Energy deals need to be transparent
Sunday, 28 September 2008
Ahmed Ali
EVERY year the country loses about Taka 21 billion (2100 crore) from the gas and power sector due to unequal deals with foreign companies, a seminar in Dhaka was told. The loss occurs as Bangladesh is required to buy gas, discovered on its territory, from foreign producers at prices, substantially higher than what Bangladeshi production companies charge. Spotted by Bangladesh government's exploration organisation, BAPEX, gas fields were handed over on lease for production to foreign companies, which has been bleeding the country. Had the previous government better utilised BAPEX, the loss could be avoided.
BAPEX enjoys a better track record in finding gas. It struck gas in one out of three fields dug by it. In comparison, foreign companies have a much poorer strike rate. Besides the foreign companies took a slow approach in exploration and production though the country needed to accelerate production and find more reserves. This may have been calculated to put pressure on Bangladesh government to buy gas at increasingly higher prices. The foreign companies took the approach also to extract extra concessions. When the country has been suffering from shortages of gas and power supply, the foreign companies took the policy to maximise profit. The past governments succumbed more and more to these foreign companies neglecting the capacity of the country's own exploration and production organisation.
The caretaker government, it seems, has realised the harms that have been caused to the country's economy due to the poor policies of the former governments. Policies were declared which appear to have the aim of strengthening BAPEX. More significant was the declaration by the energy adviser stated from now on every deal with a foreign company in the energy sector, would have to face public scrutiny and would not be approved unless cleared by such scrutiny.
Transparency is important to ensure that no deal would be allowed against national economic interests. The caretaker government has to make laws and leave behind arrangements for future elected governments to follow in making transparent deals.
BAPEX should be beefed up by the caretaker government to restore its operational capabilities. It should be revitalised at the fastest and entrusted with all on shore energy exploration. Only for off-shore exploration and production, the foreign companies may be invited because BAPEX does not have the off-shore exploration capability. Off-shore exploration and production of energy can be given to foreign companies only if they agree to carry out their activities in line with the national interests and needs.
EVERY year the country loses about Taka 21 billion (2100 crore) from the gas and power sector due to unequal deals with foreign companies, a seminar in Dhaka was told. The loss occurs as Bangladesh is required to buy gas, discovered on its territory, from foreign producers at prices, substantially higher than what Bangladeshi production companies charge. Spotted by Bangladesh government's exploration organisation, BAPEX, gas fields were handed over on lease for production to foreign companies, which has been bleeding the country. Had the previous government better utilised BAPEX, the loss could be avoided.
BAPEX enjoys a better track record in finding gas. It struck gas in one out of three fields dug by it. In comparison, foreign companies have a much poorer strike rate. Besides the foreign companies took a slow approach in exploration and production though the country needed to accelerate production and find more reserves. This may have been calculated to put pressure on Bangladesh government to buy gas at increasingly higher prices. The foreign companies took the approach also to extract extra concessions. When the country has been suffering from shortages of gas and power supply, the foreign companies took the policy to maximise profit. The past governments succumbed more and more to these foreign companies neglecting the capacity of the country's own exploration and production organisation.
The caretaker government, it seems, has realised the harms that have been caused to the country's economy due to the poor policies of the former governments. Policies were declared which appear to have the aim of strengthening BAPEX. More significant was the declaration by the energy adviser stated from now on every deal with a foreign company in the energy sector, would have to face public scrutiny and would not be approved unless cleared by such scrutiny.
Transparency is important to ensure that no deal would be allowed against national economic interests. The caretaker government has to make laws and leave behind arrangements for future elected governments to follow in making transparent deals.
BAPEX should be beefed up by the caretaker government to restore its operational capabilities. It should be revitalised at the fastest and entrusted with all on shore energy exploration. Only for off-shore exploration and production, the foreign companies may be invited because BAPEX does not have the off-shore exploration capability. Off-shore exploration and production of energy can be given to foreign companies only if they agree to carry out their activities in line with the national interests and needs.