Dollar shortage is now a regular topic of discussion in the country. The shortage is the result of higher outflow of US dollars through the banking systems compared to their inflow. The dollar crisis has been restricting import of raw material and machineries for industries including primary energy products. As the electricity generation in the country has been increasingly depending on imported primary energy, import restrictions compel large numbers of the power plants to shut their operations or restricting them to operate with partial capacity. The World Bank survey report indicates that Bangladesh losses approximately 3.3 billion dollars annually due to unreliable electric supply. Coal, liquid petroleum (diesel, Furnace oil) and liquid natural gas (LNG) have been imported as primary energy to fuel the country's power plants. Despite having the installed power generation capacity over 23,370 MW in the country, 16,000 MW of power demands could not be met steadily due to power generation limitations linked with primary fuel supply shortage. As a result country wide prolonged 'load shedding' and sufferings of businesses and people in the hot and humid summer days become an usual phenomenon.
The country has celebrated 100% electrification milestone event in February 2022. Several billion dollars have been invested both in public and private sectors to install gas, coal and liquid fuel based power plants during last 10-12 years and a significant part of them suffer for primary fuel supply shortages. Power plants in operations (fully or partially) continue to claim 'capacity charges' for idling due to primary fuel shortages. Published reports suggest, until March 2023, Bangladesh Power Development Board (or its subsidiaries) owes approximately Taka 180 billion as pending bills to Independent and private sector power producers under contract with BPDB. So, most of the investors are unhappy as they cannot recover their investments within their calculated pay back period.
The government has been trying to settle some of the pending bills for supplied coal and liquid fuel. Published reports further suggest that coal and furnace oil carrying ships are on way towards Bangladesh shore (towards the power plants and Eastern Refinery jetty) and the coal and furnace oil based plants expect to resume power generation soon. The reports inform that the volume of primary fuel imports in the pipeline for the power plants may help to recover from the immediate crisis. Foreign currency allocations for primary fuel imports if not guaranteed, such a supply disruption may be repeated in the future.
Load shedding situation has improved in Dhaka but in the countryside. The electricity supply shortfall continues to affect life for several hours a day in outside districts and rural areas. Power sector experts fear that the improvement in power generation and supply may be temporary. The foreign currency shortages for importing primary fuel will not be resolved immediately due to external and internal realities. The country has been continuing to receive less amount of foreign currency from two major sources -- export oriented industries and wage earners. So, it is compelled to spend more than it earns. The volume of country's trade deficit has been growing.
The present power situation is not unexpected. Domestic sources of commercial energy exploration and extraction have been ignored for more than last two decades. The country has been importing more than 60% of its commercial energy for power generation. At present the country spends nearly 10-12 billion dollars annually for importing primary commercial energy. If the trend continues, by 2030 our country will be 90% import-dependent on commercial fuels for generating electric energy and annual demands for foreign currency for fuel imports may reach approximately 20 billion dollars.
The energy sector policy makers ignored the questions raised earlier by the experts concerned where from such a huge foreign currency requirements for commercial energy import bills will be met. They preferred to lead the country's energy sector towards import-dependent one. They used to advocate the argument that Japan, Korea, Taiwan continued to prosper with almost 100% import primary energy and Bangladesh would secure its development with imported energy as its GDP growth rate would continue to remain high. The 20 years perspective plan for electricity sector 2041 was calculated with a GDP growth rate 9% annually. The foundation of our country's economy is far away from the developed economy and its import dependence for raw materials and consumer products, finished goods are huge. Despite limited sources of export and insignificant net annual foreign currency retention we have only other major source of foreign currency earning is from the wage earners' remittances. Both the export basket and remittance earnings are hugely dependent on external volatilities. Also, there are internal limitations for attracting foreign direct investment and rapid expansion of export earnings. Therefore, there exists huge risk of over remaining dependent on import-based energy supply. The Covid-19 pandemic and Ukraine crisis have repeatedly demonstrated the risks.
However, these risks had been sidelined and energy sector policymakers preferred not to focus on development of domestic energy sources. Now, to rectify the situation, urgent efforts are needed to inject capital and ensure policy support for exploration and development of domestic natural gas prospects (both with BAPEX capacity, accelerating production sharing contracts and joint venture with prospective and capable foreign partners) and domestic coal reserve mining. Such endeavors will not yield immediate benefit but will help to develop national capacity towards long term energy security. At the same time maximum policy support and necessary recourses are to be mobilized for harnessing renewable energy (solar, wind) so that within specific target period Bangladesh can add grid connected 2,000-2500 MW electric energy. Renewable energy sector experts are hopeful to generate 10,000 MW and supply to the electrical grid. The Draft Integrated Energy and Power Master Plan (IEPSMP) emphasized the need for maximizing the use of indigenous energy and prepare adequate energy infrastructure improvement for securing safe and stable energy supply. IEPSMP also suggested for modern and convenient energy supply at affordable cost. Let us respect our strategic planning documents and lead the energy sector towards a sustainable development path.
Author is a mining engineer who writes on energy and environment issues.
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