[🇧🇩] Energy Security of Bangladesh

[Saif]

MGI’s $700m investment in Cumilla EZ stuck in energy crisis

Three production units owned by Meghna Group of Industries (MGI) have been sitting idle inside the Cumilla Economic Zone despite two years having passed since construction works were completed due to a lack of gas and power connections

www.thedailystar.net

MGI’s $700m investment in Cumilla EZ stuck in energy crisis

Three production units owned by Meghna Group of Industries (MGI) have been sitting idle inside the Cumilla Economic Zone despite two years having passed since construction works were completed due to a lack of gas and power connections

The industrial conglomerate has already invested $700 million in the three units, with $400 million going towards a steel mill, $200 million for a glass factory and $100 million for a paperboard manufacturing unit, according to Mostafa Kamal, chairman and managing director of MGI.

Additionally, the company has been incurring around Tk 80 crore in annual losses since 2022 to maintain the inactive units, Kamal said.

Officials blame the previous government's allocation of land to the private sector players without adequate assessment

He added that the Bangladesh Economic Zones Authority (Beza) could not provide any answers about when gas and power supplies would be ensured. Instead, public officials blame the previous government's allocation of land to the private sector players without adequate assessment.

The Cumilla Economic Zone, located in the district's Meghna upazila along the Dhaka-Chattogram highway, spans 350 acres.

While recalling the tumultuous timeline so far, Kamal said BEZA held a multilateral meeting featuring representatives from the Gas Transmission Company (GTCL), Petrobangla, Titas Gas Transmission and Distribution Company Limited (TGTDCL), Cumilla EZ and the Energy Division in 2022.

Various decisions were made to speed up the process of providing electricity and gas connections, but none have had any tangible impact yet.

To speed up the connection process, Kamal said MGI even provided an additional Tk 100 crore for the development of the grid network and Tk 100 crore for GTCL's pipeline infrastructure.

But the slow rate of progress is frustrating, he added. Ashik Chowdhury, executive chairman of both Beza and the Bangladesh Investment Development Authority (Bida), said discussions were underway with MGI and utility service providers to find a solution.

An inter-ministerial meeting will be held to speed up the process of providing gas and electricity connections to the economic zone, he added.

Chowdhury also blamed the previous government's "indiscriminate" land allocation to the private sector for the current situation.

Shahnewaz Parvez, the managing director of TGTDCL, said they could not currently provide new connections to industries and economic zones due to an ongoing national gas crunch.

A meeting regarding gas connections for economic zones was held by Petrobangla recently, where it was decided to seek a final decision from the Ministry of Power, Energy and Mineral Resources, Parvez said.

He added that the situation could worsen if adequate liquefied natural gas is not imported.

Abdur Rashid Khan, managing director (additional charge) of PGCB, said they provide high-voltage industrial connections while distributors like the Bangladesh Rural Electrification Board (BREB) give connections to private economic zones.

"I am not aware of any application from the Cumilla Economic Zone," he told The Daily Star.​

 

[Saif]

Energy rationing causes industrial output fall

That the business community is upset is quite understandable. Business entities had poured in billions of Taka (BDT) over the years to expand industrial production on false promises made by policymakers of the immediate past regime. Assurances have turned out to be hollow and are now beginning to b

thefinancialexpress.com.bd

Energy rationing causes industrial output fall
Syed Mansur Hashim
Published :
Nov 27, 2024 00:43
Updated :
Nov 27, 2024 00:43

That the business community is upset is quite understandable. Business entities had poured in billions of Taka (BDT) over the years to expand industrial production on false promises made by policymakers of the immediate past regime. Assurances have turned out to be hollow and are now beginning to bite. These were some of the complaints voiced by business representatives at a seminar titled 'Ways of Mitigating Energy Crisis in the Industrial Sectors', organised by the Bangladesh Chamber of Industries (BCI) recently.

The energy advisor agreed with the predicament the industrialists face today, i.e. falling energy supplies vis-à-vis increased cost of energy inputs, the two together providing the perfect perspective for industrial stagnation. Forget about industrial growth, the current state of affairs is going to lead to factory closures and a curtailment of existing industrial production capacity.

While it is easy to blame the excesses of a previous regime, the quandary for the present energy advisor is what to do with the dwindling energy reserves at hand. There is no point in crying over spilled milk. Several useful recommendations were made at the seminar. First of all, there is no denying the fact that since the entire energy system is essentially state-owned, the issue of pilferage has largely remained unaddressed.

Despite claims made over the years by many utility companies that they have tried to stop the illegal connections, their efforts were meaningless in addressing the issue for two reasons: (1) corrupt practices by a section of officials, and (2) the influence exerted by local political elements directly involved in handing out such illegal connections, for personal profit. Now there is a non-partisan government in power. What excuse is there for tolerating such practices? As per data, plugging the loopholes in the system would save around 10 per cent of daily gas production, precious natural gas that could feed energy-starved productive sectors of the economy.

Interestingly enough, this government too has shied away from taking tough decisions when it comes to conserving natural gas. In an age of unprecedented fall in production, foot dragging continues on the issue of allowing for CNG supplies. This was a disastrous decision taken decades ago by another government that was under the impression that Bangladesh would forever be 'floating on gas' - something that turned out to be a mirage. Two decades later, the continued wastage of this precious fuel that should have been reserved for industrial use is instead, being burnt away uselessly as auto-gas.

As for business entities, the smart ones foresaw the writing on the wall. Some entities used past profits to electrify their factory rooftops with multi-megawatt solar solutions to wean off REB bills. The investments paid off rather fast thanks to availability of the right type of credit at hand. Other industrialists foresaw the possibility of an energy crunch and many RMG factory owners shifted their boiler technology to consume 'jhut' and other waste products coming from their factory lines. Yet others went a step further and turned their entire industrial production 'green' and reaped the profits by tapping into value-added orders from abroad. These steps were taken by a handful of industrial groups and they have survived the continued contraction of energy supplies. That is not the case with the bulk of industry. As for policymakers, there is no good news round the corner. It is time to take some hard decisions and clamp down on the corruption-riddled operations of state enterprises that constitute the energy sector. Take action now while there is still some hope of conserving what little resource there is.​

 

[Krishna with Flute]

When India launched solar energy policy, the tariff of 1 unit of electricity was rs. 13. At that time I used to hear that it will fall below Rs 2 by 2030. However, that happened in Gujarat couple of years back. I recommend BD and Pakistan to go for Solar power in large scale. It has become a very cost-effective source of power now a days. It comes with no pollution and damage to environment.

 

[Saif]

When India launched solar energy policy, the tariff of 1 unit of electricity was rs. 13. At that time I used to hear that it will fall below Rs 2 by 2030. However, that happened in Gujarat couple of years back. I recommend BD and Pakistan to go for Solar power in large scale. It has become a very cost-effective source of power now a days. It comes with no pollution and damage to environment.

Solar technology is still in its infancy. Widespread use of solar power needs more time.

 

[Saif]

Diesel to flow thru 250km Ctg-Dhaka pipeline mid-Dec

Bangladesh is set to reach a milestone in fuel transport with the commissioning of the 250-kilometre Chattogram-Dhaka diesel pipeline in the middle of December.

www.thedailystar.net

Diesel to flow thru 250km Ctg-Dhaka pipeline mid-Dec

Bangladesh is set to reach a milestone in fuel transport with the commissioning of the 250-kilometre Chattogram-Dhaka diesel pipeline in the middle of December.

The launch of the first underground pipeline -- from the port city's Patenga area to Godnail and then to Fatullah on the outskirts of the capital -- is expected to save about Tk 230 crore every year in fuel transport costs, according to officials of the Bangladesh Petroleum Corporation.

At present, diesel is transported from Chattogram to the rest of the country by river, rail and road, which causes frequent incidents of oil theft.

Besides, problems arise in fuel transportation due to the navigability crisis on waterways during the dry season. This often leads to disruption in fuel supply.

BPC is implementing the project at a cost of Tk 3,600 crore through the 24th Engineer Construction Brigade of the Bangladesh Army.

The pipeline has already gone through a hydro test with water successfully transmitted from one end of the pipeline to the other, according to Colonel Jahangir Hossain, the project director of the 24th Engineer Construction Brigade.

There are nine pumping stations in the pipeline and the equipment of the stations are being tested.

"I hope we will be able to commission the pipeline by mid-December," Hossain added.

