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‘Energy sector’s paradigm shift over past decade’

Energy and power sector over the past decade has witnessed paradigm shift.

Gone are the days of chronic power load shedding. But sustainable supply of quality power supply as well as assured supply of primary energy remains a huge challenge. 

Sheikh Hasina led-government of grand alliance has completed second consecutive terms of five years each in state power.  

Count down has started for the general election for electing the next government. Observers, experts, analysts and critics are reviewing and critically analyzing the performance of the government in different sectors. 

Energy and power sectors are two very important areas where government performance can be summarized as mixed success. There are commendable successes in some areas and at the same time major failures in other areas. 

Even the bitter critics of the government would acknowledge that the diabolic power load shedding situation is nonexistent now. Government through various efforts could redouble power generation. 

Bangladesh no longer suffers from 10-12 hours unbearable load shedding. At the same time even the staunchest supporters of the government would not hesitate in agreeing that fuel supply situation remains in crisis. 

Energy and Mineral Resources division (EMRD) and Petrobangla have failed to exploit discovered coal reserve, explore and develop petroleum resources appropriately and even delayed in importing liquefied natural gas (LNG). 

Most of mega imported fuel based large power generation plant projects are running 3-5 years behind schedule. 

A significant portion of installed power generation capacity remains idle for fuel supply deficit and transmission and distribution systems constraint. Continuation of speedy power generation and energy supply act adopted as contingency measure still continues.  

Achieving about 12,000 MW actual power generation capacity in 2018 from about 3,500 MW in 2009 is definitely a major achievement but failure in achieving sustainable fuel supply capacity worries about achieving sustainable energy security. 

On the back drop of above parties and fronts aspiring for forming government after winning the upcoming general election must have a clear vision and strategy for achieving sustainable energy security essential for keeping the very impressive economic development going. 

In 2009 when this government in the last term came to state power massive power load shedding of 10-12 hours brought economic activities almost to stand still. The actual generation and supply came down to 3,200-3,500 MW against demand of 5,500-6,000 MW. 

Crisis was there for natural supply as well. Against a demand of 2,200 MMCFD gas production was 1,700 MMCFD. Natural gas accounted for about 90% of power generation.

Natural gas also supplied raw materials to fertilizer and fuelled most of the industries. Government adopted short, medium and long term power generation plan for confronting and overcoming crisis. As quick fix under contingency planning liquid based rental and quick rental plants were given go head adopting special power generation and energy supply act.

Most of the furnace oil and diesel based power plants were planned to remain operational for 3-5 years from 2010 and private sector developers were selected under special power act as crisis management endeavor. Industries were allowed setting up captive power generation units.

These initiatives worked wonderfully well in managing crisis and by 2014 situation came under reasonable control. The pace of impressive GDP growth could be sustained.  The lowering price of crude oil in global market during this period also helped. But at the same time due to flawed planning and poor management almost all the base load traditional fuel based (imported coal and LNG) power plant projects failed to come into operation on time.

Government has been forced to continue with contingency liquid fuel based power plants and rather expand capacity instead of doing away with these as scheduled by 2015. 

In PSMP 2010 the planned contribution of liquid fuel based generation was 6% and in PSMP 2016 it is planned to be 5% in 2030. But now it is about 35% and growing.  The present increasing trend of price of crude oil in global market has already created concern of policy makers. 

Government over the entire two terms of ten years failed to exploit the substantial reserve of superior quality coal reserve. Neither, it could achieve any notable success in exploring new petroleum resource at onshore frontier areas and offshore.

The proven discovered reserve of gas is alarmingly depleting. Government also made long delay in importing liquefied natural gas (LNG). Starting in 2010 import of only 500 MMCFD LNG is possible by end 2018. Government desperately needs commencing coal extraction and expediting exploration of petroleum. At the same government needs expediting all projects for setting up enabling infrastructure for fuel (Coal and LNG) import. It also needs to implement aggressive plan for developing competent human resources for planning, implementing, operating and maintaining energy and power projects.

Power Scenario:

Installed Capacity (31 October 2018): 20,430 MW

Grid Connected: 17,340 MW

Off Grid Captive: 2,800 MW

Renewable: 290 MW

A. Public Sector: 8,986 MW

Companies

Installed Capacity (MW)

BPDB

5,266

APSCL

1,444

EGCB

   839

NWPGCL

1,211

RPCL

      77

BPDB+RPCL JV

   149

Sub Total

8,946 (52%)

B: Private Sector: 8354 MW

Companies

Installed Capacity ( MW)

IPPs

5,099

SIPP ( BPDB)

     99

SIPP ( REB)

  251

15 Years Rental

  169

3-5 Years Rental

1,576

Power Import

1,160

Total

8,354 (48%)

In power value chain generation is only one segment and installed capacity is nameplate capacity. The 20,430 MW installed capacity for planning purpose is only a number. In existing circumstance it could be tested.

What matters most is the actual highest generation and average generation. The highest generation ever achieved has been 11,623 MW during peak hours of 19, September 2018. PDB sources state of fuel supply deficit (natural gas) and constraints of power transmission and distribution system among reasons for leaving a significant capacity remaining unutilized, A maximum of 15 -20 % spinning reserve in a modern power value chain can be a right strategy. 

