[🇧🇩] Energy Security of Bangladesh

[Saif]

Govt should renegotiate power deals early to save economy

THE capacity charge, which the government pays independent and rental power plants when they sit idle as a guarantee of returns on investment coupled with profits, is set to reach Tk 380 billion in the 2025 financial year. This is a 46 per cent, or Tk 120 billion, increase on the capacity...

www.newagebd.net

Govt should renegotiate power deals early to save economy
27 January, 2025, 00:00

THE capacity charge, which the government pays independent and rental power plants when they sit idle as a guarantee of returns on investment coupled with profits, is set to reach Tk 380 billion in the 2025 financial year. This is a 46 per cent, or Tk 120 billion, increase on the capacity charge of Tk 260 billion that the government paid the power producers in the 2024 financial year, which was also Tk 90 billion more than what was paid in capacity charge the preceding financial year. The increase by Tk 88.93 billion in the capacity charge that the government is estimated to be paying this financial year is because of the addition of five power plants — two gas-based and three coal-based systems — in the 2024 financial year. The plants were not paid the charge in the past year as they had a dry run then. The addition of three other plants, with a combined capacity of 1.98GW, in the 2025 financial year would put an additional burden of Tk 24.84 billion every year. The continued increase in capacity payment remains a burden on the struggling economy where the government is trying to shore up revenue with regressive, discriminatory, indirect taxes, which is also burdensome for the people.

Whist the amount of payment to producers increases with an increase in the installed generation capacity for the power that the government does not use, the demand for power, however, remains static. The Awami League government, toppled on August 5, 2024, allowed more than a hundred power projects after its assumption of office in 2009 which scaled up the installed power generation capacity to close to 28GW, excluding 2.8GW of captive power, this January from about 5GW in 2009 whilst the peak summer demand is roughly 17GW — the demand this winter was estimated largely at 10GW — and the generation is hardly 13GW. The power overcapacity, thus, exceeded by 50 per cent by 2024. In the 40 years after the Awami League’s assumption of office in 2009, the government paid Tk 1,000 billion to 82 independent power producers and 32 rental power plants in capacity charge. The situation has left the government in a dilemma as it cannot increase the demand to use at least a portion of the overcapacity but it is forced to pay the capacity charge. Experts believe that the government should work out plans for an early expansion of renewable energy, which accounts for only 4 per cent of the installed power generation capacity, to do away with the capacity charge as far as it can.

The government is, therefore, left with two tasks to carry out simultaneously. It should try to increase the demand for power, geared for an optimal use of power in industrialisation, so as to lessen the overcapacity as far as it can. It should also renegotiate all the independent and rental power deals to minimise the burden of the capacity charge on the economy. It should, yet then, retire the old plants that have served out their useful economic life, step up efforts on renewable sources and not take up fresh independent and rental power projects.​

 

[Saif]

TIB demands immediate cancellation of fossil fuel-centric energy master plan

Transparency International Bangladesh (TIB) has demanded the immediate cancellation of the Integrated Energy and Power Master Plan (IEPMP)-2023, terming it a fossil fuel-centric energy master plan. The corruption watchdog made this call from a human chain organised in front of the Jatiya Sangsad B

thefinancialexpress.com.bd

TIB demands immediate cancellation of fossil fuel-centric energy master plan
UNB
Published :
Jan 27, 2025 19:56
Updated :
Jan 27, 2025 19:56

Transparency International Bangladesh (TIB) has demanded the immediate cancellation of the Integrated Energy and Power Master Plan (IEPMP)-2023, terming it a fossil fuel-centric energy master plan.

The corruption watchdog made this call from a human chain organised in front of the Jatiya Sangsad Bhaban on Manik Mia Avenue in the capital on Sunday to mark the International Clean Energy Day 2025.

It also has called for the formulation of a new renewable energy-based master plan free from the influence of the fossil fuel lobby.

TIB Executive Director Dr Iftekharuzzaman said at the human chain, "One of the foundations and beneficiaries of the power structure of the fallen authoritarian and thuggish government was the domestic and foreign lobbies, who were held hostage by the policy framework."

