[🇧🇩] Energy Security of Bangladesh

[Saif]

IMF prescription to raise energy prices is anti-people, illogical

The IMF prescription for the public means increased gas, electricity and transport prices, and so on.

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IMF prescription to raise energy prices is anti-people, illogical

VISUAL: SHAIKH SULTANA JAHAN BADHON

The International Monetary Fund (IMF) has just completed their recent mission in Bangladesh, during which they held various meetings and discussed the terms and conditions of the $4.7 billion loan, which they are set to give out in instalments. We have seen a set of preconditions emerging out of those discussions. Typically, there are two types of IMF conditions—and I say this from my observations and long-term research on IMF activities in developing countries. The first set of conditions relates to much-needed reforms to improve any economy, such as financial sector reform, tax-GDP ratio, ensuring accountability and transparency, etc. Then there is a second set of conditions, whose main objective is more privatisation and commercialisation. For the public, this means increased gas, electricity and transport prices, more taxes, and so on.

We have to treat these two conditions separately. If we do, we will notice that the IMF is not so serious about the first set of conditions—which are the bare minimum needed for an economy to function. They may talk about these much-needed reforms, but these are not their main agenda. Their priority is to institute the second set of reforms. The IMF has already given out loans to Bangladesh 10 times before, but has there been any improvement in the financial sector? In fact, there has been an alarming degradation of the sector—Bangladesh has now become an example of how a financial sector can become a place of unprecedented and unapologetic looting. But since the 1990s, the IMF and World Bank have brought about many reforms in public banks. The space and scope for private banks have been increased. They have done these in the name of reform in the financial sector, but we have not seen any overall improvement.

It has been the same in the case of corruption in private and public sectors. In the name of increasing the tax-GDP ratio, they have imposed various taxes on the people, but those in whose hands wealth has been centralised have not been brought under the tax regime. It is now universally acknowledged that inequality has increased exponentially in Bangladesh. It is because a large amount of wealth has accumulated in the hands of a few people within a very short amount of time, thanks to large-scale looting in the finance or energy sector, occupation and destruction of our rivers and forests, and different construction projects undertaken at the highest costs. But those who have benefitted from this corruption are not being taxed, even though it is because of them that the country's GDP has increased. So while there is a need to increase the tax-GDP ratio, the burden is ultimately falling upon the ordinary people. New taxes are being imposed on them at different times of the year, even though such decisions are supposed to be made as per the national budget.

The IMF's position is clearly to protect corporate interests and against public interest. If they were concerned with public interest, they would have asked why subsidies are so high, instead of asking to reduce them in the energy sector. Why are subsidies so high? Even though our installed capacity is more than our current need, the government has given one private power plant after another permission to set up, and now are paying them an absurd amount of money to simply sit idle—as much as 81 percent of the subsidies in the energy sector is spent paying capacity charges. Another reason is that, instead of investing time and money in gas exploration, our government has opted for expensive LNG imports. So now we are having to spend Tk 30,000-40,000 crore in importing LNG to get what we could have gotten by spending Tk 400 crore in gas exploration. As a result, subsidies are increasing in the gas sector.

Similarly, instead of investing in renewables, they are setting up import-based coal power plants. Nuclear power plant is being built with huge loans. If the reasons due to which subsidies are so high remain unaddressed, the process of withdrawing subsidies would only mean that instead of solving the energy crisis, the burden of increased energy costs will fall on the general public. Simply put, in order to expand the businesses of some private groups in Bangladesh, Russia, China, US, India, etc, our electricity production costs are increasing. This is what the government wants and also what broader corporate groups want. But, as always, it is the people who must bear the burden.

Instead of addressing the pressing concerns of the energy sector, raising prices is an anti-people and anti-development position. Unfortunately, that is what the IMF consistently does. It is not truly invested in institutional reforms. They gave out loans to Sri Lanka many times, yet it fell into a crisis. Pakistan has taken out loans 22 times, but we all know the state of its economy. So it is important to question the conditions, frameworks and prescriptions recommended by the IMF and World Bank, and hold them accountable. It is time to ask what the results are of the various projects and prescriptions of these organisations. The ruling class in Bangladesh are certainly to blame for the chaotic situation in the railway, education, health and energy sectors, but I also hold the IMF and World Bank responsible for enabling them. It is time we asked whose interests are being served ultimately by the various projects and prescriptions of these international institutions.

As told to Sushmita S Preetha of The Daily Star.

Anu Muhammad is a former professor of economics at Jahangirnagar University.​

 

[Saif]

The next budget should push for clean and secure energy

The forthcoming national budget could create a renewable energy fund to further stimulate the renewable energy sector’s progress.

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The next budget should push for clean and secure energy

Source Budget Speech (Archive), Finance Division, Ministry of Finance; IEEFA Analysis.

Bangladesh's drive to fulfil energy demand, riding on quick-fix strategies and relying on imports, has helped in the short-run but exacerbated the country's financial health. While fixing the problems will require long-term efforts, the upcoming national budget, to be unveiled in June 2024, will provide an opportunity to address some of the key challenges of the energy and power sectors.

The forthcoming national budget could create a renewable energy fund to further stimulate the renewable energy sector's progress, which has seen increased interest on the back of high energy prices and energy security concerns. Additionally, the budget may allocate more to the energy sector, to explore domestic gas resources and reduce reliance on imported liquefied natural gas (LNG).

With fiscal challenges eroding the country's capacity to clear full payments against imported fossil fuels and electricity produced by private power producers in the last couple of years, investment in clean energy is taking centre stage. Other factors, such as high and volatile fossil fuel prices and concerns about energy security, tempted the government to sign contracts with private investors for renewable energy projects of several thousand megawatts (MW) capacity in the last two years.

However, prior experience points to a gloomy picture. Although new renewable energy projects have come online in the last two years, the pace and scale seem slow and inadequate.

Difficulty arranging expensive land, where ownership is fragmented, limits the country's accelerated deployment of renewable energy. Furthermore, private project developers shoulder the cost of long transmission lines, increasing the overall project cost.