It appears from the table above that 2,800 MW off grid captive generation would not be ultimately there once industries have uninterruptible supply of quality power from the grid. 290 MW renewable power (solar) is also off grid. In future given access to grid through net metering rooftop solar and solar irrigation power can also make contributions to grid. 

Fuel Mix Scenario:

Until the recent past natural gas almost exclusively dominated fuel supply for power generation and other industrial use. In view of the depleting scenario of discovered recoverable gas reserve and increasing demand of fuel for feeding economic growth government adopted fuel diversification plan in power system master plan 2010. 50% of the planned 40,000 MW power generation capacity targeted for 2030 was planned to be the contribution of coal. 

Local discovered coal was planned for 10,000 MW power generation. But government over the past 10 years failed taking political decision for mining own coal.  As such the fuel mix planned in PSMP 2010 could not be achieved.  PSMP 2016 re-fixed fuel mix. It targeted 60,000 MW power generation by 2041 with a planned fuel mix of 35% Coal (34% imported), 35% pipeline gas and imported LNG and 30% from nuclear, power import and others. No plan for local coal reserve exploitation is in view.  Local exploration for petroleum resources in off shore and onshore is not up to expected level.

Actual Fuel Mix Off Grid Connected Power (Installed Capacity): October, 2018

Fuel

Installed Capacity

% Contribution

Natural Gas

10,138 MW

58.49%

Furnace Oil

  3,587 MW

20.69%

Diesel

  1,680 MW

   9.69%

Imported Power

   1,160 MW

   6.69%

Coal

       524 MW

   3.02%

Hydro

       230 MW

    1.33%

Grid Connected Solar

          23 MW

    0.13%

Reference: BPDB Website

It can be seen from above that natural gas still dominates the fuel mix. But the proven reserve of natural gas is fast depleting. The exploration activities over the past 18 years remaining below bare minimum on the back drop of gas demand increasing in geometric progression has created huge gas deficit. 

Even responsible government policy makers apprehended that even at the present rate of use the reaming gas reserve may completely deplete by 2031 is not replenished with new discoveries.

From 2000 to 2018 only about 1.5 Tcf new reserve could be added as against about 9 Tcf of proven reserve used. Deficit now is about 1200 MMCFD and growing. Off course 500 MMCFD RLNG supply very recently has comforted the situation a little bit. 

Gas Scenario: (July 2018) 

Gas Fields Discovered

27

Fields Under Production

19

Production Capacity

2750.00  MMCFD

Highest Production (May 06, 2015)

2785.80  MMCFD

Proven + Probable Reserve

27.77 Tcf

Cumulative Production (December 01, 2018 )

15.22 Tcf

Remaining Reserve

 12.55 Tcf

Cumulative Peak Demand

3996 MMCFD

Consumer

41.80 Lakhs

 Natural Gas apart from fuelling power generation is also used in fertilizer as feedstock, fuel for industrial, commercial, domestic and CNG.

 Gas Supply (July 2018) 

Sector

% of Total

Power (Grid)

40.22%

Industrial

16.88%

Domestic

16.03%

Captive Power

16.32%

CNG

  4.75%

Fertilizer

  4.35%

Commercial

  0.84%

Tea

  0.10%

Bangladesh energy sector is getting increasingly dependent on imported fuel, liquid fuel, LNG and coal. Some experts observed that if there is no major gas find soon and if local coal is not exploited Bangladesh may soon become 90% depended on imported fuel. Given the volatility of global fuel market and geo political uncertainties imported fuel dependency would create challenges in ensuring smooth supply chain, getting fuel and generating power at affordable cost.

For fuel import Bangladesh needs setting up fuel import infrastructure–deep sea port, coal port, coal transfer terminal, LNG terminals, and liquid fuel import terminals. 

In addition government requires expediting exploration for petroleum in onshore and offshore. For Bangladesh a balanced fuel mix is recommended for sustainable energy security in the context of reliable fuel supply, affordability of fuel and power cost. For sustainable economic development sustainable fuel supply is prerequisite. 

We must bear in mind that world is fast moving towards green renewable energy moving away from fossil fuel. The carbon foot print of Bangladesh is negligible but we are among the most vulnerable country for climate change due to global warming. We have to plan our fuel mix according.

Bangladesh has to adopt state of the art modern technology in power generation if they want to grow big in coal and other fossil fuel use. For that investment, price implications and extensive capacity development are major challenges. 

Geographical Location Presents Challenge:

Geographically Bangladesh is sand witched between Indian states from almost 2.75 sides by Indian states. Mymanmar is on the South East and the Bay of Bengal is on the South. Bangladesh is a riverine delta formed of sediments flown in from the upstream by several rivers originated in the Himalyan Mountain and  criss-crossing  land surface in to the Bay of Bengal. The coastal area is relatively shallow unless Japan , Korea , India and China . The all season draft of Chittagong port is 8-9 meters and that of Mongla is 5-6 meters.  

Underdeveloped Payra port may not have more than 8 meter draft. For Coal carriers and LNG vessels at least 14 -16 all season draft is essential. Only in south of Matarbari Island it is possible setting up coal port and terminal and setting up land based LNG terminals. Till Bangladesh can set up deep sea port or complete the bay port terminal import of large volume of coal and LNG would remain a huge challenge.  Investment and competent human resources are challenges here also. 

Saleque Sufi is an eminent energy expert.

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