"As a result, the energy master plan purposefully maintains fossil fuel dependence due to their conflict of interest," he said, adding that through this, the possibility of transitioning to renewable energy has been trampled on.

In order to build a country that relies on renewable and clean energy while respecting national and international commitments, the policy framework must be freed from the influence of fossil fuel advocates, he added.

He said: "We call on the interim government to immediately take the initiative to formulate a master plan for 100 percent renewable energy-based power generation in phases by 2050 and a time-bound roadmap for its implementation, involving experts and stakeholders free from conflict of interest."

This is the first time that TIB has celebrated International Clean Energy Day in Bangladesh to raise awareness about the transformation of renewable energy.

Keeping in mind the theme “Clean Energy: Sustainable Future,” TIB has organised multifaceted programs at the local and national levels to celebrate the day.

At the local level, awareness campaigns including human chains, rallies and discussion, public meetings, street meetings on increasing the production and use of renewable energy were organised with the active participation of members of the Aware Citizens Committee (ACC), Active Citizens Group (ACG), and Youth Engagement and Support (YES) groups formed under the inspiration of TIB in 45 districts and upazilas.

In addition, TIB's proposals were highlighted in the human chains organised in Dhaka to highlight the importance of renewable energy and ensure good governance in the energy sector.

The human chain organised by TIB was attended by organizations such as Water Keepers Bangladesh, Working Women, Dharitri Rakhaye Amara, ActionAid Bangladesh, and ETI Bangladesh.

On the occasion of International Clean Energy Day 2025, TIB placed a number of recommendations to ensure good governance in the energy sector and take effective steps to transition to renewable energy.

These include preparing a new master plan based on the principles of reducing the use of fossil fuels and increasing the amount of renewable energy in the energy mix.

To prevent policy manipulation in the energy sector and prevent conflicts of interest, forming an independent monitoring and control authority consisting of relevant experts and representatives of civil society to ensure accountability in the decision-making process related to this sector are among the recommendations.

The TIB urged the government to ensure monitoring and verification of flawless environmental impact assessment activities for all types of energy and power projects by regulating them under the Environment Act and to follow transparent and appropriate procedures in issuing environmental clearances and monitoring pollution and environmental issues.

It also called for providing leadership in the transition to renewable energy, and giving the Sustainable and Renewable Energy Development Authority (SREDA) the status of an autonomous institution, along with enhancing its technical, human resources and infrastructure capacity.​

 

[Saif]

Renovation of 31 wells to increase gas production

The production of local gas is consistently declining, leading to the need to import liquefied natural gas (LNG) at high prices to fill the gap. This has been putting pressure on the country's foreign currency reserves. If production continues to decrease, imports will increase further. To...

en.prothomalo.com

Renovation of 31 wells to increase gas production
Mohiuddin
Dhaka
Published: 30 Jan 2025, 08: 27

The production of local gas is consistently declining, leading to the need to import liquefied natural gas (LNG) at high prices to meet the shortfall.

This has been putting pressure on the country's foreign currency reserves. If production continues to decrease, imports will increase further. To manage this situation, the government is prioritising the renovation of 31 wells to increase local gas production.

According to sources at the ministry of energy, the government has planned the implementation of a project involving the renovation, exploration, and development of 100 wells.

Exploration wells are drilled to discover new gas reserves, development wells are drilled to increase production from old gas fields, and renovation work is carried out on old or non-functional wells to boost production. Given the current situation of gas production, renovation work is being prioritised.


Bangladesh Oil, Gas, and Mineral Resources Corporation (Petrobangla) has stated that according to earlier plans, if 50 wells are drilled by 2025, the national grid will add nearly 650 million cubic feet of gas per day. Currently, 18.4 million cubic feet of gas are being extracted daily, with 7.2 million cubic feet being supplied to the national grid.

On 22 January, the energy and mineral resources ministry held a meeting regarding well drilling. The meeting minutes show that energy adviser Muhammad Fouzul Kabir Khan emphasised the importance of well drilling.