The pipeline can transport 2.7 to 3 million metric tons of diesel annually, which can be increased to 5 million metric tons in stages.

In fiscal 2023-24, 5.4 million metric tons of fuel were transported by waterways across the country, according to BPC.

Of this, 2.7 million metric tons were transported from Chattogram to Godnail and Fatullah depots in Dhaka. Currently, 110 ships carry fuel on this route every month.

The long-awaited pipeline has two segments: a 241.28-kilometre 16-inch diameter pipeline from Patenga to Godnail depot in Narayanaganj through Feni, Cumilla, Chandpur and Munshiganj and an 8.29-kilometre 10-inch diameter pipeline from Godnail to Fatulla.

The pipeline from Patenga to Godnail has touched the bottom of 22 rivers and canals. Out of these, 10 are large rivers.

A new depot with a capacity of 21,000 metric tons has been built in Barura, Comilla.

The storage capacities at the Godnail and Fatullah depots have also been increased, said Aminul Haque, who is acting as the project director on behalf of BPC.

The Executive Committee of the National Economic Council approved the 'Fuel Supply from Chattogram to Dhaka Pipeline' project at a cost of Tk 2,861.31 crore in October 2018.

After amending the development project proposal several times, the cost has now reached Tk 3,600 crore. The project implementation period has been set until December this year.

It is the second underground fuel pipeline project after the 110-kilometre Single Point Mooring (SPM) Project from the deep sea in Maheshkhali to the Eastern Refinery in Chattogram.

Although the trial transmission of the twin pipeline for diesel and crude oil was completed on February 29 and March 9 respectively this year, commercial operation has been stalled in the absence of an operator.

The SMP was built to transport fuel to the depot directly from a deep-sea mooring.

Currently, imported fuel from Chattogram Port is transported to the depot through feeder vessels.

During the previous Awami League government, the single-source tendering method was followed in appointing an operator for the SPM project, according to BPC officials.

The interim government has now started the process of appointing an operator for SPM following the open tender method.

Contacted, BPC Chairman Md. Amin ul Ahsan told The Daily Star that the current government has decided to appoint the Chinese company that built the project as the operator on a government-to-government basis.

The operator will soon start the SPM project after completing the due process, he added.​

 

[Saif]

Titas loses Tk 3,000cr amid rising system losses across Bangladesh

Bangladesh’s largest gas distributor lost gas worth about Tk 3,000 crore during the past financial year as its system loss climbed further up compared with the year before.

www.newagebd.net

Titas loses Tk 3,000cr amid rising system losses across Bangladesh
Emran Hossain 29 November, 2024, 00:24

Bangladesh’s largest gas distributor lost gas worth about Tk 3,000 crore during the past financial year as its system loss climbed further up compared with the year before.

The system loss, as reported by the state-owned company, Titas Gas Transmission and Distribution Company Limited, reached 7.66 per cent in 2023–24, up from 5.28 per cent reported in 2022–23.

The overall loss of the company, responsible for supplying gas to about 30 lakh customers, mainly in five zones in Dhaka and Mymensingh, increased by 350 per cent.

Titas gas distributes 55 per cent of all gas produced annually.

The officially-announced system loss has always been viewed with suspicion. In 2022, a government analysis revealed the year’s system loss to be 13 per cent against the officially-announced 2 per cent.

‘The system loss more or less has been the same always,’ said Arpana Islam, general manager, finance division of Titas gas.

She did not admit that the system loss was ever as high as 13 per cent but confirmed that it was never 2 per cent either.

Officially, 2 per cent system loss was announced in 2021 and 2020 as well.

Titas officials also said that the system loss was never actually calculated. The loss was kept at 2 per cent following a decision of the energy ministry, they said.

Energy experts long accused Titas of corruption, gas theft and inefficiency and cited the mismatch in the account of system loss as evidence.

Authorities, however, came up with explanations, such as, its decades-old rusty and porous pipe line causing a substantial loss of gas every year.

In the past financial year of 2023–24, the Titas’s finance division said that the company received 15,698 million cubic metres of gas and sold 14,495mmcm.

The sale of the gas earned the company Tk 35,692 crore.

The gas supply under the non-metered category, providing piped gas to households, increased by 5mmcm, though there was no reason for the supply to increase. A moratorium on giving new connections to households has been in place for about a decade due to rapid depletion of the gas reserve.

The 5mmcm of gas is equal to over 41 lakh tonnes of oil.

Household remains the country’s single-largest gas consumer category.

The increase in household gas supply indicates unabated theft of gas which often occurs with the help of the department’s officials through illegal gas connections.

Energy experts argue that establishing illegal connections by reaching gas pipelines buried deep under the earth is not possible without help from government officers.

Entire villages and neighbourhoods in cities can be found that run on illegal gas connections with pipes dangling dangerously overhead or running along the ground, exposed to direct human and transport contacts.

Titas has failed to come up with an exact account of illegal connections though the problem persists over decades.

In 2022–23, Titas disconnected 2.82 lakh illegal connections through which all types of consumers—industries, households, commercial clients and captive consumers—were involved in gas theft. Allegations are there that disconnected connects are usually are re-established bringing opportunity to the corrupt officials to make yet another round of illegal income.

The gas supply to industries dropped by almost 6 per cent in the last financial year with the supply in the sector falling to 3,842mmcm from 4,075 mmcm.

The drop in the industrial gas supply is shocking and runs counter to the narrative developed by the immediate past Awami League government about a robust economic growth.

‘Energy crisis led to the drop in the industrial gas supply,’ said Kazi Mohammad Saidul Hasan, general manager, operation division of the Titas gas.

‘The pressure of gas was particularly very low. Industries require high pressure for production,’ he explained.

Industrialists said that their reliance on liquefied petroleum gas greatly increased in the past year because the government had failed to ensure energy even after increasing its price.

In January last year, gas prices were increased by up to 179 per cent for industries, power and commercial sectors.

Some consumers, however, received more gas in the past financial year compared with the year before. For example, fertiliser industry received 135 per cent more gas, CNG filling stations received over 9 per cent more gas, while the power sector received 5 per cent more gas.

Titas, supplying gas with 13,391kilometres of pipeline, reported a loss of Tk 744 crore in the past financial year.

The loss rose by more than 350 per cent compared with the previous year for what the company said a rise in tax. Titas now needs to pay a minimum tax.

In the past financial year, Titas paid Tk 872 crore in tax against its distribution margin of Tk 303 crore.

Titas is a non-profit company that is allowed to charge only Tk 0.23 for distributing a cubic feet of gas.

In March 2022, Bangladesh Energy Regulatory Commission revealed in a public hearing that Titas was charging its customers far more than it should regarding its actual supply.

Then Titas managing director Md Haronur Rashid Mullah admitted at the public hearing that 10 per cent of his employees might be dishonest.

Titas has nearly 2,000 staff.​

 

[Saif]

Govt should stop theft, corruption to fish Titas out of trouble

GAS supply to households has increased despite a moratorium on fresh connections that has been in place for about a decade because of gas reserve depletion. Gas supply to industries...

www.newagebd.net

Govt should stop theft, corruption to fish Titas out of trouble
30 November, 2024, 00:00

GAS supply to households has increased despite a moratorium on fresh connections that has been in place for about a decade because of gas reserve depletion. Gas supply to industries declined by about 6 per cent in the 2024 financial year, falling from 4,075 million cubic metres to 3,842mmcm. And, the overall loss of Titas Gas Transmission and Distribution Company, which supplies gas to about three million consumers mainly in five zones in Dhaka and Mymensingh, increased by 350 per cent in the 2024 financial year in comparison with the loss the company incurred in the 2023 financial year. Titas, which supplies gas using a pipeline network spanning 13,391 kilometres, in the 2024 financial year reported Tk 7.44 billion in losses. Titas, however, says that the loss largely resulted from the company having to pay taxes, which has been made mandatory, to the state exchequer. With the tax issue having been set aside, a 2022 government analysis put the system loss at 13 per cent against the official figure of 2 per cent, which experts have always viewed with suspicion. The system loss has almost always been the same, as the general manager of the company’s finance division general manager says. The official seeks to say that it has never been as high as 13 per cent and neither has it ever been as low as 2 per cent.

