What has gone wrong in power and energy sector?

Khondkar Abdus Saleque The Awami League-led Grand Alliance government has failed to bring meaningful changes in the power and energy sector during the four years of its five-year term. Though the power generation capacity and gas production have significantly increased, yet these have failed to cope with the increasing demand as the economy continues to grow at a steady pace of 6.0 per cent plus. About 1.5 per cent power demand grows for every 1.0 per cent growth of GDP (gross domestic product). Hence it requires about 8- 9 per cent growth of power generation every year to maintain steady GDP growth. The government has so far failed to manage demand-supply critical balance professionally and consequently the crisis is adversely impacting economic growth. An objective assessment of the performance of the present government in energy and power sector over the last four years would show mixed results. One would appreciate different initiatives for increasing power generation, diversifying fuel mix for power, increasing gas production, and stabilising transmission and distribution of power and gas from sources to demand centres. Some of these met with success and some failed. There have been major failures in creation of cost-efficient fuel supply options, ensuring energy conservation, controlling the system losses and ensuring energy efficiency. Consequently, there have been bare minimum impacts on the national economy of almost doubling the effective power generation capacity from 3,500 MW to 6,350 MW per day and increasing gas production from 1,750MMCFD to 2,287 MMCFD. The government could to some extent successfully address the massive demand-supply imbalance of power grid through the introduction of controversial imported liquid fuel-based high-priced rental power plant option. But to contain the consequent huge subsidy impacts of absorbing high import cost of liquid fuel from volatile international market, the government had to inevitably adjust power and fuel prices in several steps much to the discomfort of all end-users. The government also failed to advance appreciably the implementation of major traditional fuel-dependent base load major power plants for various reasons like protracted tendering processes, bureaucratic and political interferences in tendering and evaluation processes, imbedded corruption and inefficient project management. The government also failed to resolve the impasse of mining substantial untapped coal resources. Adoption of under-cooked import strategies of high-priced LNG and coal without bothering about enabling infrastructure also created messy situation in power and energy sector. The situation is set to lead to a huge deficit of power in the national power grid in the ensuing irrigation season and massive gas supply shortage for all end-users all over the gas grid. A democratic government, despite of initiating several milestone initiatives in energy and power sector, could not derive credible returns of its efforts. The government is now confronted with huge challenges of turning the tide in the fag end of its term to restore confidence of the electorate. Fuel mix and energy pricing: For a developing country like Bangladesh, the major challenge in the power sector lies in adopting the appropriate fuel mix and rational power and energy pricing. Bangladesh until recently used to rely almost exclusively on indigenous natural gas for power generation. Kaptai hydro-electricity generation, Barapukuria coal-fired power generation and some minor diesel and furnace oil-based plants were other options. Price of power and gas in Bangladesh are among the cheapest in the world. The pricing was not the economic pricing and had no rationale for this. Bangladesh is blessed with cheap gas price as most of the major gas resources are almost free as the Father of the Nation Bangabandhu Sheikh Mujibur Rahman through his visionary initiatives took over major gas resources at nominal price from Shell BV after independence. Taking advantage of very cheap power and gas price small, medium and large energy-inefficient industries mushroomed around energy-constrained corridors in greater Dhaka and Chittagong region. This unbalanced growth stressed gas production and transmission systems beyond the designated limits. Moreover, the advent of international oil companies (IOCs) in the upstream created price imbalance of gas. State-owned gas companies failed to generate enough revenue to reinvest in expansion of capacity. Production and transmission capacity in the national gas grid became super-saturated. There were many talks and studies for economic pricing of gas and power. There were works on Power System Master Plan and Gas System Master Plan. But successive governments due to their narrow political vision did not address the energy and power pricing. Governments for lack of vision and poor governance also failed to manage balanced expansion and growth of power and energy sector infrastructures. Consequently, demand grew exponentially but neither power generation nor production and supply of gas expanded simultaneously. In 2009, when the present government came into power, it inherited a dysfunctional power and energy sector reeling under 3,000 MW power deficit and 300 MMCFD gas shortage. It also inherited massive system losses (mostly theft and pilferage) in the power and energy sector. The managerial capacity of power and energy sectors also eroded as the successive governments completely politicised the sector victimising competent professionals for political reasons. The challenges of the present government were well cut out. It had to address the challenges of depleting gas resources, rationally diversify fuel mix and adjust power and energy pricing rationally to make these market-oriented. The government had very little choice but to opt for imported liquid fuel-based short-term rental power generation options side by side with initiating other traditional short-, medium- and long-term power generation initiatives. In four years, the government could increase power generation by 2,850 MW out of which about 1,800 MW came from expensive liquid fuel-based rental power plants. There is no doubt that this additional electricity made significant contribution to the national economy which remained functional. But the cost that the nation paid for the expensive power was phenomenal. The planning and implementation of mid- and long-term gas and coal-based power generation initiatives failed to advance appreciably, causing the nation to bear the burden of expensive power generation through rental power plants beyond the projected tenure of 3-5 years. Most of the contingency rental power plants were due to retire by now. But the desperate government cannot come out of these essential evils as it has failed to create reliable alternatives. Moreover, to offset impacts of high-priced power generation options, the government had to revise upward and adjust power and energy pricing on