He stated that the country’s gas reserves are steadily depleting while demand continues to rise, leading to significant foreign currency expenditure on importing fuel.

During the meeting, the energy advisor provided several directives. To avoid delays, he recommended conducting feasibility studies for multiple projects as a cluster for new initiatives. Priority should be given to exploration activities where there is a higher chance of discovering large gas reserves.

It is also essential to explore large gas reserves using BAPEX’s existing rigs and initiate efforts to increase reserves through deep well drilling. Additionally, a 5-member expert subcommittee has been formed to oversee the renovation of 31 wells.

Earlier, on 21 January, Petrobangla formed a committee to prepare a specific timetable and work plan for the renovation of the 31 wells. The committee consists of 15 members, chaired by Istiaque Ahmed, Chairman of the BAPEX Board of Directors.

The committee includes officials from the energy, Petrobangla, Bangladesh University of Engineering and Technology (BUET), and gas production companies.

The committee’s scope of work includes reviewing the schedule for the renovation of 16 wells under the 50-well exploration project and 31 wells under the 100-well project, assessing the likelihood of gas extraction, determining the feasibility of connecting the wells to the pipeline quickly, and identifying the benefits and potential of well renovation.

Additionally, priority will be given to the exploration and development of 34 and 69 wells, respectively, in two plans. The committee will submit a report to Petrobangla within 30 days.

Petrobangla’s chairman Mohammad Rezanur Rahman told Prothom Alo that the focus on well renovation is aimed at bringing the demand and supply of gas to a manageable level.

Renovation work has already begun on 16 wells, and as a result, the supply to the national grid has slightly increased with the completion of work on seven wells.

Once all the work is completed, production will further increase. The energy ministry is now expediting the approval of development project proposals (DPPs) for well drilling.

The daily demand for gas in the country is 380 million cubic feet. For several years, supply of around 300 million cubic feet has generally been sufficient, with 220 million cubic feet coming from domestic gas sources, and the remaining being met through LNG imports.

The ousted Awami League government focused more on LNG imports instead of increasing domestic gas exploration and production, which led to a steady decline in local gas production. Now, domestic production has fallen below 200 million cubic feet.

Moreover, due to high prices, the required amount of LNG could not be imported. Faced with a severe crisis, a plan to drill 50 wells was proposed in mid-2022, but it was not implemented with priority.

After assuming office, the interim government has focused on gas exploration and production and has initiated well drilling. Plans for an additional 100 wells to be drilled next year have also been outlined.

Experts believe that increasing domestic gas production is the only alternative to solving the gas crisis. With proper renovation and technological advancements, it is possible to increase production in old gas fields. Simultaneously, both onshore and offshore gas exploration activities must be ramped up.​

 

[Saif]

AL REGIME ENERGY PRICING: Local coal far costlier than imported one

Bangladesh’s own coal, extracted from its lone coal mine in Dinajpur, is costlier than the imported one, up to 77 per cent in some cases, due to arbitrary energy pricing by the past Awami League regime, which was...

www.newagebd.net

AL REGIME ENERGY PRICING: Local coal far costlier than imported one
Emran Hossain 31 January, 2025, 23:43

Bangladesh’s own coal, extracted from its lone coal mine in Dinajpur, is costlier than the imported one, up to 77 per cent in some cases, due to arbitrary energy pricing by the past Awami League regime, which was ousted amid a mass uprising in July-August in the past year.

The current price of the locally extracted coal, $176 a tonne, excluding value-added tax and the taxes, was set on January 5, 2023 with retrospective effect from exactly a year ago.

The coal is used for power generation by the government. Power price increased more than a dozen times during 15 years of the AL regime due largely to increased fuel costs.

People were struggling hard to cope with soaring living costs when the coal price was raised by more than 35 per cent compared with the previous price of $130 which had been in force since 2015, citing the fuel’s production cost increase and the need for investing in exploratory activities and land acquisition purposes.

Though the coal price exceeded $400 a tonne in early 2022 on the international market, it has been about a year the price dropped to about $150 a tonne.