Titas officials say that the system loss of the company has never been calculated and the figure has been put at 2 per cent in keeping with a decision of the energy ministry. This shows that the company has almost always resorted to the juggling of figures to cover up the theft of gas and the inefficiency of the company management. Energy experts have for long blamed Titas for its corruption, the theft of gas and inefficiency, which they believe are evident in the mismatch of the account of its system loss. The authorities have always sought to explain that the leak of gas sent through rusty and porous pipes were causing a substantial loss of gas every year. An increase by five million cubic metres, which is equivalent to more than 4.1 million tonnes of oil, in the supply of gas to non-metered households with no fresh connection having been offered for about a decade, as experts believe, is reflective of unabated gas theft through illegal connections, which are mostly done with the connivance of Titas officials and employees. The company in the 2023 financial year severed 282,000 illegal connections used by consumers of all categories — industries, households, commercial clients and captive consumers. The managing director of Titas at a hearing that the Energy Regulatory Commission held in March 2022 said that 10 per cent of Titas employees might be dishonest. The situation can be well assumed to have so far persisted as it has not improved.

The government should, therefore, earnestly stop the theft of gas, corruption within the agency and attend to issues of inefficiency to fish Titas Gas Transmission and Distribution Company out of trouble.​

 

[Saif]

PDB to give up role as sole buyer of electricity from private producers

The Bangladesh Power Development Board (PDB) will no longer be the sole buyer of electricity produced by independent power producers (IPPs), said Fouzul Kabir Khan, adviser to the Ministry of Power, Energy and Mineral Resources.

www.thedailystar.net

PDB to give up role as sole buyer of electricity from private producers

The Bangladesh Power Development Board (PDB) will no longer be the sole buyer of electricity produced by independent power producers (IPPs), said Fouzul Kabir Khan, adviser to the Ministry of Power, Energy and Mineral Resources.

He said the government is working on a merchant power plant policy, under which the PDB will purchase a minimum 10-20 percent of total power offtake from any new private plants.

Currently, the PDB is the sole buyer of electricity in the country, purchasing power from IPPs and through import and then reselling it to six distributor companies. The government also guarantees a minimum offtake. If the PDB is unable to purchase that amount, they pay IPPs for unproduced power.

However, the adviser said for any agreements made under the new policy, the private producer has to sell electricity directly to buyers or distributor companies by paying wheeling charges to use the national grid.

The adviser was addressing a seminar, titled "Energy Transition to Renewables: Role of Domestic Financial Institution", organised by the Economic Reporters Forum (ERF) at its auditorium yesterday.

About the barriers hindering the transition to renewables, Khan said one major reason was that the Awami League government set renewable energy targets but did not work sincerely towards those.

"Banks have financed many projects seeing the faces of the people, not based on the assets of investors or after checking balance sheets," he said.

"There is a myth that land scarcity poses an obstacle to setting up solar power plants, but this is not true," he said, adding that the government had acquired plenty of land that is not being utilised properly.

"We don't have any other choices but to go towards renewables," Khan stressed.

Regarding the demand to reduce import duties on items used for solar energy projects, he said they had already withdrawn advance income taxes and other duties on such products.

However, he stressed that they would emphasise local production.

"If you ask to reduce import duties on cables, how would it be logical? We have local cable manufacturers. There is nothing we cannot produce locally. If we want to be self-contained, we need to go for local manufacturing of panels, inverters, batteries and so on," he added.

While presenting the keynote paper, Gouranga Nandy, chairperson of the Centre for Environment and Participatory Research, said the country will require a staggering Tk 87,000 crore in investment over the next six years to achieve the renewable energy target to have a mix of 30 percent renewable energy in its total power generation by 2030.

He said domestic commercial banks need to scale up investment in solar and wind power projects if the country wants to meet its renewable energy goal.

Citing Bangladesh Bank data, he said domestic banks have invested around Tk 73,000 crore in green and sustainable projects in the last six years, but less than 3 percent went to renewable energy projects.

Khondaker Golam Moazzem, research director at the Centre for Policy Dialogue, said the banks usually lend on a six to eight-year repayment method, which is tough for a renewable project as it takes more time for such initiatives to turn a profit.

"It takes around 10-12 years for repayment and the banks need to ease their policy," he said.

Hasan Mehedi, chief executive of CLEAN, a co-organiser of yesterday's event, said each megawatt of installed solar power would annually save the country Tk 26.1 million worth of furnace oil imports.

He suggested Bangladesh Bank amend the green financing guidelines for local banks.

ERF President Refayet Ullah Mirdha chaired the event while City Bank's Chief Economist Ashanur Rahman, Action Aid's Abul Kalam Azad, and Campaign for Sustainable Rural Livelihoods' Ziaul Hoque Mukta also spoke.​

 

[Saif]

Energy indemnity law repealed

The government has promulgated an ordinance repealing the controversial energy law called ‘Quick enhancement of electricity and energy supply act, 2010’.

www.newagebd.net

Energy indemnity law repealed
Staff Correspondent 01 December, 2024, 00:07

The government has promulgated an ordinance repealing the controversial energy law called ‘Quick enhancement of electricity and energy supply act, 2010’.

A gazette notification was issued on Saturday regarding the promulgation of the ordinance passed on November 28. The repeal ordinance was to be immediately effective.

The gazette stated that actions taken under the 2010 law would be considered legally done while activities undergoing by the power of the law would continue and be completed as if it had not been repealed.

However, the gazette noted that the government for public interest can evaluate any activities taken under the law and take any step necessary regarding the activities.

Hours before the gazette was made available, power, energy and mineral resources adviser Muhammad Fouzul Kabir Khan had said that they had awaited the full verdict of the High Court declaring some sections of the law unconstitutional to pass the ordinance.

Fouzul was speaking at a discussion on transition to renewable energy at the Economic Reporters’ Forum on Saturday morning.

Some of the speakers at the discussion urged the government to reconsider for the sake of foreign investment before cancelling some of the renewable energy projects that signed letter of intent.

‘There is no scope of considering the matter when the law does not exist anymore,’ said the energy adviser, iterating his government’s commitment to ensure competitive bidding in all businesses.

‘Business will no longer be reserved for ministers’ relatives or those who can hand secretaries large sums. Every citizen has right to doing business,’ he said.

A small change in the Bangladesh Petroleum Corporation law regarding business tenders had opened the import of fuel to a larger number of businesses, he said, adding that it had ensured an import deal that cost 35 per cent less than deals done under the past government.

In the past 14 years until Hasina was overthrown on August 5, the Awami League government made almost all power and energy deals behind the scene under the protection of the law.

The law had handed unprecedented power to the minister of power and energy, which was Hasina herself, enabling her to award power and energy deals without any tender while ensuring that her decisions could not be challenged in any court of law.

The ‘Quick enhancement of electricity and energy supply act, 2010’, enacted on October 12 in 2010, had come to be known as the indemnity law. Its initial tenure was for two years, later to be extended four times—in 2012, the law was given two years’ extension, followed by four year’s extension awarded in 2014, three years extension in 2018, and five years extension in 2021 until 2026.

Ignoring widespread demands from energy and legal experts for throwing it out, the government, wielding the law, oversaw unabated fossil fuel expansion at exorbitant prices further facilitating corruption and inefficiency. It created the scope for channeling a huge amount of public money into private pockets by establishing a power system suffering from 50 per cent overcapacity.

The law allows awarding any companies without tender any power and energy projects, including the import of natural gas, coal, liquefied natural gas and petroleum products, as well as the extraction of mineral resources. The law also covers electricity generation, transmission and distribution projects.

In Section 9, the law states that the legality of any activity or measure or order taken or given under it cannot be challenged in any court of law.

No legal action can be taken against any employees and officials who have operated under the law or its subordinate rules or any general or special orders given under it, states Section 10 of the law, considering all actions done under it performed in good faith.

After taking permission from the minister, Subsection 2 of Section 6 states that a special committee can contact and negotiate with a limited number of parties or a single party to process any procurement or investment proposals in the power and energy sector.

The special committee used to comprise, as usually, top officials of the energy ministry and the state-owned power end energy entities.

Under the law, the government indiscriminately approved projects, increasing the installed power generation capacity to over 28,000MW in June this year from less than 5,000MW in 2009.

On November 14, the High Court invalidated two sections of the law.​

 

[Saif]

Energy sector destroyed to benefit AL cronies

The immediate-past Awami League government manipulated the power and energy sector by all means possible to benefit its cronies, opening windows for them to pocket public money and...

www.newagebd.net

Energy sector destroyed to benefit AL cronies
Emran Hossain 02 December, 2024, 00:29

The immediate-past Awami League government manipulated the power and energy sector by all means possible to benefit its cronies, opening windows for them to pocket public money and then launder it in full awareness of the consequences their actions would bring, revealed the white paper on economy submitted to the interim government on Sunday.

