Ensuring transparency of deals in energy sector
Tuesday, 27 November 2007
Khalilur Rahman
THE messy state of affairs in the country's energy sector should draw the attention of all concerned to the need for identifying the causes why things have not been improving. It is alleged by some quarters that the previous governments in succession had only contributed to rendering more insecure the country's energy and economic situation. They are alleged to have entered into short-sighted contracts with multinational oil and gas companies.
Discussants in a recent seminar, organised by a non-government organisation, noted that every year the country loses about Taka 21 billion from the gas and power sector due to uneven deals with such companies. This loss is incurred as Bangladesh, as the discussants noted, is required to buy gas discovered on its own territories from foreign producers of the same at prices that are substantially higher than the ones charged by the indigenous companies engaged in producing gas. According to such circles, the gas fields, though they were located by Bangladesh government-owned exploration organisation, BAPEX, were in the end handed over to foreign producers on lease for production. Now those have been bleeding the country in the financial sense. But this bleeding would not be there if the previous governments had decided to make better use of BAPEX.
BAPEX did otherwise show a better track record all along in finding gas, notwithstanding some critical queries about its costs of operations. It enjoys a successful strike rate in one out of three fields dug by it. It is alleged by different quarters that the foreign companies were going slowly with both their exploration and production activities, despite the pressing need of the country to find more gas reserves or to accelerate the production from the existing fields. Meanwhile, the country has been suffering from gas and power crisis, because gas is not only directly used by a variety of consumers but also needed to run power plants to generate electricity. In this situation, the government should seriously consider ways and means for addressing the problems in the country's energy sector.
It is heartening to note that the present caretaker government is starting to realise the harms that have been caused to the country's economy from the poor policies of the former governments. Recently, policies have been declared which appear to have the aim of strengthening BAPEX. More significant has been the declaration by the adviser concerned that from now on every proposed deal with a foreign company in the energy sector, will be allowed a public scrutiny and after such a scrutiny, the approval or otherwise will be given to any deal involving foreign companies in the sector.
Transparency in the deals in energy, or, for that matter, any, sector is very important to ensure that the accord thereof serves national economic interests. But such a decision will be useful in the longer run only if the caretaker government makes laws and leaves behind arrangements to absolutely obligate future governments to submit proposed deals in the energy sector unfailingly through such a process to ensure transparency and scrutiny.
The incumbent government should also see to it that BAPEX is also beefed up at the fastest and provided with possible public policy supports for carrying out energy exploration activities cost-effectively.
THE messy state of affairs in the country's energy sector should draw the attention of all concerned to the need for identifying the causes why things have not been improving. It is alleged by some quarters that the previous governments in succession had only contributed to rendering more insecure the country's energy and economic situation. They are alleged to have entered into short-sighted contracts with multinational oil and gas companies.
Discussants in a recent seminar, organised by a non-government organisation, noted that every year the country loses about Taka 21 billion from the gas and power sector due to uneven deals with such companies. This loss is incurred as Bangladesh, as the discussants noted, is required to buy gas discovered on its own territories from foreign producers of the same at prices that are substantially higher than the ones charged by the indigenous companies engaged in producing gas. According to such circles, the gas fields, though they were located by Bangladesh government-owned exploration organisation, BAPEX, were in the end handed over to foreign producers on lease for production. Now those have been bleeding the country in the financial sense. But this bleeding would not be there if the previous governments had decided to make better use of BAPEX.
BAPEX did otherwise show a better track record all along in finding gas, notwithstanding some critical queries about its costs of operations. It enjoys a successful strike rate in one out of three fields dug by it. It is alleged by different quarters that the foreign companies were going slowly with both their exploration and production activities, despite the pressing need of the country to find more gas reserves or to accelerate the production from the existing fields. Meanwhile, the country has been suffering from gas and power crisis, because gas is not only directly used by a variety of consumers but also needed to run power plants to generate electricity. In this situation, the government should seriously consider ways and means for addressing the problems in the country's energy sector.
It is heartening to note that the present caretaker government is starting to realise the harms that have been caused to the country's economy from the poor policies of the former governments. Recently, policies have been declared which appear to have the aim of strengthening BAPEX. More significant has been the declaration by the adviser concerned that from now on every proposed deal with a foreign company in the energy sector, will be allowed a public scrutiny and after such a scrutiny, the approval or otherwise will be given to any deal involving foreign companies in the sector.
Transparency in the deals in energy, or, for that matter, any, sector is very important to ensure that the accord thereof serves national economic interests. But such a decision will be useful in the longer run only if the caretaker government makes laws and leaves behind arrangements to absolutely obligate future governments to submit proposed deals in the energy sector unfailingly through such a process to ensure transparency and scrutiny.
The incumbent government should also see to it that BAPEX is also beefed up at the fastest and provided with possible public policy supports for carrying out energy exploration activities cost-effectively.