Against this backdrop, the Bangladesh government may create a dedicated fund to turbo-charge the renewable energy sector amid the country's heightened exposure to the international fossil fuel market. Allocating through the fiscal year (FY) 2024-25 budget, the government may aim to support at least three areas of renewable energy.

It may cover the transmission costs of selected renewable energy projects. Likewise, it may allocate land to some renewable energy projects through the renewable energy fund, which can support land acquisition costs. Shouldering such costs, the government may introduce reverse auctions in carefully selected projects to reduce tariffs. The government can further utilise the fund to pilot renewable energy projects with battery energy storage systems.

Bangladesh can take inspiration from its past support for private-public-partnership (PPP) projects to create such a fund. Notably, the country allocated Tk 25 billion ($227.5 million) to PPP projects in FY2009-10 to bridge the infrastructure investment gap. This fund included PPP technical assistance worth Tk 1 billion ($9.1 million), a viability gap funding of Tk 3 billion ($27.3 million) and an Infrastructure Investment Fund of Tk 21 billion ($191.1 million).

A similarly bold and landmark ambition, if translated through a budgetary allocation, will help transform the country's energy sector while containing costs and improving reliability.

The Annual Development Plan (ADP) 2023-24 already considered that nine renewable energy projects planned within its framework were "insufficient". Therefore, the ADP, in the upcoming fiscal year, may strategically take up more renewable energy projects. This will be pragmatic as some of the power plants commissioned in the last year or so have not received sufficient gas to operate at their optimum capacities.

As new nuclear facilities will likely be online during FY 2024-25, Bangladesh will have significant baseload capacity. Based on allocation in the forthcoming national budget, the ADP may turn the tide towards renewable energy.

However, Bangladesh continues to allocate more of its budget to the power sector instead of the energy sector. For instance, the Power Division, which takes care of the power sector's development, received around 90 percent of the total budget allocated for Energy and Power Divisions from FY 2016-17 to FY 2022-23. Notably, it received a massive 97.1 percent of the allocated Tk 348.2 billion ($3.17 billion) in FY 2023-24, leaving the Energy Division with a paltry Tk 9.9 billion ($89.5 million).

A decade ago, Bangladesh's lagging power system capacity influenced massive investment in power infrastructure, but the need and outlook appear quite different now. Allocations of hefty budgets to the power sector on a yearly basis have already thrown up several challenges for the Energy and Mineral Resources Division, which has become increasingly import-dependent.

The national budget may consider allocating more funds to the latter to strengthen Bangladesh Petroleum and Exploration Company (BAPEX), to enhance the company's ongoing onshore gas exploration efforts and limit the reliance on imported LNG.

An important step in driving Bangladesh away from fossil fuels towards a renewable energy future is the rationalisation of duties on electric vehicles and renewable energy. Following approval of the budget of FY 2023-24, any individual willing to buy a second personal transport—be it an electric vehicle (EV) or an internal combustion engine (ICE)-based one—needs to pay an environmental surcharge ranging from Tk 25,000 ($228) to Tk 3,50,000 ($3,187). As EVs are environment-friendly, and interested buyers may already have an ICE car, the government should waive this environmental surcharge on EVs.

Furthermore, total tax incidences on EVs at the import stage are 89.2 percent, including a supplementary duty of 20 percent. A similar supplementary duty is also applicable for hybrid cars. As the government envisages reducing 3.39 million tonnes of carbon dioxide (CO2) emissions from the transport sector by 2030, such import duties on EVs will limit the country's ambition. Instead, the government may increase the duties for second ICE cars and channel part of the revenue to build charging stations for electric and hybrid vehicles.

energy price hike in Bangladesh, clean energy in Bangladesh, power tariffs in Bangladesh, power generation costs in Bangladesh, solar power in Bangladesh, gas price hikes in Bangladesh, Institute for Energy Economics and Financial Analysis (IEEFA), Bangla

Additionally, rooftop solar accessories are subject to import duties ranging from 11.2 to 58.6 percent. As rooftop solar can help generate clean energy without affecting land, the government may revisit the tax structure and bring it down.

The current reality reinforces the urgency of frontloading efforts for renewables, creating a conducive ecosystem for EVs and reducing demand growth in imported fuels like LNG. By creating a renewable energy fund and increasing budgetary allocation to the energy sector, the upcoming budget can help attract more private capital and improve Bangladesh's overall energy security.

Shafiqul Alam is lead energy analyst for Bangladesh at the Institute for Energy Economics and Financial Analysis (IEEFA).​

 

[Saif]

Beximco's Teesta Solar powers up nat'l grid with 443.8 million units

Bangladesh's largest solar power facility Teesta Solar Ltd has transmitted around 443.8 million units of electricity to the national grid in the past 15 months. The 200-megawatt (MW) plant, spanning 650 acres on the banks of Teesta River in Gaibandha's Sundarganj upazila, was officially inaugurate

thefinancialexpress.com.bd

Beximco's Teesta Solar powers up nat'l grid with 443.8 million units
SAJIBUR RAHMAN, BACK FROM GAIBANDHA
Published :
May 04, 2024 09:35
Updated :
May 04, 2024 09:35

Bangladesh's largest solar power facility Teesta Solar Ltd has transmitted around 443.8 million units of electricity to the national grid in the past 15 months.

The 200-megawatt (MW) plant, spanning 650 acres on the banks of Teesta River in Gaibandha's Sundarganj upazila, was officially inaugurated by Prime Minister Sheikh Hasina on August 2 last year.

During a recent visit to the site, it was found that Teesta Solar Ltd, a subsidiary of Beximco, installed around 550,000 solar panels.

Unlike conventional power plants that rely on gas, coal, or fossil fuels, the plant generates electricity without requiring fuel or incurring raw material costs -- a capability it is expected to maintain until 2043.

To connect the plant to the national grid, a 35 km power transmission line with 122 towers was constructed. The line operates at 132 kilovolts and stretches from the plant to Rangpur.

To safeguard the plant against natural disasters like floods and river erosion, a dam and a seven-kilometre road was constructed, which also benefits the local community now.