Using fictitious and unrealistic data, the government set ambitious economic growth targets, leading to mismatched and excessive growth in generation, transmission and distribution capacities that only helped inflate power and energy bills.

While people suffered from inflation and industries lost competitiveness as a result, the immunity provided under the special provision act of 2010 gave Awami League’s political allies and financiers to go unchallenged, the white paper said.

As of October 2024, the total dues in energy and power sector is approximately Tk 50,000 crore or $4.16 billion, excluding dues to the National Board of Revenue, against $30 billion invested between 2009 and 2022 in power sector alone, the whitepaper said.

In a conservative estimate, the whitepaper noted, $3 billion changed hands in kickbacks.

‘Many argued that these violations fostered a group of crony capitalists in the country who benefited from government patronage and were also involved in the transfer of wealth out of Bangladesh,’ read a line of the white paper prepared by a committee of 12 members.

The transmission and distribution system, the daily and seasonal load management, primary energy supply, physical infrastructure of fuel import, storage and transport—all aspects of an integrated system were neglected in the planning of the energy and power sector.

The sector was run under monopolistic state companies completely controlled by bureaucrats and Awami leaders who awarded favours to their acquaintances without facing almost any resistance from the public or the political opposition.

For instance on how the favours took place, the white paper stated that tariff fixing was not well defined. For independent power producers and rentals, the tariff was ‘negotiated’. Irrespective of investment, the tariff negotiation was done by benchmarking previously tendered tariff or other negotiated deals, allowing favourable rates, terms and conditions to political and business cronies of the Prime Minister’s Office, energy adviser, state minister, secretaries and other key officials.

‘Apart from excess profit, it is suspected that many of these projects were used for money laundering by overvaluing project costs,’ the whitepaper inferred.

The misalignment that comprised the generation capacity far exceeding actual needs and heavy import reliance for fuel had led to an excess investment of approximately $4.48 billion in the sector.

Taking advantage of guaranteed payment such as capacity charge, the capacity market was flooded with over supply through unprecedented corruption. The total capacity or rental payment to private sector from 2010–11 to 2023–24 was approximately Tk 1.15 lakh crore. The overall plant factor of the total system varied between 42 per cent and 46 per cent in the last five years.

A 65 per cent plant factor is achievable by minimising maintenance, reducing standby capacity and full supply of fuel. The rental plants that were awarded in 2010–11 made as high as 35 per cent profit against a standard 15 per cent.

Another instance of the government favour awarded to allies was the tariff given to the 200MW unsolicited Teesta solar plant of Beximco, awarded in 2016. It was granted a tariff of $0.015/kWh in 2023, whereas all other plants were offering $0.010/kWh due to reduced panel costs and much higher efficiency.

The situation was no better in the gas sector.

Since September 2020, Rupantorito Prakritik Gas Company Limited bought 74 LNG cargos through 100 tenders through 12 companies though 23 companies were enlisted. Out of the 12 companies, three companies received orders for 59 cargos, indicating preferential treatment or collusion. Even a few cents overpricing in the unit gas price would net millions of dollars for the unscrupulous parties, the whitepaper said.

Until August 2024, 69 cargos of 225.4 million MMBTU LNG were imported from the spot market at an average cost of $16/MMBTU totalling $3.6 billion. A 50 cent kickback would net more than $100 million.

Under Hasina’s leadership, the energy adviser, state minister Nasrul Hamid Bipu, and the power division were the conduit of corruption. Every single deal from a small solar plant to a mega project like Adani was approved by the Prime Minister’s Office.

Now 65 per cent primary energy needs to be imported at an annual cost of $10 billion, and by 2030 this will rise to $20 billion.

The whitepaper called the Rooppur nuclear power plant a misadventure. In comparison, India’s nuclear power unit cost is $3,350/kWe, while the unit cost for Rooppur stands at $5,500/kWe. The national grid is not even ready to handle nuclear power.

The white paper advised that the government to explore renewable energy seriously through 2030 to relieve some of the burden. Gas exploration has also been emphasised to bring down energy costs.​

 

[Saif]

Increasing renewable energy use -- a key imperative for Bangladesh

Greater availability of energy promotes economic development and facilitates meeting diverse needs associated with the manufacturing industry and agriculture. It also provides a better lifestyle for citizens. These factors lead countries to seek additional energy from hydrocarbons-- coal, oil and n

thefinancialexpress.com.bd

Increasing renewable energy use -- a key imperative for Bangladesh
Muhammad Zamir
Published :
Dec 01, 2024 23:29
Updated :
Dec 01, 2024 23:29

This photo taken on February 17, 2024 shows a 50 MW Chinese-built photovoltaic power plant in Mymensingh District, Bangladesh Photo : Xinhua

Greater availability of energy promotes economic development and facilitates meeting diverse needs associated with the manufacturing industry and agriculture. It also provides a better lifestyle for citizens. These factors lead countries to seek additional energy from hydrocarbons-- coal, oil and natural gas. However, such a dynamic has led to the assumption that greater use of hydrocarbons and fossil fuels is contributing to global warming and to climate variability. This has led the world to seek alternatives through the creation and use of renewable energy - in the form of solar energy, bio-gas, bio-fuel and wind energy.

This functional approach regarding global warming has also led to the recognition that Bangladesh will be one of the most severely affected countries and there is a need for our relevant authorities to undertake necessary measures directed towards adaptation and mitigation. The civil society has also been monitoring how Bangladesh can play a more interactive role within the evolving paradigm envisioned through the Framework Convention on Climate Change (UNFCCC).

The urgency of such a dynamic has been felt since the 24th Conference of Parties (COP24) that was held in Katowice, Poland. According to environmentalists this was seen as a significant factor that needs to be pursued very carefully and given attention by all relevant authorities. This aspect has led scientists to describe that this has raised the need for environmentalists to ascertain as to whether measures are also being taken to ensure conservation of biodiversity as well as protection of forestry.

It needs to be stated that the use of renewable energy in different forms has increased throughout the country, particularly in the case of our rural regions. Solar power through the use of solar panels has now become part of the functional matrix in these areas.

Recent estimates have mentioned that solar panels are now being used in more than three million homes. This is facilitating students to continue their studies after evening, helping families to watch television, helping to recharge nearly 100 million mobile phone users within our rural parameters, generating required power for water pumps necessary for lifting underground water for the purpose of irrigation and recharge conveyances that run on batteries. In addition, there is growing awareness and use of biogas as bio-fuel in rural kitchens.

These factors are contributing towards the socio-economic growth in our economy. It is this awareness that also persuaded our relevant authorities to try and boost the use of solar power not only in the rural but also in the urban areas.

Measures were taken to boost solar power so that its contribution within the energy platform exceeds 10 per cent of the total power generation capacity. Attention was also directed to providing approval to 19 on-grid solar power parks being created by different companies in the private sector. However, the private sector has been pointing out that they are facing one big challenge-- acquiring land being used for cultivation and agricultural purposes. They have drawn attention to the fact that a solar project with power generation capacity of 100 MW needs about 300 acres of land.

Nevertheless, it is being felt that the efficiency in generating solar power will increase in the future through new technological advances.

No discussion on use of renewable energy will, however, be complete without reference to the potential use of wind power to generate energy. This is particularly true in the case of Bangladesh.

A recent study carried out by the US Department of Energy's National Renewable Energy Laboratory has indicated that the coastal belt of Bangladesh holds wind power prospects. A comprehensive wind mapping exercise has demonstrated that the average wind flow in nine places is between 5.0 to 6.0 metres per second. This was good news for Bangladesh as, for commercial production; one needs wind speed of between 2.3 to 2.5 metres per second.

It needs to be mentioned here that electricity from onshore wind energy, according to German energy specialists, is nowadays one of the most affordable forms of renewable energy generation. The yields attainable in this respect, according to experts, depend on good energy sites, the impact of tower height and the size of rotors. In this context one needs to refer to a US study carried out on behalf of the Power Division some time ago. It found that the coastal areas of Khulna, Barishal and Chattogram Divisions have more than 6 meters per second available wind speed at the 120-meter height- sufficient for generating electricity from wind turbines. It has also come out from the mapping survey that, for wind speeds of 5.75 to 7.75 m/s, there are more than 20,000 square kilometers of land with a gross wind potential of more than 30,000 MW. This means that if we can exploit this proven potential, Bangladesh can reach the 10 per cent renewable energy target agreed upon in 2021. Unfortunately, delays in taking decisions and arranging for funds have affected this outreach.

