No easy answer to energy sector's problems

At a recent seminar titled "Challenges in Reforms in Energy and Power Sector" on September 4, two of the country's leading energy sector experts, BUET Professor Dr. Tamim and Dr. Ijaz Hossain spoke. Dr. Ijaz presented the key note paper in which major issues plaguing the energy and power sectors were discussed - how we got into this mess and what reforms could be initiated to start the journey on the road to recovery. It is now public knowledge that every attempt had been made to politcise the sector over the past 16 years whereby decision-making regarding technical matters were taken out of the hands of energy sector professionals and put into the hands of politicians, who enacted policy framed by the bureaucracy. The sole aim was to maximise profits for select companies and fatten the wallets of policymakers.
The idea of prioritising building of power plants superceding the annual power demand was a political decision and had little to do with what the economy needed. This was part-and-parcel of the pipedream of the previous government to gallop ahead in order to achieve an unrealistic GDP growth rate of 9.0 per cent for the next 20 years. This target was not based on economic reality but the energy master plan was ramrodded into action overriding serious reservations of experts who had argued for ensuring energy supplies prior to building and commissioning of multiple power plants. Hence the country has added up more than 8,000 megawatts of power generation capacity but no fuel to fire them up and also there is no demand for this excess power.
Billions of dollars have been squandered in the name of achieving the unachievable. Billions have been borrowed from foreign lenders, repayments of which have begun to kick in and there is no money to make those repayments. As pointed out by Dr. Tamim, the full stoppage of local gas exploration was done deliberately, as it opened up the door to foreign fuel imports. Again, the Bangladesh Energy Regulatory Commission was made redundant so that the whole issue of public hearings could be forgone and total control over energy price fixing could be ensured.
Today, Bangladesh is in a full-blown energy crisis despite the fact that leading geologists in the country have been stating that Bangladesh has massive untapped gas reserves on- and off-shore that were never properly explored. Industry was promised "uninterrupted gas supply" when the power tariff was increased nearly three-fold recently. That promise was not kept and policymakers expected industry to simply bear the burden of a tariff that made no sense because power was not available and the requisite pressure of gas to run machines remained below par.
On the flipside of all these irregularities, the past government turned a blind eye to the system loss of nearly 10 per cent of daily gas supply (both domestic and imported) which in today's value is about US$1.0 billion per annum. Studies have shown that even if this "system loss" is cut down to 5.0 per cent, that would free about 100 mmcfd (million cubic feet per day) and if supplied to industry, this amount could prove to be a major lifeline for many manufacturing sectors. Sadly, this system loss was also a political decision, i.e. supplying gas to communities of people who did not pay bills to the utility companies but to party cronies who made these illegal connections possible.
Taking stock of the situation, Dr. Ijaz stated that, "around 60 per cent of our natural gas is used for power generation, with 18 per cent going to captive power generation. Residential gas consumption accounts for 11 per cent. Currently, 20 out of the country's 29 gas fields are operational, and our gas production stands at 2,202 mmcfd. However, increased gas consumption in various sectors over the past five years has led to supply shortages." All this has happened since the ministry of Energy & Power became the sole decision maker on how power would be produced using imported gas instead of the locally produced. This was a deliberate decision, one that has crippled the future prospects of growth, at least in the short term. Experts at the event have stated that when it had become obvious that gas production from existing fields were depleting rapidly, no action was taken to go on a war footing to start drilling seriously. The current anticipated success rate of finding gas is 1:10, i.e. gas in one well out of 10 wells drilled. That means, around 200 wells should have been drilled annually over the last few years which could have helped find "new gas" that could have been added to existing reserves. This was also not done.
Some good things have happened. The infamous Quick Rental Power Supply Act has been suspended and there is now talk of open bidding for all energy contracts. Committees are being formed to look into past contracts made in the power sector to find out how much money has been siphoned off by crooked companies. Again, there is no short-term solution to the inevitable energy crunch the country is now facing but for reforms to be effective, control of the sector must be put back into the hands of technically sound people. Drilling must begin in earnest and unnecessary power plants need to be shut down. Decisions in these respects need to be pragmatic.

[email protected]