The project's total cost exceeded Tk 30 billion, with Tk 22 billion financed through Beximco's Sukuk Bonds. This initiative represents a significant step for Bangladesh in generating cleaner electricity and promoting environmental responsibility.

A study suggests that adding 2,000 MW of rooftop solar capacity could help the Bangladesh Power Development Board (BPDB) save between Tk 52.3 billion to Tk 110.32 billion per year by reducing reliance on expensive power generation and input purchases.

Engineer Md Tashikul Alam, who manages strategic planning and government affairs at Teesta Solar Ltd, said, "Around 65 per cent of our technology and equipment are imported from China. The remaining 35 per cent comes from India and other countries, including those in Europe."

He said it is possible to explore cultivating suitable agricultural products, such as nuts, underneath the solar panels.

Gautam Das, in-charge of projects at Beximco Power Company Limited, explained the advantages of solar power projects in Bangladesh compared to traditional options that rely on heavy fuel oil (HFO), coal or gas.

"Solar power is cheaper to maintain, more efficient in the long term and doesn't pollute the environment," Mr Das said.

He commented that as more solar projects are built, economies of scale will bring down costs.

However, building solar projects in Bangladesh still remains expensive compared to countries like India, according to him, due mainly to logistical and infrastructure issues.

Shafiqul Alam, lead analyst at the Institute for Energy Economics and Financial Analysis (IEEFA), said Teesta Solar Ltd accounts for roughly 50 per cent of the country's total installed utility-scale solar capacity.

"Green sukuk was used to finance the solar project, marking the first such instance in the clean energy sector," Mr Alam said. "This paves the way for renewable energy project investors to utilise similar instruments, such as green bonds, to mobilise private funds."

He added that such instruments have the capacity to streamline renewable energy project implementation and strengthen local entrepreneurship in the coming years.

According to IEEFA lead analyst, green sukuk can also be a viable option when securing international investors for independent power producer (IPP)-based renewable energy projects proves challenging.

The use of proceeds from green sukuk in this project is innovative, being the first case in Bangladesh, commented Mr Alam. "This success story may encourage other project developers to consider green sukuk as a financing option in the future."​

 

[Saif]

Why must the public bear the burden of capacity charges?

There is no justification for raising electricity prices four times a year

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Why must the public bear the burden of capacity charges?
There is no justification for raising electricity prices four times a year

VISUAL: SHAIKH SULTANA JAHAN BADHON

The government has decided to increase electricity prices four times a year over the next three years to withdraw all subsidies from the power sector. At present, the wholesale price of electricity is Tk 7.04 per unit on average. If the subsidies are withdrawn, this rate will have to be raised to more than Tk 12. In that case, the average electricity price at the consumer level, which is Tk 8.95 now, will almost double to Tk 15.
This decision has come at a time when people are already under a lot of pressure due to the increased prices of daily commodities. Last year, gas prices were increased by an average of 82 percent in January and electricity prices were increased by an average of five percent in three phases between January and March, contributing to inflation. In March this year, electricity prices were again raised by Tk 0.34 to Tk 0.70 per unit.

If this decision is implemented, this will surely add to consumer spending, more so because of the increased production costs of everything that requires electricity for production. In addition, these price hikes will affect electricity bills in residential areas, irrigation, industries, education, religious institutions and healthcare facilities, among others. A rise in irrigation costs will impact agriculture as higher production costs will in turn raise the prices of all agricultural products, including rice. This will have a ripple effect on the economy, and as a result, the lives of low and fixed-income people will be even more adversely impacted.

It is being argued that the price hike is required to reduce subsidies in the power and energy sectors to comply with IMF conditionalities. The question is: why do the subsidies have to be paid in the first place, and where does the subsidy money go? Moreover, increasing prices is not the only way to reduce subsidies—they can also be reduced through cost-cutting. Why is the government then only interested in increasing prices, rather than reducing costs by preventing irregularities, corruption and waste?

First of all, subsidies are required because Bangladesh Power Development Board (BPDB) has to buy power at high prices from privately owned power plants run by imported and expensive liquid fuel. The purchasing cost from the private sector is much higher than the cost of generating power from the public sector. When power generation in the private sector increases, the average cost of power generation in the country increases. According to BPDB annual reports, the average cost of power generation per unit was Tk 6.61 in 2020-2021, Tk 8.84 in 2021-2022, and Tk 11.33 in 2022-2023. In 2022-23, the generation cost of BPDB's own power plant was Tk 7.63 per unit, and the cost of other state-owned power plants was Tk 6.85. On the other hand, the average generation cost was Tk 14.62 for independent power producers (IPPs) and Tk 12.53 for rental power plants. Just a year earlier, IPP and rental electricity generation cost was Tk 11.55 and Tk 9.80, respectively (BPDB Annual Report 2021-22, page 96; PDB Annual Report, 2022-23, page 98). As a result, the BPDB is incurring losses by purchasing power from IPPs and rental power plants, and the government has to cover these losses with subsidies.

According to a report in Bonik Barta, the revised budget for the 2023-24 fiscal year estimated the power sector subsidies to be Tk 39,406 crore. On the other hand, the capacity charge payment has been estimated at more than Tk 32,000 crore—around 81 percent of the subsidies given to the power sector. In FY2022-23, capacity charges were paid to the tune of Tk 26,000 crore, which was 65.76 percent of the total subsidies given to the power sector.

Now, we know that a large part of the power generation capacity remains unused throughout the year. But even if the power is not purchased, as per the agreement, BPDB as the sole buyer of power has to pay the capacity charges to the power plants. Last year, capacity charges of more than Tk 26,000 crore were paid when 41 percent of capacity remained unused. Capacity charges have cost Bangladesh more than Tk 1 lakh crore in the last 14 years. Every year, with the increase in power generation capacity in the private sector, the amount of capacity charges keep rising and the losses incurred by the BPDB rise in tandem. To reduce these losses, electricity prices have been increased 12 times at the wholesale level and 14 times at the retail level over the last decade and a half. Yet, the losses and subsidies have not decreased; rather, pressure has been created to increase the prices of electricity repeatedly.