At present some wind turbines with 3 MW capacities have been in operation for the last few years in coastal Kutubdia. However, because the centre-point of the blades are only 18 meters above the ground, they are yet to run up to full capacity. The wind turbine in Feni, with the blades centre-point 50 meters above the ground has, however, generated power reasonably well.

The Sustainable and Renewable Energy Development Authority (SREDA) has correctly formed a working Committee in this regard. Environmental engineers are trying to also set up towers to collect site-specific data in different coastal areas including Kuakata and Patuakhali.

These aspects indicate that we have several challenges ahead of us. However, we need to move forward to further our strategic interests and overcome our energy challenges. It will not only need bipartisan participation between the public and the private sectors but also active engagement from foreign investors.

Renewable energy will not only ease dependency on foreign fuel, but can have a host of positive social effects and help us move into the green belt.

It has been recently reported that the Centre for Policy Dialogue (CPD) has suggested for scrapping a total of 42 power plant projects on August 27, including 37 renewables plants with a combined capacity of around 3,102 megawatts (MW). Of them, 30 plants were to be set up under joint ventures or build-own-operate (BOO) initiatives by investors from 15 different countries.

It has also been advocated that necessary measures need to be undertaken for attracting Chinese investment in renewable projects.

Khondaker Golam Moazzem, research director of the CPD, while presenting the keynote paper also pointed out that "The Power Development Board (PDB) is now preparing to issue tenders for the development of 10 grid-connected solar power plants in the private sector, each with a capacity of 50 MW, totalling 500 MW. Chinese investors now have a particularly good opportunity to invest as they are known to offer more competitive prices than other foreign or local investors."

In this regard attention has also been drawn to the fact that nearly US Dollar 39.74 billion in global funds is available for renewable energy investments in Bangladesh, which can be accessed in the form of loans, equity, technical assistance and financial aid. According to CPD, Chinese investors prefer using funds from Chinese financial institutions such as the China Development Bank (CDB), Asian Infrastructure Investment Bank (AIIB), Exim Bank of China and Silk Road Fund. It has also been clarified that Chinese investors usually do not engage in the planning phase of renewable energy projects. They prefer local private firms or the government to plan projects and then bid for investment and equipment supply. This leads one to believe that if Chinese companies get involved, local investors can apply for financing from Chinese institutions.

However, Gan Peng, chairman of Chint Solar (Bangladesh) Co Ltd, expressed concern about higher tariffs compared to neighbouring countries. This appears to have prompted Shafiqul Alam, lead energy analyst at the Institute for Energy Economics and Financial Analysis, to call on the interim government to reduce import duties to encourage foreign investors. Two other factors have also been suggested by the CPD - (a) that in view of Bangladesh's foreign reserve crisis, the Bangladesh Bank should establish a dedicated local currency conversion channel for renewable energy investors, ensuring timely conversion of returns from BDT to USD, and (b) that the government should continue pursuing China's proposed loan assistance of US Dollar 5 billion in Chinese currency to mitigate foreign reserve pressures and further strengthen investor confidence.

In addition, it has been underlined that tax incentives, subsidies, and a favourable regulatory environment for green bond markets and venture capital investments must be provided. Simplifying administrative processes and reducing bureaucratic barriers might also lower the cost of accessing finance. This will make the investment environment more attractive. It has also been suggested that Bangladesh Bank and local private banks should establish state-backed green banks or dedicated renewable energy funds to offer lower-cost financing and accelerate renewable energy projects.

Muhammad Zamir, a former Ambassador, is an analyst specialized in foreign affairs, right to information and good governance.​

 

[Saif]

Energy projects under AL should be carefully examined

THE committee to investigate economic corruption under the deposed Awami League government in its report submitted to the interim government on December 1 termed the energy sector as a ‘conduit of corruption’. The findings of the committee confirm the observation of economists, energy experts...

www.newagebd.net

Energy projects under AL should be carefully examined
03 December, 2024, 00:00

THE committee to investigate economic corruption under the deposed Awami League government in its report submitted to the interim government on December 1 termed the energy sector as a ‘conduit of corruption’. The findings of the committee confirm the observation of economists, energy experts, and anti-corruption watchdogs, who have all along urged the government to reform the energy sector and talked about how arbitrary tariff fixing, overhauling project costs, heavy import reliance, and the guaranteed payment against idle power were bleeding the economy. With an investment of $30 billion in power generation since 2010, at least $3 billion changed hands as kickbacks, and about 10 per cent of the project cost was spent as commission. Irrespective of investment, the tariff negotiation was done by benchmarking previously tendered tariffs or other negotiated deals, allowing favourable rates, terms and conditions to political and business cronies. Meanwhile, people suffered from inflation, and industries lost competitiveness, and 65 per cent of the country’s primary energy still needs to be imported at an annual cost of $10 billion, and by 2030 this will rise to $20 billion.

The power and energy sector in Bangladesh has become a hub for corruption, largely due to a lack of accountability stemming from the Quick Enhancement of Electricity and Energy Supply Act, 2010, which allowed immunity to both government officials and political leaders. A gazette notification was issued on November 30, which repealed the act and stated that actions taken under the 2010 law would be considered legally done while activities undergoing by the power of the law would continue and be completed as if it had not been repealed. The AL party members, lobbyists, private businesses, and independent power producers became major stakeholders in this sector, and the indemnity law facilitated the bypassing of due processes. For example, the White Paper termed the Rooppur Nuclear Power Plant as a misadventure and overpriced, as the unit cost of power produced by the plant stands at $5,500/kWe, which is much higher than a similar power plant in India. With the same kind of investment, 6,000 to 8,000 MW of renewable, gas, or coal power plants could be installed. The cancellation of the act is a major step towards reforming a sector that was designed for corruption, but the government needs to revisit the decision to consider all action taken under the act as ‘legally done,’ because it allows activities under some unfair and environmentally hazardous deal to continue.

The government should, under the circumstances, consider revisiting the business and trade agreements secured through political favouritism, nepotism and other unfair means, evading due process under the recently repealed energy sector indemnity law, and bring all errant government officials and others involved in the illicit transfer of public money to private pockets.​

 

[Saif]

NBR grants 15-year tax exemption for new renewable plants

With the objective of facilitating clean energy generation, the National Board of Revenue (NBR) has granted a 15-year tax benefit for investments to establish renewable energy-based power facilities..The revenue authority issued a circular in this regard on November 27, saying it would exe

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NBR grants 15-year tax exemption for new renewable plants

With the objective of facilitating clean energy generation, the National Board of Revenue (NBR) has granted a 15-year tax benefit for investments to establish renewable energy-based power facilities.

The revenue authority issued a circular in this regard on November 27, saying it would exempt all taxes on income from renewable energy projects if the plants start commercial production between July 1 next year and June 30, 2030.

A full tax exemption will be applicable for the first 10 years after starting production, according to the circular.

Half of the income will be tax-exempt for the following three years while 25 percent will be exempt for two years thereafter, the circular added.

The producer or the company will require a no-objection certificate from the Ministry of Power, Energy and Mineral Resources to avail of the benefit, it added.

Officials said the tax benefit was offered in line with a request from the Power Division to encourage private investment in clean energy ventures and cut dependence on fossil fuel-based electricity.

The NBR has previously offered tax breaks for privately-run power plants, except for coal-fired ones.

In June 2023, it provided a 12-year extension to a tax holiday on the income of private power plants, except for coal-fired ones, that started electricity generation before June 30, 2024.

On August 27 this year, the interim government cancelled 42 power plant projects, including 37 renewable facilities, with a combined capacity of around 3,102 megawatts (MW).

It announced that it would float tenders against all of those power plants, aiming to reduce tariffs.

Currently, the country has 893 MW of power generation capacity from renewable sources, accounting for about 3 percent of total capacity.​

 

[Saif]

Govt yet to decide on raising energy prices

The interim government is yet to decide whether energy prices will be increased, said Muhammad Fouzul Kabir Khan, adviser to the Ministry of Power, Energy and Mineral Resources.

www.thedailystar.net

Govt yet to decide on raising energy prices

Photo: Collected

The interim government is yet to decide whether energy prices will be increased, said Muhammad Fouzul Kabir Khan, adviser to the Ministry of Power, Energy and Mineral Resources.