The current price of a tonne of the best quality coal bought from Indonesia is $127.72. Bangladesh imports most of its coal for power production from Indonesia. The coal Bangladesh usually imports is currently in the price range of $72.24 to $92.87, excluding transport and handling costs.

‘The predatory local coal price is the upshot of monopolistic energy administration,’ said professor M Shamsul Alam, energy adviser at the Consumers Association of Bangladesh.

The coal price increase was proposed by state-owned Barapukuria Coal Mining Company Limited. The proposal was invariably found correct in a verification done by another state-owned company Bangladesh Power Development Board, the buyer of local coal. Finally, the proposal was approved with slight changes by an executive order by the Ministry of Power, Energy and Mineral Resources.

While ordinary people continued to bleed financially, the coal price hike immediately increased the profits of the BCMCL, winning its employees hefty annual bonus and the government increased income.

‘There was no real verification of the proposal. There is no way of knowing if the price hike was actually needed,’ said Shamsul.

The BCMCL had initially sought a 62 per cent rise in the coal price, setting the price at $210 a tonne.

With the costs of production estimated at $138 a tonne, the BCMCL incorporated in the proposed price almost $50 as the costs of future land acquisition and exploration. The proposed price also included 15 per cent profits after paying VAT and the other taxes. The approved price considered all the expenses.

Bangladesh Energy Regulatory Commission officials observed that land acquisition and exploration expenses should have covered by the company’s profits.

It was typical of the past AL government to frequently raise energy prices, necessitated by a flawed energy policy that energy experts found excessively beneficial to the private investors, all of them being AL favourites. Soon after assuming power, the AL had enacted an indemnity law to award power and energy projects without tender and being challenged in court.

The interim government led by Muhammad Yunus scrapped the law after taking office on August 8, 2024.

The power sector had undergone an aggressive expansion throughout the AL regime between 2009 and 2024, leading to a massive overcapacity problem. The BPDB’s comprehensive losses stood at Tk 8,764 crore at the end of the past financial year.

The BPDB buys the entire production at the coal mine to generate electricity at the Barapukuria thermal power plant, which is often partially used due to lack of fuel supply.

Shaiful Islam Sarkar, managing director of the BCMCL, justified the price hike with the need to increase profits to pay taxes and dividend to the government and incentivise the BCMCL officials and workers, who are risking their lives by choosing to work in a coal mine.

‘Our coal, with the calorific value of 6,137 kcal/kg and 0.53 per cent sulphur content, is still undervalued. We can easily sell it for $230 a tonne should export be allowed,’ he said.

Shaiful justified the price increase with its increased expense in a number of sectors — repair and maintenance, spare parts import and employing a foreign workforce of 300 people, including 40 officers.

The BCMCL has a workforce of 250 people, who mostly do not work inside the mine. The 1,100 mine workers are on the CMC’s payroll. The main work of the coal mine, from designing the coal extraction plan to supervising workers, are done by Chinese workers under contract with the China National Machinery Import and Export Company.

After the coal field was discovered in 1985, the BCMCL extended its contract with the CMC to develop the mine and then extract coal through 2027.

The BCMCL started extracting coal in 2005, lifting 13.02 million tonnes by June 2022. Of the extracted coal, 9.54 million tonnes were used in the 525MW coal power plant while 3.35 million tonnes were supplied to the local industry.

Coal sales to local buyers have remained suspended since 2018 after the discovery that over 1.43 lakh tonnes of coal went missing between 2006 and 2018.

The BCMCL had profited over Tk 144 crore in 2021-22. In the year, when the price hike benefit was partially enjoyed, the BCMCL workers’ profit participation fund received over Tk 7.6 crore. In VAT and taxes, over Tk 233 crore was paid in the same year.

In the following financial year of 2022-23, enjoying full price hike benefits, the payment to the government exchequer in the VAT and other taxes rose to over Tk 422 crore. The profits of BCMCL more than doubled to Tk 300 crore compared with those in the previous year, while the contribution to the WPPF almost tripled to over Tk 22.21 crore.