Meanwhile, despite the underutilisation of the existing power generation capacity, new capacity addition has not stopped. For example, while the capacity of the existing gas-based power plants cannot be utilised fully due to lack of gas, new gas-based power plants are being constructed. Recently, two gas-based power plants of Summit and Unique groups started operating in Meghnaghat, Narayanganj with a total capacity of 1,167 MW. Aside from this, there is a 718 MW Reliance power plant waiting to start operating. All these will increase BPDB's costs even more.

The real problem in Bangladesh's power and energy sectors is the implementation of power and energy projects one after another, without competitive bidding, under the umbrella of the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act, 2010, for the benefit of various domestic and foreign investors—without any accountability. As a result, on the one hand, power plants with excess capacity have been constructed with the provision of capacity payment. On the other hand, power generation has become more dependent on imported primary fuels like LNG, oil and coal. Meanwhile, due importance has not been given to the exploration and extraction of domestic gas reserves, as well as renewables. Without addressing the root causes, no matter how much the price of electricity is increased, the crisis in the power and energy sectors will not be solved. Rather, the country's economic crisis will deepen and people will suffer even more.

Kallol Mustafa is an engineer and writer who focuses on power, energy, environment and development economics.​

 

[Saif]

Inefficient gas-fired captive power plants waste $460m

Bangladesh could save $460 million a year by increasing efficiency of its gas-fired captive power generation plants, revealed a report released on Monday by the US-based Institute for Energy Economics and Financial Analysis...

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Inefficient gas-fired captive power plants waste $460m
Staff Correspondent 13 May, 2024, 18:23

Bangladesh could save $460 million a year by increasing efficiency of its gas-fired captive power generation plants, revealed a report released on Monday by the US-based Institute for Energy Economics and Financial Analysis.

Captive power plants refer to power generation systems installed by industries for meeting their own electricity demand. Establishment of these power plants were allowed since the national grid could not be relied for quality power supply.

The report estimated that greater efficiency in captive power generation and efficient utilisation of the heat generated during the power generation could reduce the import of liquefied natural gas by 50.18 billion cubic feet.

The report also revealed that the average efficiency of industrial gas-fired captive power plant is 35.38 per cent whereas generators with 45.2 per cent efficiency are available in the market.

A survey on 51 industries with 124 gas-fired captive generators with a combined generation capacity of about 250 megawatts was conducted to find out energy efficiency in the captive power plants.

'Low efficiency in gas-fired captive power generation consumes a significant amount of gas annually. This is despite the average efficiency in captive generation increasing to 35.38 per cent from 30 per cent in the last decade,' said Shafiqul Alam, lead analyst, Institute for Energy Economics and Financial Analysis, the author of the report.

'Additionally, a significant percentage of industries do not utilise the waste heat released by these generators,' he said.

The report found that 54.28 per cent of the studied generators have an operational age of more than eight years.

Although age is not the only parameter affecting generator efficiency, the report said, when industries procured the old stock of generators, the rated efficiency was not as high as the efficiency of newly purchased generators.

This report further finds that 44.22 per cent of industry samples do not use waste heat released by generators, while 79.6 per cent do not use jacket cooling water in productive applications.

'By using the waste heat recovery boiler/plant and jacket cooling water in a chiller or heater, a substantial amount of gas can be saved,' said the report.

Replacing inefficient power generators in the captive power production may incur an upfront cost, the report noted, adding that the cost would be recovered between 1.5 and five years.

The return on investment in waste heat recovery is only about one year, the report said.

Bangladesh entered the LNG market in 2018 with a modest import of 31.45 billion cubic feet (Bcf) of LNG. In 2023, imports swelled to 238.72Bcf, more than seven times the 2018 figure.

Over the six years since 2018, rapidly rising imports in a volatile global market exposed Bangladesh's energy sector's weak financial health earlier than anticipated.

The power sector is the single largest gas consumer as it accounted for 41.76 per cent of gas production or 389.38Bcf in the fiscal year 2022–23.

Regarding gas consumption during FY2022–23, industrial processes, excluding fertiliser and tea production, consumed 19.17 per cent, while captive power generation consumed 17.6 per cent, the report said.

Bangladesh's plan to power its economic development with LNG imports was not designed to cope with extreme global fuel market volatility, depreciation of the local currency and weak fiscal conditions, the report noted.

The high dependence on gas is raising import bills and with it, the tariffs paid by consumers, the report said, adding that Bangladesh must urgently re-evaluate its energy strategy and take steps to improve energy efficiency to contain the growing demand for gas.

Bangladesh's current installed power generation capacity is over 27,000MW, excluding captive power capacity of 2,800MW.​

 

[Saif]

Nasrul advocates for AI in enhancing Bangladesh's power and energy sector

State Minister for Power, Energy and Mineral Resources, Nasrul Hamid, has said that a roadmap that integrates artificial intelligence with modern technology to advance Bangladesh's power and energy sector is being developed. Speaking at the closing session of a seminar titled “The Engineers

thefinancialexpress.com.bd

Nasrul advocates for AI in enhancing Bangladesh's power and energy sector
FE ONLINE DESK
Published :
May 13, 2024 20:17
Updated :
May 13, 2024 20:17

State Minister for Power, Energy and Mineral Resources, Nasrul Hamid, has said that a roadmap that integrates artificial intelligence with modern technology to advance Bangladesh's power and energy sector is being developed.

Speaking at the closing session of a seminar titled "The Engineers for Transforming Technology Driven Smart Bangladesh" at the Engineers Institution, Bangladesh (IEB) on Monday, Hamid emphasised the pivotal role of power and energy as the main drivers of Bangladesh's economy.

The event was presided over by IEB president and Member of Parliament, Engineer Md Abdus Sabur, with General Secretary Engineer SM Manjurul Haque Manju also in attendance, reports UNB.

Nasrul Hamid said that artificial intelligence will make daily work easier.

"Technology will work behind the scenes to build a knowledge-based society. Engineers should make a responsible contribution to increase the use of technology at all levels of the workplace," he said.