Khan said he was not the authority to raise gas price and proposals have been sent to Bangladesh Energy Regulatory Commission (BERC) for further consultation, while views must also be availed from industry people.

This is a conflicting issue because the industries need gas, but at the same time the government also needs to reduce the subsidy burden, he said.

The adviser was responding to a query of a journalist at a roundtable on "FDI Ecosystem to Boost Sustainable Economic Growth" organised by the American Chamber of Commerce in Bangladesh (AmCham) at The Westin Dhaka on Monday.

Businesspeople from both America and Bangladesh, government high ups, diplomats, leaders of different business chambers and trade bodies and experts attended the roundtable.

The adviser said he was not the authority to raise gas price and proposals have been sent to the BERC for further consultation

The industry people, especially spinning mills, have been complaining over the last few years about inadequate gas supply severely affecting production, causing most to run at just 50 percent capacity.

Bangladesh has been having to import liquefied natural gas (LNG) as local supplies of natural gas can hardly meet the demand of industrial units.

There is no easy solution when it comes to gas prices and supplies may not improve in the short- term, but there are plans to import more LNG to meet industrial demand, said Khan.

Many suggest increasing supplies to industrial units by limiting that to refuelling stations and homes, but that will put transportation and cooking in difficulties, he said.

The LNG is imported at Tk 70 per unit and sold at Tk 30 to industries, for which Tk 30,000 crore has to be paid a year in power sector subsidies while Tk 20,000 crore in gas supply, he said.

Some bottlenecks within the government must be removed to attract more foreign direct investment (FDI), said Lutfey Siddiqi, the chief adviser's special envoy on international affairs.

He said they were working with various ministries and regulatory bodies to develop a culture that supports foreign investment, not as regulators, but as facilitators, according to a statement from AmCham.

The statement quoted both Khan and Siddiqi as saying that the business community would soon be able to avail a better One Stop Service (OSS) portal of Bangladesh Investment Development Authority, which would help resolve current grievances.

The duo encouraged business to continue to share their challenges and suggestions to foster a more conducive environment for FDI.

Eric Walker, vice-president of AmCham and president of Chevron, Peter D Haas, strategic adviser at Excelerate Energy and former US ambassador to Bangladesh, and Md Habibur Rahman Bhuiyan, country manager of Excelerate Bangladesh, also spoke.​

 

[Saif]

Renewable energy sector gets a boost

Much to the delight of the countrymen, the government has started working to bring necessary reform to the energy sector as is evident from the annulment of the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010 that has earned the notoriety of being a 'black law' for g

thefinancialexpress.com.bd

Renewable energy sector gets a boost
Sarker Nazrul Islam
Published :
Dec 03, 2024 23:32
Updated :
Dec 03, 2024 23:32

Much to the delight of the countrymen, the government has started working to bring necessary reform to the energy sector as is evident from the annulment of the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010 that has earned the notoriety of being a 'black law' for giving immunity to deals suspect of gross financial anomalies under it. It may be remembered that the High Court on November 14 declared the immunity provision (Section 9) of the law 'illegal and unconstitutional'.

According to an FE report, the interim government has also unveiled a plan that includes transition from the indemnified Independent Power Producers law that allows only private-to-public electricity business to a mechanism called merchant power plant policy that provides for business-to-business electricity trade. This transition is expected to boost the highly critical development of renewable energy sector.

It is known to all that the greenhouse gases emitted from burning of fossil fuels are responsible for global warming and its adverse impacts on earth's climatic condition. Although green energy from renewable sources is universally recognised as a way out of global warming, the Hasina government had a different idea. It gave lip service to green energy mainly for its self-aggrandisement. This is why instead of 10 per cent of power-mix target by 2025, Bangladesh has achieved a meagre 3.2 per cent installed capacity and 1.8 per cent generation capacity. These prove the past government's lack of seriousness about renewable energy.

Power, energy and mineral resources adviser of the interim government Muhammad Fouzul Kabir Khan revealed on Saturday that the government is working out a new renewable-energy policy with provisions for helping the sector flourish. Nullifying the previous government's false claim about shortage of land and fund, the energy adviser informed that the policy in the offing will not only facilitate funding but also provide vital infrastructures like installation sites and connection to the transmission line. Private renewable energy producers will be able to use these facilities in exchange for a minimum charge. Under the policy of business-to-business electricity trade, the producers will have to find their own customers while the government will purchase a minimum 10-20 per cent of power from such plants. A salient feature of the coming policy is that it will bring an end to the previous government's informal loan approval during lunches or dinners without going through rigorous evaluation and at the same time will ensure offering renewable power generation contract through open tender so that genuine businessmen get the opportunity without having to grease the hands of the high-ups. Meanwhile, as an additional encouragement, the tax exemption for renewable energy-based power plants has been extended up to 15 years. According to the FE report, the power plants starting commercial production between July 1, 2025 and June 30, 2035 will be eligible for the tax benefits.

However, to achieve the target of 30 per cent renewable energy by 2030, the key challenge will be mobilisation of finance amounting to Tk876.57 billion for the next six years. But stakeholders consider mobilisation of fund possible through what they term a comprehensive mechanism including budget allocation, tax exemption and long-term soft loan from public and private financial institutions. Banks' reluctance to providing fund for the green energy promotion should also be removed to facilitate development of this important sector.​

 

[Saif]

Reliance on captive power weakens PDB

Captive power, which the industrial sector in Bangladesh leans on heavily, has been weakening the financial health of the Bangladesh Power Development Board (PDB) by costing it customers that pay the highest tariffs.

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Reliance on captive power weakens PDB

Captive power, which the industrial sector in Bangladesh leans on heavily, has been weakening the financial health of the Bangladesh Power Development Board (PDB) by costing it customers that pay the highest tariffs.

Currently, gas-fired captive plants -- which industries use to generate power by themselves -- produce more than 3,000 megawatts (MW) of power by using around 100 million cubic feet of gas a day.

If the PDB could shift half of the captive power users to the national grid, it would be able to earn Tk 3,414 crore a year, found the latest study by the Institute for Energy Economics and Financial Analysis (IEEFA).

The report, titled "Fixing Bangladesh's Power Sector", said the PDB can offset annual losses of $1.2 billion or Tk 13,800 crore, provided to the PDB in the form of government subsidies, through electricity sector reforms targeted at addressing core problems, including the reduction of captive power usage.

"In absence of reliable grid electricity, the tepid demand growth in the industrial sector [in grid] is largely because of its excessive dependence on captive power," the report said, adding that load shedding and sudden grid power outages disrupt industrial production, making captive generators popular.

Despite a drastic 87.5 percent increase in gas tariffs in February 2023 and a modest increase of 2.5 percent in February 2024, industries continue to find electricity from captive systems more competitive than the grid, the report said.

Based on the efficiency of plants, captives can produce electricity at a cost of between Tk 1.3 per kilowatt-hour (kWh) and Tk 3.53 per kWh less than grid electricity prices.

"The strong economics make industries heavily dependent on captive systems, resulting in lacklustre demand growth in grid power," the IEEFA said.

Currently, the national grid has a capacity of 27,086MW power generation capacity, boasting a 57.5 percent reserve margin compared to peak grid demand.

The IEEFA recommended reducing the reserve margin to a standard level of 20 percent in a bid to cut the burden of capacity charges -- a charge that the PDB must pay power producers regardless of whether plants produce.

"The surplus is a principal factor in the PDB's woes as it pays capacity charges to idle power plants, which increases average power generation cost," it said.

In addition, the study identified the inefficient use of power plants, excessive usage of expensive fuel, high transmission-distribution losses and load-shedding due to weak financial health as the main reasons behind the PDB's financial distress.

From July 2023 to May 2024, oil-fired plants contributed 10.9 percent to grid power generation while incurring 32 percent of the total fuel cost, the report said. Within the same period of time, Bangladesh experienced load-shedding on at least 23 days a month, it added.

In the past five fiscal years, the PDB's total annual expenditure increased 2.6-fold against revenue growth of 1.8 times, prompting the government to allocate a combined subsidy of Tk 126,700 crore to ensure power supply and keep the economy afloat.

Yet, the PDB recorded a cumulative loss of Tk 23,642 crore in these years.

The IEEFA suggested Bangladesh fix a realistic power demand projection by factoring in energy efficiency gains and demand shift measures.