At the end of the past financial year, the BCMCL profits soared to Tk 418 crore with the WPPF contribution rising to Tk 29 crore. The payment to the government exchequer rose to nearly Tk 709 crore.

‘People always feel proud about a profitable public company,’ said BCMCL managing director Md Shaiful Islam Sarkar.

BCMCL officials said that over 62 per cent of the production costs was gone to pay the CMC. The BCMCL was supposed to develop mining capacity working with the CMC, eventually overtaking the full responsibility of the operation of the mine. But that has not happened in 20 years since the extraction of coal began.

‘Coal mining is not rocket science. Neighbouring India operates its own coal mines,’ said energy expert Badrul Imam, who is an honorary professor of geology at the Dhaka University.

‘Operating the coal mine on our own could have reduced the coal price,’ said Badrul, also a director on the board of directors of the BCMCL.​

 

[Saif]

Capacity payment terms must be renegotiated

The interim government must suspend the inefficient and costly power plants and renegotiate the capacity payment terms with the private power producers as the structure incentivises inefficiency, according to the report of the task force.

www.thedailystar.net

Capacity payment terms must be renegotiated
Proposes task force on power sector

File photo

The interim government must suspend the inefficient and costly power plants and renegotiate the capacity payment terms with the private power producers as the structure incentivises inefficiency, according to the report of the task force.

"The current capacity payment structures incentivise inefficiency and impose unnecessary costs on the government," said the task force report on re-strategising the economy and mobilising resources for equitable and sustainable development.

Revising the terms will align payments with actual energy production, ensuring better value for public spending, it said.

Over the years, maximum power generation has consistently fallen short of installed capacity.

Surplus capacity reached 11,680 megawatts (MW) in fiscal 2023-24. Nearly 43.5 percent of the power plants' capacity remained underutilised last fiscal year compared to the installed capacity of 26,844 MW.

As a result of capacity payments, irregularities and various inefficiencies, the Bangladesh Power Development Board's operating losses surged to Tk 44,291 crore last fiscal year. In fiscal 2017-18, PDB's losses stood at Tk 6,208 crore.

This fiscal year, capacity charges would take up about 80 percent of the Tk 40,000 crore subsidy allocation for the power sector, the report said.

This disproportionately large share directed towards capacity payments raises concerns about the influence of vested interest groups within the sector.

Powerful business entities and political elites are benefitting from these contracts, often secured under non-competitive arrangements, the report said.

"Such practices not only burden public finances but also limit resources available for investing in sustainable energy solutions and infrastructure improvements."

Quoting the data of capacity payments released in the parliament in 2023, the report said 82 independent power plants and 32 rental power plants have received more than Tk 1 lakh crore in capacity charges over the previous 14 years. Of the amount, the top 10 plants had received one-third of the payments.

"Giving tenders to the same few companies over and over again has made the country dependent on them to the extent that the country has to accept their technical failures even during spans of high demand."

The problems and challenges in the power and energy sector include poor regulatory quality; lack of institutional capacity; and lack of strategies to address the PDB's growing revenue shortfall in the Integrated Energy and Power Master Plan 2023.

The government's monopoly market structure in power procurement, transmission and distribution systems; the lack of transparency and accountability; and the pricing and subsidy policies are the other problems and challenges for the sector.

Subsequently, the task force suggested that the interim government prepare a short-term strategy consisting of revising the master plan, adjusting the energy prices and subsidies, leveraging regional energy trade, ensuring transparency in the international contracts, eradicating tax mismatches for renewable energy adoption, strengthening the capacity of the Sustainable and Renewable Energy Development Authority.

The task force also emphasised ensuring uninterrupted energy supplies to export-oriented and export-supporting firms as the critical first step to maintaining operational efficiency and reducing production costs.

"Unreliable power supply is a particularly serious problem for the light engineering industry where many manufacturing processes require an uninterrupted power supply. Frequent power cuts, especially during the summer, lead to high wastage rates and raise energy costs," the report said.

KAS Murshid, the former director general of the Bangladesh Institute of Development Studies, headed the task force, which submitted its report to Chief Adviser Muhammad Yunus last week.​