He highlighted the digital connectivity established under Prime Minister Sheikh Hasina's leadership as foundational to creating a 'Smart Bangladesh.'

"We must build a smart country by making timely decisions," he added, suggesting that learning from technologically advanced countries could spur innovation and a study-based approach to overcoming challenges.

Hamid outlined a vision where "a resilient strategy will transform Bangladesh into 'Smart Bangladesh' through intelligent integration of infrastructure, health, education, and other sectors by leveraging innovation."

He stressed the importance of the engineering community in accelerating the country's development: "The faster our engineers can harness technology for human welfare, the quicker Bangladesh will evolve into a developed nation."

Detailing specific applications of technology in the energy sector, Hamid explained, "With smart metres, we can calculate and control the electricity load for power distribution. Artificial intelligence and SCADA systems will enable quick identification of power disruptions in any area."

Despite the commitment and sincerity of the engineers, Hamid noted that it is crucial for them to work with determination and loyalty to the people to realise the vision of a 'Smart Bangladesh.'

The seminar saw the presentation of 10 papers, with the main article delivered by BUET Professor Dr Engineer Munaz Ahmed Noor at the 61st convention of the IEB.​

 

[Saif]

Power producers may lose zero-duty benefit

Power generation companies, including rental ones, may see an end to a zero-duty benefit on their import of machinery, equipment and spare parts from next fiscal year as the government moves towards generating more revenue curtailing the practice of handing out tax exemptions.

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Power producers may lose zero-duty benefit

Power generation companies, including rental ones, may see an end to a zero-duty benefit on their import of machinery, equipment and spare parts from next fiscal year as the government moves towards generating more revenue curtailing the practice of handing out tax exemptions.

The companies may need to pay a 5 percent customs duty when importing goods from the upcoming fiscal year of 2024-25, according to officials of the National Board of Revenue (NBR).

The rental power plants have been enjoying the duty-free benefit since 2008. Prior to that, there was an import tax of around 10 percent.

The government exempted the rental power companies from paying the duties to enhance private investment in this sector at a time when there was a huge deficit in power production, said the officials concerned.

There were times when Bangladesh Power Development Board (BPDB) had no option but to impose power cuts around the country by rotation for hours on end.

"The government awarded contracts to a good number of small power plants at that time to increase the power generation capacity within a short time," said a BPDB official wishing anonymity.

"But later the validity of contracts with them were extended several times. Besides, they were provided advantages, including different VAT and tax exemptions," said the official.

According to a private sector power generation policy (PSPGP) of Bangladesh 2004, private investors enjoy a corporate income tax waiver, relaxed customs duties, exemptions from stamp duty payments and interest on foreign loans and other benefits.

Such decisions were changed and extended several times.

About the customs duty, a government circular of March 11, 2008 reads that rental power companies have been exempted from paying all kinds of import duties, value added taxes and supplementary duties.

This was applicable whenever equipment or spare parts were being imported for power plants being set up temporarily.

There were some conditions in the circular, including one that stipulated that rental companies would have to export their plants and parts after the end of the contracts.

But later, most of the plants got extensions on the durations of their contracts. The validity of the circular was also extended multiple times, the last being till June 2026.

The new proposal for imposing the 5 percent customs duty comes at a time when the government is facing pressure from the civil society to stop availing power from the rental plants for it being more expensive than that from other sources.

The other sources are government-run power plants and independent power producers, which have a much larger power generation capacity than the rental ones.

On the other hand, the NBR is also seeking ways to enhance revenue collection in order to finance public expenditure and reduce government dependence on borrowing.

"We are working to place the proposals as duty measures for the next fiscal year with the objective of coming out of the culture of giving out tax breaks," said a senior official of the NBR, seeking anonymity.

"A 5 percent customs duty will be applicable on all types of equipment required for setting up any power plant," said the source in the NBR.

According to the NBR's data, investors in this sector have received duty exemptions amounting to Tk 1,853 crore in the last two years from July 2022 to March 2024.

There were at least 32 rental power plants operating in fiscal year 2015-16.

Now there are 18 with a combined capacity of 1,170MW. Of it, 797MW is being availed on a "No Electricity No Payment" basis following renewals of associated contracts, said the BPDB officials.​

 

[Saif]

Bangladesh needs sophisticated power grid: JICA study

The power grid of Bangladesh needs to be immediately prepared to accommodate sophisticated power sources like the Rooppur nuclear power plant, which is scheduled to evacuate about 2,400 MW in the coming years, a Japan International Cooperation Agency (JICA) study has suggested. It also proposed up

thefinancialexpress.com.bd

Bangladesh needs sophisticated power grid: JICA study
FE ONLINE REPORT
Published :
May 20, 2024 20:29
Updated :
May 20, 2024 20:29

The power grid of Bangladesh needs to be immediately prepared to accommodate sophisticated power sources like the Rooppur nuclear power plant, which is scheduled to evacuate about 2,400 MW in the coming years, a Japan International Cooperation Agency (JICA) study has suggested.

It also proposed upgradation of the national load dispatch centre, capacity development of officials and several mid- and long-term activities.

To read the rest of the news, please click on the link above.​

 

[Saif]

JICA and Power Division host workshop for improving power quality

Breaking News, International News & Multimedia

thedailynewnation.com

JICA and Power Division host workshop for improving power quality
23 May 2024, 12:00 am
Business Report :

With a vision to improve nationwide power grid frequency, the Japan International Cooperation Agency (JICA) and the Power Division jointly organised a workshop at the Power Division on Sunday.

Md Habibur Rahman, BPAA, senior secretary of Power Division, Md Mahbubur Rahman, chairman of Bangladesh Power Development Board (BPDB) and Ichiguchi Tomohide, chief Representative of JICA Bangladesh office, attended the workshop along with relevant officials from the government and development partners.

Following the grid failure and countrywide blackout incident on October 4, 2022, JICA conducted a study to prevent blackouts and improve grid stability.

In the report, the JICA study team shared their findings and recommended several short-term, mid-term, and long-term countermeasures to improve power quality.