The IEEFA's projection by factoring in such variables shows that the country's peak power demand in 2030 is likely to be 25,834MW. Meanwhile, the Integrated Energy and Power Master Plan's (IEPMP) forecast, made in July 2023, estimated it at between 27,138MW and 29,156MW.

The IEEFA roadmap also suggested halting investment in fossil fuel-based power and limiting the use of oil-fired plants to 5 percent of total power generation.

If these steps are taken along with the anticipated 4,500MW of fossil-fuel-based power plant retirements by 2030, it is expected that Bangladesh will have a system capacity of 35,239MW by that time, the report said.

"A system capacity of 35,239MW will help Bangladesh meet the peak demand of 25,834MW by 2030. It will bring the reserve margin down to 20 percent, which is comparable to countries like India and Vietnam," said Shafiqul Alam, IEEFA's lead energy analyst for Bangladesh and the author of the study.

"The window to make Bangladesh's power sector sustainable is rapidly narrowing, but there is still time to get the sector back on track by following a suitable roadmap," he added.​

 

[Saif]

Gas crisis: What's the way out?

Last Thursday, a group of workers from Mahmud Jeans mercilessly assaulted the factory's deputy managing director, Rafee Mahmud, who is also the son of the factory owner and responsible for overall management of the factory. A spokesperson of Bangladesh Garment Manufacturers and Exporters Associatio

thefinancialexpress.com.bd

Gas crisis: What's the way out?
Atiqul Kabir Tuhin
Published :
Dec 05, 2024 00:34
Updated :
Dec 05, 2024 00:34

Last Thursday, a group of workers from Mahmud Jeans mercilessly assaulted the factory's deputy managing director, Rafee Mahmud, who is also the son of the factory owner and responsible for overall management of the factory. A spokesperson of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) claimed that the factory had been forced to cease operations due to a severe gas crisis. Despite this, the management had managed to clear the workers' salaries before shutting its doors. However, a group of workers began protesting, demanding the service benefits they were entitled to receive after the layoff.

Being financially distressed, the DMD was negotiating to sell off his property in Banani area to clear the outstanding payments of the workers in line with a tripartite agreement. Unfortunately, the angry mob allegedly refused to give the required time for this process and brutally attacked the DMD. While the mob attack is strongly condemnable and the perpetrators need to be booked, this incident signifies the devastating consequence of gas crisis for factory owners, workers, and the national economy as a whole.

Bangladesh has been grappling with a severe gas crisis for the past two years, driven by dwindling domestic production and an unstable supply of imported Liquefied Natural Gas (LNG). The country's daily demand for natural gas stands at approximately 4,000 million cubic feet (mmcfd) per day. However, domestic production has been steadily declining, currently standing at only about 2,000 mmcfd per day. To mitigate this shortfall, the government imports LNG through two Floating Storage and Re-gasification Units (FSRUs) at Maheshkhali, which collectively supply around 1,000 mmcfd to the national grid. Even with this imported supply, the total daily gas supply stands at about 3,000 mmcfd, leaving a significant deficit of around 1,000 mmcfd.

This shortfall has severely impacted both household and commercial consumers, with the industrial sector bearing the brunt of the crisis. Industries such as textiles, ceramics, and steel, all heavily reliant on uninterrupted gas supply, are struggling to sustain operations. To highlight the gravity of the ongoing energy crisis, Bangladesh Chamber of Industries (BCI) recently organised a seminar where a keynote paper presented by Prof. Dr. Ijaz Hossain, a former professor of BUET, revealed a terrible cost of gas crisis on industries.

According to his findings, gas crisis has led to a production decline in garment sector by 30-35 per cent, in steel factories by 25-30 per cent, and in ceramic factories by 50 per cent. Moreover, factories' increased reliance on diesel generators has significantly raised operational costs, posing severe challenges for small-scale industries, particularly in rural areas. As a result, approximately 40 per cent of these small industries are reportedly on the verge of closure.

Even though industries are badly affected and industrialists are pleading with the government to solve the problem earnestly, there appears to be no immediate end to their woes. While LNG provides a costly short-term solution, the interim government, unlike the previous Awami League administration, appears reluctant to increase the country's reliance on energy imports, primarily due to high import costs and vulnerability to global market fluctuations. It has already cancelled MOUs signed by the previous Hasina administration for establishing two additional FSRU regasification units. Instead, the current government is prioritising the drilling of new gas fields and expanding renewable energy sources. While these measures appear promising on paper, they require a time-consuming process and cannot address the current energy shortfall. The energy advisor states that the situation is unlikely to improve until any new gas field is developed. But the question is, can industries afford to wait that long?

It is, therefore, imperative for the government to immediately look at some short term options to meet industrial demand for gas.

At the BCI seminar, business leaders categorically told the energy advisor, "Give us gas, and we will give you dollars." Therefore, until an alternative is available, importing adequate LNG and increasing LNG storage and supply capacity should not be taken off the table.

At the same time, increasing extraction capacity from existing gas fields by adopting advanced technology can offer some relief. As reports from Petrobangla and the Ministry of Power, Energy, and Mineral Resources show, extraction from local gas fields is far below their actual capacity. For instance, the Bangladesh Gas Field Company, despite having a capacity of 815 million cubic feet per day (mmcfd), is currently producing only 555 mmcfd. Similar shortfalls are evident in the Sylhet Gas Field Company and Bapex.

According to Dr. Badrul Imam, an honorary professor at the Department of Geology, University of Dhaka, Petrobangla had engaged Schlumberger to identify ways to boost gas production from existing fields. After carrying out their work for a year or so, Slamburger found that production in the country's gas fields was low due to technical weaknesses. The company recommended certain simple technical management in these fields, basically involving certain repairs, adjustments and addition of certain equipment (such as tubing with a wider diameter), etc. But Petrobangla did not undertake any operations to carry out these recommendations. He thinks the authorities can optimise gas production from local gas fields by adopting advanced technologies and best practices.

Besides, it is indeed an irony that when the country is grappling with severe gas crisis, a massive 2.5 trillion cubic feet (tcf) of natural gas reserve is lying unused in Bhola. It cannot be utilised because of lack of pipeline. If measures can be taken to bring gas from the island district in the form of compressed natural gas (CNG) or liquefied natural gas (LNG), gas shortages in industries can be alleviated to some extent.

The gas crisis is not merely an energy issue; it threatens the viability of industries, livelihoods of workers and the nation's economic growth. The government must act swiftly to implement both short and long-term solutions. Failure to address the crisis could result in more factory closures, job losses, and a significant setback to the country's growth momentum. The lessons from Mahmud Jeans should serve as a wake-up call to prioritise industrial demand for energy before the situation worsens further.​

 

[Saif]

Uninterrupted LNG supply to cost Tk 50b in state subsidy soon

Uninterrupted supply of import-dependent liquefied natural gas (LNG) until this month-end will cost some Tk 50 billion in state subsidy as Petrobangla seeks the money before long, officials say. The amount is in addition to Tk 20 billion given to the state-run gas-and-oil supplier until last

thefinancialexpress.com.bd

Uninterrupted LNG supply to cost Tk 50b in state subsidy soon
Petrobangla airs fear of fuel crunch if fund not footed in time for Dec
Syful Islam
Published :
Dec 07, 2024 00:02
Updated :
Dec 07, 2024 00:02

Uninterrupted supply of import-dependent liquefied natural gas (LNG) until this month-end will cost some Tk 50 billion in state subsidy as Petrobangla seeks the money before long, officials say.

The amount is in addition to Tk 20 billion given to the state-run gas-and-oil supplier until last month.

In the last fiscal year, the government gave Tk 60 billion as LNG-import subsidy to the Oil, Gas and Mineral Corporation or Petrobangla.

The Petrobangla authority in a letter to the Energy and Mineral Resources Division, which was forwarded to the Finance Division late last month, estimated that the shortage of funds to import required LNG until December 30 will stand at Tk 57.82 billion.

"Payment of LNG-cargo-import cost will face uncertainly unless the government pays subsidy," the letter reads-incidentally at a time when the post-uprising interim government gasps under accumulated financial burdens of yesteryears.

The corporation further mentions that unless the payment invoices can be paid in time, there is a possibility that the suppliers under long-term agreement can stop delivering the liquid gas.

Moreover, the master sales and purchase agreement (MSPA)-signing companies, which supply LNG from spot market, may feel discouraged from participating in bidding if payment is disrupted, it has said in the alert note.

