Energy crisis: who is to blame?

Photo: Shafiq Islam/ Drik NewsSyed Mansur Hashim

When we are informed at fag end of the year that the Sunetra gas field purported to have gas reserves anywhere from 2-3 trillion cubic feet may not be giving us the dividends we had hoped for, there is something fundamentally wrong with our planning. The incumbent party in power is effectively entering into the final year in office. To break such dismal news to the general public grappling with double digit inflation in food and other basic rights, i.e. housing, education, etc. must have been painful. However, it is nothing compared to the pain the public has been putting up with the last couple of years on account of electricity generated by the rental power industry — electricity that is expensive to generate and to consume and one that provides no long-term solution for the economy.

Now that Sunetra has come up literally dry, policymakers are in a fix. They have no idea how to get out of the gas crisis. To state the situation in the energy sector dire is somewhat of an understatement. We are facing a national energy crisis. In terms of “planning,” the government took a two-pronged approach: short and medium-term. As pointed out by Economist Forest Cookson in a recent article in The Independent “The government faced two problems: What to do about the energy situation in the short run — essentially over the period of its tenure. Second, how to develop large scale power projects and provide the fuel that they required. Such projects would come on line in the period 2013-2016. The first problem has been handled quite well. Production of electrical energy will have increased 50% through June 2013, about 11% per year. There were three steps to improve the short run situation: (1) Commissioning rental power projects to increase supply. (2) Charging higher electricity prices to reduce demand. (3) Reduce losses in the distribution systems.”

Yes, the authorities did handle the first problem very well. Significant new power to the tune of some 3,500 megawatts (MW) was augmented to the national grid during this term in office. The problem is that somewhere along the line the government forgot or, was unable for reasons beyond our comprehension about the mid-term energy sector planning. Failure to gauge the need to get a move on to repair and upgrade the old existing plants took the backburner. Again, despite constant prodding of energy experts, the authorities failed to setup baseload power plants plants based and diversify primary fuel supply sources. Have the rental plants delivered? Yes and no. The mere production of new power is only half the game. The produced electricity needs to be channeled to end-users. That requires an upgrading of the distribution network. Is it any wonder that there is mounting evidence that the current distribution network is unable to handle the extra power being pumped into it?

The next three years, i.e. up to 2016, no major new power plants are going to come on line, since it is unlikely that there will be any major gas supply improvements in the pipelines. So what now? Current projects in the pipeline can bring in at best, 1,000MW (250MW per annum till 2016) of new power will be added to the national grid. This is a far cry from the 800-1,000MW that needs to be added per annum as per demand. Getting back to the subject of planning; the government had hoped to plan for the future on a mixture of domestic gas and imported coal. Since we can now safely delete the gas part in the equation, this leaves coal. Thanks again, to the futuristic approach of policymakers, who chose not to explore our proven reserves of high quality coal — leaving it for “posterity” and the “future generation.” Since there is now zero possibility of mining own coal for use in the immediate future, we are left with imported coal. Astonishing as it may seem, there is again, unfortunately, little prospect of getting hands on imported coal before 2017- 2018. Because, contrary to popular belief, coal sourcing is not about waltzing down to the international market and ordering a few million tonnes of coal for delivery next month, because no sourcing contract has been done. According to Forest Cookson who states in his article 'the energy scenario: alternatives': “The price of the landed imported gas is reported to be very high of the order of $12/thousand cft. (Energy expert, Prof. Tamim of BUET considers landing price of LNG in Bangladesh will be no less than $18 dollars per unit), compared to average prices of the order of $1.50 for domestic gas. [These are the costs for Petrobangla to obtain gas purchase from the Production Sharing Contractors including the 'free gas' Petrobangla receives from PSC or from the Government's own fields.”]

Lastly, the issue of LNG has not moved an inch from the day it was conceived. Now why is that? The issue of sourcing LNG, building a LNG plant has dominated newspaper headlines for the past few years. Policymakers had better start working on their answer to questions revolving around this issue.

Now that we are in a bit of a jam, precisely how the nation is going to crawl its way out of the quagmire is indeed the million dollar question. By foot dragging on to extract domestic coal or import coal or indeed to go for the LNG option, the government has wasted invaluable time. There is now no choice but to rely on rental or import-based oil fired power plants (these could be rental, quick-rental or BPDB plants) �”

these are going to be EXTREMELY expensive, for this year's oil import bill is hovering around $3 billion, approximately 25% of annual inward remittance. Who know what the future holds?

Source: The Daily Star