To read the rest of the news, please click on the link above.​

 

[Saif]

Beyond renewables: A coordinated and just transition for Bangladesh

Diversifying domestic energy sources into renewables is crucial because of the current dwindling gas reserve and no new exploration

www.thedailystar.net

Beyond renewables: A coordinated and just transition for Bangladesh

VISUAL: SHAIKH SULTANA JAHAN BADHON

Bangladesh is lagging behind its renewable energy targets, with the current capacity standing at just four percent relative to the target of 10 percent by 2020, making it unlikely to reach the target of 100 percent by 2050. Yet, the success of the latest Conference of the Parties (COP28) agreement to substantially increase renewables in the next decade relies heavily on Asia, where many countries like Bangladesh are struggling to keep up.

Conversations and debates are plentiful around energy sources: renewables versus fossil fuel, and the challenges with renewables like high land requirements for solar expansion. However, what it takes for developing countries like Bangladesh to achieve a green transition gets limited attention.

So what are the crucial aspects of successful renewable energy transition that must be considered for a country like Bangladesh?

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[Saif]

Bangladesh explores energy efficiency technologies at global summit in Kenya

Young Consultants chief executive and Certified Management Consultant M Zakir Hossain has recently held a productive discussion with the Ministry of Power of Kenya and the secretary general of the International Energy Agency at the 9th Annual Global Conference on Energy Efficiency....

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Bangladesh explores energy efficiency technologies at global summit in Kenya
Staff Correspondent 23 May, 2024, 22:18

| Press release photo.

Young Consultants chief executive and Certified Management Consultant M Zakir Hossain has recently held a productive discussion with the Ministry of Power of Kenya and the secretary general of the International Energy Agency at the 9th Annual Global Conference on Energy Efficiency, said a press release on Thursday.

The event that took place in Nairobi in May 21-22 marks the first of this type of conference in Africa, underscoring the IEA's strengthened collaboration with Kenya, now an Association country of the IEA, the release said.

'The discussions cantered on how Bangladesh can leverage the latest advancements in energy efficiency technology showcased at the summit. Mr Zakir's participation highlights Young Consultants' commitment to global energy efficiency initiatives and represents a significant opportunity for Bangladesh to adopt new technologies and best practices emerging from the conference,' it read.

'As Bangladesh aims to expand its economy fivefold, the country's energy demand is expected to increase substantially. In response, the Bangladeshi government with assistance of Japan has developed the "Integrated Energy and Power Master Plan (IEPMP) 2023," outlining medium- and long-term policies to establish a low-carbon, decarbonized society,' it said.

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[Saif]

Gas discovered in Kailashtila well no-8 in Sylhet

Bangladesh Petroleum Exploration and Production Company Limited (Bapex) has discovered new gas in Well No-8 of Kailashtila Gas Field in Sylhet. Officials of Sylhet Gas Fields Limited (SGFL) revealed this on Friday after the excavation work. With the new discovery, gas has been found in four wells

thefinancialexpress.com.bd

Gas discovered in Kailashtila well no-8 in Sylhet
BSS
Published :
May 24, 2024 21:54
Updated :
May 24, 2024 21:54

Bangladesh Petroleum Exploration and Production Company Limited (Bapex) has discovered new gas in Well No-8 of Kailashtila Gas Field in Sylhet.

Officials of Sylhet Gas Fields Limited (SGFL) revealed this on Friday after the excavation work.

With the new discovery, gas has been found in four wells of Sylhet in the last seven months, SGFL Managing Director Mizanur Rahman confirmed.

He said since January last year, Bapex started the digging in well no-8 of Kailashtila Gas Field.

Mizanur said gas has been found at a depth of 3,440 feet to 55,000 feet and now 21 million cubic feet of gas is being extracted daily from the field on experimental basis.

He hoped that they would be able to go to operation in full swing within next three months.

According to officials concerned, the SGFL authorities have been continuing the exploration and drilling of wells in Sylhet since last year. As a part of that, the excavation work in Kailashtila well no-8 started in early 2023 spending about Tk 1.5 billion.

About 100 million cubic feet of gas is now being added to the national grid from the production wells of Sylhet Gasfield Limited.​

 

[Saif]

Govt to allocate Tk 350bn in power subsidy for FY25

The government is going to allocate Tk 350 billion as a subsidy for the power sector in the upcoming national budget to settle capacity charges and other bills owed to private electricity producers, officials said. The rising debt burden to private electricity producers, including Independent Powe

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Govt to allocate Tk 350bn in power subsidy for FY25
FHM HUMAYAN KABIR
Published :
May 26, 2024 00:00
Updated :
May 26, 2024 00:00

The government is going to allocate Tk 350 billion as a subsidy for the power sector in the upcoming national budget to settle capacity charges and other bills owed to private electricity producers, officials said.

The rising debt burden to private electricity producers, including Independent Power Producers (IPPs), requires this huge budgetary allocation, according to the officials.

The Ministry of Finance has finalised the national budget for the next fiscal year (FY) 2024-25, due for announcement on June 6, an official said.

The power subsidy will mainly be used to clear outstanding bills owed to IPPs that supply electricity to the national grid every month.

A senior finance ministry official said Tk 350 billion has been earmarked in the upcoming budget to pay the outstanding electricity bills owed to power producers.

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[Saif]

Threats to energy security

THE daily demand for natural gas at present in our country is around 3,880 million cubic feet. The daily supply, however, is approximately 3,056mmcf, leading to a daily deficit of roughly 824mmcf...

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Threats to energy security
Ghulam Muhammed Quader 27 May, 2024, 00:00

| — Bangladesh Sangbad Sangstha

THE daily demand for natural gas at present in our country is around 3,880 million cubic feet. The daily supply, however, is approximately 3,056mmcf, leading to a daily deficit of roughly 824mmcf.

The sector-wise deficit is as follows: Electricity: 452.65mmcf, industry: 197.52mmcf, households: 82.3mmcf, fertilizer: 57.61mmcf, compressed natural gas: 24.69mmcf and commercial: 8.23mmcf, resulting in a 21.21 per cent shortfall across sectors.