The suppliers may also encash standby letters of credit if invoices cannot be paid off in time. Also, if payment is delayed, there is an obligation of paying interest at the rate of LIBOR-plus 5.0 per cent which is also quarterly compounded.

According to Petrobangla officials, the agency incurred Tk 249.81 billion worth of financial loss in the fiscal year 2021-22 for having to fix LNG-selling price lower than the import cost. Moreover, due to gas-price hike on the international market by 80 per cent in February last year it incurred loss worth Tk 42.87 billion in fiscal year 2022-23.

In that two fiscal years the state agency faced a total loss of Tk 292.68 billion which it met by spending money from energy-security fund, government subsidy, gas-development fund, and retaining earnings of companies under it.

Until November 18 this year, the corporation had unpaid invoices against eight LNG cargoes and two floating storage and regasification units (FSRU) totaling $266.70 million or Tk 32.80 billion, for which it already asked the banks to make payment.

Moreover, it owed some Tk 12.31 billion to the International Islamic Trade Finance Corporation (ITFC) on account of loan installment.

While the total debt was Tk 45.11 billion, the Petrobangla had a balance of Tk 15.78 billion in its bank account, it mentions in the letter.

Contacted, a finance-division official told the FE that the subsidy requirement of Petrobangla has been growing every year.

"We are under tremendous pressure from the Intentional Monetary Fund to lessen subsidy and incentives while Petrobangla's demand is growing constantly," he said about what feels like to be on the horns of a dilemma.


The official notes that public-sector expenditure has to be lowered by any means as revenue earnings not rising as expected.​

 

[Saif]

Numerous IOCs upbeat about bay gas exploration

Hopes run high about a good response from international oil companies (IOCs) in bidding for bay gas exploration as the deadline for tendering in the offshore bidding round ends tomorrow (Monday). "We are hoping that a good number of IOCs will submit bids for oil-and-gas exploration in the Bay of

thefinancialexpress.com.bd

Numerous IOCs upbeat about bay gas exploration
M Azizur Rahman
Published :
Dec 08, 2024 00:42
Updated :
Dec 08, 2024 00:42

Hopes run high about a good response from international oil companies (IOCs) in bidding for bay gas exploration as the deadline for tendering in the offshore bidding round ends tomorrow (Monday).

"We are hoping that a good number of IOCs will submit bids for oil-and-gas exploration in the Bay of Bengal as many of them purchased bid documents and kept enquiring on it for long," a senior Petrobangla official told the FE Saturday.

He said the previous deadline for submitting bids, September 9, was extended up till December 9 following requests from some potential IOCs.

Petrobangla floated the international tender on March 10 with a total of 24 offshore blocks -- 15 in deep sea and nine in shallow sea - on offer for exploration lease.

The bidding process is launched fronting the banner 'Oil and Natural Gas Exploration Under Bangladesh Offshore Bidding Round 2024'.

The energy corporation also held a promotional seminar on May 8 wherein more than a dozen international oil companies took part.

A good number of them, including reputed ones from the U.S., Europe and Asian countries, have shown interest in joining the bidding, he said.

The 15 deep-sea blocks on offer are DS-08, DS-09, DS-10, DS-11, DS-12, DS-13, DS-14, DS-15, DS-16, DS-17, DS-18, DS-19, DS-20, DS-21 and DS-22.

The nine shallow-water blocks are SS-01, SS-02, SS-03, SS-05, SS-06, SS-07, SS-08, SS-10 and SS-11.

Production-sharing contracts (PSCs) will be inked with the IOCs in line with the newly approved model PSC through which the terms have been made 'lucrative' with more sweeteners for the contractors.

"The IOCs will not be required to submit any signature bond," he said, adding that they will not have to pay any royalty either.

"No import duties will be charged from the firms for import of machinery and equipment necessary for exploration and drilling," the official said about baits.

Petrobangla will bear the income-tax liability on behalf of the IOCs.

The gas price for the offered blocks will be tagged to the price of brent crude on the international market so that the gas price becomes flexible in line with the movement of global oil-price indices.

The gas price will be 10 per cent of Brent Crude, meaning if the Brent crude is traded at $85 per barrel, the gas price would be $8.5 per million British thermal unit (MMBTu).

The pricing modalities will be same for both shallow and deep-water blocks. Petrobangla will purchase the explored IOC gas at the Brent crude-linked rate, which will have no capping.

Capping-free price means Bangladesh will have to purchase the gas, to be extracted by the contractors, at a rate as high as it goes or as low as it slips. The foreign firms will also have the liberty to export natural gas after meeting domestic demand following Petrobangla's first right of refusal.

They will be able to repatriate full profit, too.

There will be provision for assignment of interest and share-transfer and 100-percent cost recovery with an annual cap of 75 per cent.

They will, however, have to provide bank guarantees for performance of the minimum exploration programme.

Meanwhile, contractors must have a mandatory work programme consisting of a 2D seismic survey and the mandatory purchase of available 2D multi-client seismic data to get relief from mandatory work obligations proportionately.

They will have minimum work obligations in each of the exploration periods of nine years, of which the initial-study phase will last four years, then an exploration phase of two years and another three years for subsequent exploration.

Over the last decade Bangladesh had launched only one bidding round - in 2017 - and that was only for three deep-water blocks, according to Petrobangla data.

Although Posco-Daewoo was awarded one deep-water block - DS-12 - after the bidding, the South Korean oil-and-gas -exploration company left the block in 2020 after carrying out a 2D seismic survey. Previously Petrobangla had floated a bidding round in 2012, through which three shallow-water blocks and one deep-water block were awarded to contractors.

Currently, four IOCs have active PSCs, either individually or under joint venture, to explore three shallow-water blocks in Bangladesh.

U.S. oil-major Chevron is active in exploring and producing natural gas in three gas fields under onshore blocks 12, 13 and 14. Singapore's KrisEnergy is producing natural gas from the Bangura field under Block 9. ONGC Videsh and Oil India are jointly exploring shallow -water blocks SS-04 and SS-09.​

 

[Saif]

A welcome step towards renewable energy

The government offering entrepreneurs land and interconnection to the national grid for a rapid expansion of solar energy is welcome. The Power Development Board is also scheduled to, as the energy adviser announced on December 7, begin open calls for 40 renewable energy projects, mostly for...

www.newagebd.net

A welcome step towards renewable energy
09 December, 2024, 00:00

The government offering entrepreneurs land and interconnection to the national grid for a rapid expansion of solar energy is welcome. The Power Development Board is also scheduled to, as the energy adviser announced on December 7, begin open calls for 40 renewable energy projects, mostly for solar power. The Awami League government awarded the projects without bidding and the interim government has cancelled the earlier awards to go for an open invitation. The initiative, if properly implemented and followed by more such offers and facilitation, can help to produce a significant portion of the energy from renewable sources. An overwhelming dependence on imported fossil fuels for power generation and the absence of initiatives to promote cost-competitive renewable energy have, as experts say, held back the transition to renewable energy. Successive governments, especially the deposed Awami League government, came up with a number of road maps and promises to project the transition from fossil fuel to renewable energy in 5–15 years. But when it came to investment and work, there was a pronounced disinclination. This is what was problematic and worrying. All talks about a transition to renewable energy appear to have been nothing but rhetoric.

A report by the United States-based Institute for Energy Economics and Financial Analysis says that Bangladesh did not receive any significant renewable energy investment in 2023. As a signatory to the Paris agreement, Bangladesh is meant to generate 100 per cent electricity from renewable sources by 2050 as it has pledged in the Climate Vulnerable Forum. The government spoke of generating 5 per cent of power from renewables by 2015 and 10 per cent by 2020. But it could not meet the target. Studies show that the investment gap to achieve even the minimum target of power from renewables is huge. The share in the generation of solar and wind power, in fact, declined to 0.77 per cent in 2022 from 0.93 per cent in 2015, as the Berlin-based think tank Agora Energiewende says. The lack of promotion and the placement of barriers to rooftop solar systems have also held back the potential of solar power. An earlier Institute for Energy Economics and Financial Analysis report, published in December 2023, says that Bangladesh lags way behind its neighbours in promoting rooftop solar power and 5,000MW can be produced using only the roofs of industries.

In such a situation, the government offering land and connection to the national grid is a step forward. With more such steps, the authorities can unlock the potential of power production from renewable sources. For that, the authorities need to invest adequately and facilitate private investments. The authorities should also promote rooftop solar power. It is high time the authorities reviewed its renewable energy policy and recommitted to renewable sources.​