onshore frontiers areas also outside BAPEX assigned blocks. New PSC bidding round for deep water blocks must also be invited soon reviewing and approving updated Model PSC 2018. Bangladesh must not be fussy about incentives for attracting major IOCs in deep water.

Own coal and additional own gas would create opportunity for 50:50 fuel mix of local: imported fuel. Exclusive reliance on imported fuel would neither be sustainable or affordable. Volatile global crude oil market would take fuel price beyond affordable level any time. The supply chain may also be disrupted for global and regional confrontations.

Governance of the sector:

Almost in all developed countries power and energy sector business operation has minimum involvement of the government.  Incumbent government must review the present governance process in true perspective. SOEs must be allowed to be operated as per companies act by the properly constituted autonomous board. Government must not have exclusive presence in the board of directors of each and every company. Why secretary of energy or secretary of power needs to be in company boards? There are many retired experienced professionals whose institutional memories and experiences can be utilized in company boards rather than crowding company boards with mid level government officials. Why ministry officials should be sent on deputation to Petrobangla , BPC or BPDB ?

The emergency power and energy supply act must the rescinded as soon as possible. The transparency and accountability in the power and energy sector must be restored through return to competitive bidding process.

Incumbent government must assess objectively why Petrobangla over the past 10 years have failed in exploiting coal reserve and expediting exploration of petroleum resources?  Why massive pilferage of gas could not be controlled? How training facilities of Petrobangla and companies were misused? Petrobangla, BPC must have senior technical professionals in key policy making levels.

Enabling policies of private sector in all segments:

One must appreciate that private sector played a significant role in achieving huge success in increasing power generation. IPP, SIPP, captive power generation policy, rental and quick rental policy struck gold. Starting with foreign companies now local companies like Summit, United , Orion , Energypac and others have taken the lead. Local companies are contributing well in LPG market development. Transmission and distribution segments of power sector, and entire gas sector apart from some IOCs are in exclusive domain of state owned companies. Policies must be formulated for integrating local private sector companies in upstream, middle and downstream segments of gas value chain either on stand alone basis or in joint venture with SOEs.

Stronger and Effective BERC:

Power and energy sectors of Bangladesh cannot get free flow of urgently required private sector investment without stronger and truly functional Bangladesh Energy Regulatory Commission (BERC). BERC must be manned by qualified and experienced professionals. This statutory authority must function absolutely independently creating level play ground for public and private sector companies. It must police enforcement and compliance of acts, laws, policies and regulations through stake holders engagement, efficiency auditing.

Human resource development:

40,000 MW power system in 2030 and 60,000 MW system in 2041 and all infrastructure systems development, operation would require thousands of well qualified and trained professionals. Bangladesh has so many public and private sector universities and institutes. But unfortunately it seriously lacks experts in system planning, mega projects management, contract negotiation and management, system operation.

Managing fossil fuel using energy generation mandates Bangladesh adopting state of the art modern technology in coal fired power generation, LNG import facilities development , operation of power and gas transmission systems operation, management of PSCs, management of own coal mines . Incumbent government must set up linkage between education institutes and industry. And well thought human resource development plan must be adopted. Local training institutes can have linkages with international accredited institutes.

Comprehensive energy and power utilization policy:

Imported LNG and coal would be prohibitively expensive. Government has to effectively curb misuse, pilferages. There must be a clear policy about downstream use.

LNG, coal, liquid fuel must have specific areas for down stream use. Every use of gas and electricity must come under pre paid metering system, SCADA and telemetry must be introduced at power and gas system operation. 

Hope parties and fronts would take into account the above points and clearly present their energy and power system policy and strategy to the voters.

Saleque Sufi is an eminent energy expert.

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