Two floating storage and regasification units, FSRU, are now used for receiving liquefied natural gas from imported ships and putting it into our gas supply system. Liquefied natural gas is unloaded from ships into these FSRUs, each with a capacity of 500mmcf.

Therefore, to import more liquefied natural gas, the number of FSRUs and their facilities would need to be increased. Additionally, the national grid's pipeline has not been equipped to handle more than 1,000mmcf. As a result, it is currently not feasible to import additional liquefied natural gas and supply it to the national grid. Moreover, establishing these facilities is time-consuming.

The average per year import cost for the four financial years from 2018–19 to 2021–22 amounts to Tk 21,416.75 crore. If the current deficit of 824mmcf were to be met through imports, the cost would nearly double the current expenditure on liquefied natural gas import, given that currently 1,041mmcf are imported.

However, it is evident that the government lacks the financial capacity to address this shortfall. Furthermore, even if additional liquefied natural gas were imported, technical constraints such as the lack of existing facilities would hinder its unloading and supply to the national grid.

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[Saif]

High import duties barrier to renewable energy sector: Dr Atiur

Favourable tax policy for the growth of the renewable energy sector is pivotal for realising the prime minister’s vision of sourcing 40 per cent of the country’s energy need from renewable sources, said Dr Atiur Rahman, former governor of Bangladesh Bank. The high import duties and tax

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High import duties barrier to renewable energy sector: Dr Atiur
Removing duties and taxes may reduce the cost of installing solar systems by 8-11pc

Favourable tax policy for the growth of the renewable energy sector is pivotal for realising the prime minister's vision of sourcing 40 per cent of the country's energy need from renewable sources, said Dr Atiur Rahman, former governor of Bangladesh Bank.

The high import duties and taxes currently imposed on input solar energy systems are creating a serious barrier, he said.

The former central bank governor and also an emeritus professor of the University of Dhaka Dr Atiur Rahman said this on Monday while chairing a pre-budget seminar titled 'Favorable tax policies for renewable energy sector in the National Budget'.

The panel discussants in the session organised by Unnayan Shamannay were BIBM Faculty Member and green finance expert- Khondker Morshed Millat, Director of the Institute of Energy, University of Dhaka- Dr Nasif Shams, and internationally acclaimed renewable energy entrepreneur Dipal C Barua.

Representatives from think tanks and civil society organisations along with media professionals and renewable energy sector stakeholders participated in the discussion session, says a media release.

Dr Atiur further pointed out that removing the duties and taxes imposed on inputs such as solar inverters and solar panels may reduce the cost of installing solar system by 8 to 11 per cent.

Considering these, he believes, these taxes and duties should be completely removed or at least significantly reduced in the coming National Budget with the intention of promoting solar energy in Bangladesh.

Khondker Morshed Millat added that without the right set of tax incentives solar energy entrepreneurs will not be able to capitalise on the available green finance from commercial banks and NBFIs.

Tax incentives must be ensured to reduce prices of solar energy systems which in turn will increase the demand for solar energy in Bangladesh to a significant extent, said Dr Nasif Shams.

He further added that with the desired level of increase in demand for solar energy, local entrepreneurs may even be interested to produce the said inputs domestically.

Products imported for renewable energy must not be equated with other imports, said Dipal C Barua.

While the government may lose some revenue by exempting all duties and taxes on solar energy-related imports, the possible reduction in fossil fuel expenses due to the expansion of solar energy will much higher- he added.​

 

[Saif]

Renewable energy will save 5,000 MW power: Saber

Environment, Forest and Climate Change Minister Saber Hossain Chowdhury on Saturday said that if the country's agricultural irrigation pumps are converted to renewable energy, it could save 5,000 megawatts of electricity. The minister made the remarks at 2nd Dhaka Renewable Energy Financing Talk o

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Renewable energy will save 5,000 MW power: Saber
Published :
Jun 01, 2024 23:21
Updated :
Jun 01, 2024 23:21

Environment, Forest and Climate Change Minister Saber Hossain Chowdhury on Saturday said that if the country's agricultural irrigation pumps are converted to renewable energy, it could save 5,000 megawatts of electricity.

The minister made the remarks at 2nd Dhaka Renewable Energy Financing Talk organised by Change Initiative at the Bangabandhu Military Museum in the capital today, BSS reports citing press release.

Aiming to combat climate change and promote sustainable development, the government is committed to increasing the production and use of renewable energy, he said.

As part of implementing a green, clean, and climate-resilient economy, the government is working to reduce reliance on coal for electricity production and encourage the use of renewable energy, he added.

Due to limited land availability, initiatives are being taken to install floating solar panels on ponds or water bodies for fish farming underneath or to place solar panels on rooftops, the minister said.

The minister further said: "We are encouraging the private sector to invest in renewable energy projects. The government has set a goal to produce 40 per cent of our electricity from renewable sources by 2041. This goal is crucial for ensuring energy security, economic growth, and environmental sustainability."

Highlighting the need for cooperation across all sectors of society to achieve this vision, Saber said that investment in renewable energy infrastructure and technology, including solar, wind, biomass, and hydropower, is essential.

"To attract both domestic and international investors, we must create a supportive environment with financial incentives and transparency," he added.

The minister said that renewable energy not only reduces carbon emissions but also creates employment, improves public health, and enhances the quality of life.

He stressed the importance of innovative financial instruments in this transformation, such as green bonds, climate funds, and public-private partnerships.

He said:"We expect grants, not loans, from the developed world. The role of research and development in this sector is highly significant. By building strong partnerships and taking bold steps, we can make renewable energy the cornerstone of our nation's progress and prosperity."

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[Saif]

Capacity payments feared to mount significantly

The government's capacity payments to private gas-fired power plants are feared to surge significantly for its failure to purchase power due to gas crisis. Sources said five new facilities with the total generation capacity of 2,673 megawatt have either completed construction or are nearing comple

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Capacity payments feared to mount significantly
M AZIZUR RAHMAN
Published :
Jun 02, 2024 00:28
Updated :
Jun 02, 2024 00:28

The government's capacity payments to private gas-fired power plants are feared to surge significantly for its failure to purchase power due to gas crisis.