several small installments. People would have welcomed this if they could get reliable and assured supply of power and energy in exchange. But as it is not the case, the government actions have drawn bitter criticism from all around. Increased power and fuel prices have increased cost of living and costs of doing business. Poor vision and wrong perceptions: As has been discussed very often, LNG import initiative and plan to set up large imported coal-based power plants in the socio- economic environment of Bangladesh were short-sighted. For associated techno- economic reasons, Bangladesh is not in a position now and nor will it be able in the near future to successfully implement LNG import or coal import for power generation. The most feasible power generation option still remains exploration and exploitation of own coal. The major failure of the present government lies in not initiating appropriate actions in mining own coal and setting up of coal-based power plants. A vested quarter is still misguiding the policy-makers. All impacts of coal mining, including management of surface and subsurface water of mined area, have proven scientific and well-rehearsed technology. The government has already got several studies of accredited international consultants. The Energy Advisor to the Prime Minister recently talked about fresh study of subsurface water management. Who are the Bangladeshi experts for conducting study of mine water management? Why could the government not rely on studies conducted by internationally accredited consultants? The nation is paying heavy price for poor vision and wrong perceptions of white-collar non-professional advisory groups. In four years, there has been no meaningful progress of LNG or coal import initiatives. There has been no progress on exploration and exploitation of own coal. The government should recognise the reality and take positive rational decision of coal mining, abandoning unrealistic initiatives. Gas sector failed to deliver: The performance of gas sector indicating increase of production capacity from 1,750 MMCFD to 2,285 MMCFD is claimed as major success by Petrobangla. About 90 per cent of this capacity increase came from Chevron-owned Bibiyana and Jalalabad gas fields for which there has been very little contribution of Petrobangla. The capacity enhancement initiatives of Bibiyana Gas Field was initiated by the caretaker government. The only capacity enhancement of gas transmission was also effected through Chevron installing a gas pipeline compressor at Muchai station owned and operated by GTCL. Apart from that, BAPEX made some contributions in bringing two marginal gas fields Semutang and Sundalpoor into operation and adding some development wells in other under-operation gas fields. BAPEX acquiring 3D seismic capability is a milestone achievement. But failure of Petrobangla gas companies in accomplishing production enhancement and transmission capacity enhancement projects on time have delivered a massive blow to gas security and energy security. Petrobangla miserably failed to implement fast track gas field development project for wrong strategy and poor management. The failure in four years of the fast track gas production enhancement initiative is an evidence of incompetence. Petrobangla's top management appears to be happy after every interpretation of 3 D seismic surveys of BAPEX of major gas and oil discovery. Experts and critics have termed these as reinventing of wheels and acts of immaturity. Real petroleum or reservoir engineering experts cannot talk about discovery of gas or oil without drilling of exploratory wells and production testing. No seismic survey can conclude any gas or oil discovery. Petrobangla unprofessionally hyped gas discovery and even indicated possible extent of additional reserve. Now that much-hyped Sunetra gas prospect evidencing dry hole and other prospects not showing encouraging signs have triggered frustrations. People will now question about resource mapping of Rashidpur, Titas, Haripur and Koilastila gas fields. Petrobangla companies have also failed to advance major gas transmission infrastructure implementation. Failure of ill-conceived LNG import initiative will prolong gas crisis of Chittagong region. The failure of Petrobangla to increase gas production to required extent, expand transmission capacity and mange resources professionally has created all-round crisis in the energy and power sector: substantial power generation capacity has been forced to remain idle, urea fertiliser production suffers every now and then, gas supply to all industrial, commercial users suffer from low pressure and poor quality, gas supply to CNG fuelling stations require rationing, and all new gas connections require to remain suspended. According to many, the top management of the gas sector has miserably failed to create dynamism in the sector and this has adversely impacted the overall performance of the power and energy sector. Many opine that clash of personalities among policy makers in the energy sector is one of the reasons for the poor performance of Petrobangla and its companies. Adopting unrealistic LNG import initiative, relying on incompetent politically favoured non-performing senior executives, adopting some unnecessary gas transmission infrastructures like Bibiyana-Dhanua pipeline, delay in major projects implementation like gas pipeline compressor stations of GTCL have led to the present abysmal performance of the gas sector. Year 2103 must see some major achievements in gas sector if the energy sector has to turn around. Russian energy giant GAZPROM may complete drilling of 10 production wells, and BAPEX may also complete drilling of some production wells. By end of 2013, about 250-300 MMCFD additional gas should come on stream. But how this gas will be transmitted to distribution points will remain a huge challenge. There is possibility of Bakhrabad-Shiddhirganj pipeline to get completed. It can transport about 300 MMCFD gas for a section of present and additional gas demand in the greater Dhaka region. Completion of Ashuganj pipeline compressor station will restore gas transmission capacity of northern corridor of transmission hub. But the construction of a controversial unnecessary pipeline from Bibiyana-Dhanua pipeline may be stuck in quick sands as early monsoon rain in March or April may cause inundation of ROW from flash flooding. Such a massive investment in a huge challenging project should have been further reviewed as additional gas resources are yet to be confirmed for ensuring capacity gas supply through this pipeline over the design life of the project. Why not Rashidpur-Ashuganj loop line extended to Koilashtila instead? The present government will find it truly embarrassing if people have to continue suffering from power and gas crisis for most of the time in 2013. Many of the milestone achievements of the government will be overshadowed by failures in power and energy sector. The writer is an engineer. khondkar.saleque@gmail.com