Sources said five new facilities with the total generation capacity of 2,673 megawatt have either completed construction or are nearing completion to initiate test runs and then come into operation.

Of the plants, two are owned by the private sector and three by the public sector.

The plants include a 718-MW Reliance-JERA joint venture (JV) gas-fired power plant and 590-MW Anwara Power Plant of the local United Group.

The JV between India's Reliance Power and Japan's JERA has completed construction of its power plants and now carrying out test runs.

Anwara 590 MW Power Plant of United Group has almost completed constructions, said sources.

Two public-sector plants - 156MW Ghorashal 3rd Unit and 409MW Ghorashal 4th Unit - remained idle after completing work due to inadequate gas, according to the Bangladesh Power Development Board (BPDB).

Another publicly-owned 800MW Rupsa Power Plant has completed around 80 per cent of the work.

The BPDB has already started counting capacity payments on new plants as it often fails to buy power from Summit's Meghnaghat 583MW and Unique Meghnaghat's 584MW plants.

Although the duo have started commercial operation recently, the BPDB very rarely keep them operational at one go due to gas crisis and bottlenecks in power transmission systems.

The recent liquefied natural gas (LNG) regasification setback caused from the cyclone Remal has aggravated the gas supply crisis.

The Summit LNG Terminal, which was hit by a stray broken floating pontoon at Moheshkhali in the Bay of Bengal during the cyclone, is now shut, said a senior Petrobangla official.

Dozens of gas-fired plants are now kept idle due to gas crisis and the BPDB has been counting capacity payment on them.

Amid the already surplus generation capacity and limitations in power transmission infrastructure, energy experts warn that this will exacerbate the burden of capacity charges on consumers.

The government paid a total of around Tk 1.05 trillion as capacity payments to power plant owners up to August 2023, according to state minister for power, energy and mineral resources Nasrul Hamid.

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[Saif]

ISA to support Bangladesh in solar energy

The International Solar Alliance (ISA) will provide technical support to Bangladesh to pull in financing for the renewable energy sector. We'll help Bangladesh find a right policy to introduce a right business model for investment in the solar power sector, ISA Director General Ajay Mathur has...

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ISA to support Bangladesh in solar energy
Published: February 24, 2023 21:05:54

File photo used for representational purposeFile photo used for representational purpose

The International Solar Alliance (ISA) will provide technical support to Bangladesh to pull in financing for the renewable energy sector. "We'll help Bangladesh find a right policy to introduce a right business model for investment in the solar power sector," ISA Director General Ajay Mathur has said. He said this while addressing a press briefing in Dhaka Thursday, reports Xinhua.

The ISA is an alliance based on an intergovernmental treaty whose primary objective is to work for efficient consumption of solar energy to reduce dependence on fossil fuels.

The remarks came following Bangladesh's signing of a strategic country partnership agreement with the ISA to accelerate the development of solar energy.

Power secretary Habinur Rahman and Mathur signed the agreement on behalf of their respective sides.

The ISA chief said that land scarcity and a right technological solution have been the biggest challenges to the government in achieving a target of generating 40 percent of electricity from renewable sources by 2041.

"Options like floating solar could be an ideal solution for Bangladesh ... We'll be working to find innovative ideas," he said.

Rahman noted that a total of eight projects were to be implemented under the agreement with the ISA.

These include installations of 12 trolley-mounted portable solar irrigation systems of about 2kW capacity, 12c portable solar paddy threshers of about 2kW capacity, two rooftop solar projects with a capacity of 22kW, a solar cold storage for preservation of agricultural produce, the development of a rooftop project at Chattogram or any other railway station, the installation of a floating solar project in Gazipur and Munshiganj.

Conversion of two manually operated sluice gates to floating solar-powered auto sluice gates in two sites under the Bangladesh Water Development Board is also included in the agreement.​

 

[Saif]

Gas supplies unlikely to normalise this month

Overall, Petrobangla can currently supply around 2,600 mmcfd against a demand of 3,800 mmcfd.

www.thedailystar.net

Gas supplies unlikely to normalise this month
Damaged FSRU of Summit will require repairs abroad

Photo: Summit Group
Gas supplies are unlikely to increase this month as a damaged floating storage and regasification unit (FSRU) owned by Summit Group will require repairs abroad, said the company yesterday.

"The Summit LNG Terminal is expected to return to Bangladesh after repairs, hopefully within three weeks," read the Summit statement.

It said, according to assessments by Bureau Veritas, certification societies and international inspectors, the vessel was now ready to discharge all onboard liquefied natural gas (LNG) before proceeding to a dry dock in either Singapore or the Middle East for necessary repairs.

While Cyclone Remal was raging last month, a broken stray steel structure weighing hundreds of tonnes struck the Summit LNG Terminal, causing significant damage, the statement reads.

"The impact sheared the vessel's outer hull, approximately one metre below the waterline, leading to water ingress into the ballast tanks," it said.

"Despite the severe monsoon conditions, the crew, operators, and owners of the vessel, along with the Summit team, worked tirelessly day and night to secure the vessel and its LNG cargo," it said.

"Their bravery and relentless efforts successfully prevented the loss of the cargo," it added.

"This unfortunate incident was mitigated by the grace of Almighty and the hard work of Rupantarita Prakritik Gas Company Limited (RPGCL), customer Petrobangla, the Summit LNG team, our port service operator PSA Marine, and the vessel provider Excelerate," it said.

"Due to their diligence, a major accident was averted," it further added.

Bangladesh avails gas from two FSRU having a total capacity to supply 1,100 million cubic feet of gas a day (mmcfd). The accident reduced the supply to 600 mmcfd.

Overall, Petrobangla can currently supply around 2,600 mmcfd against a demand of 3,800 mmcfd.

The FSRU only resumed operations in mid-April after undergoing maintenance in Singapore for two and a half months.​

 

[Saif]

Higher non-operating income: State-run energy companies deviating from business norm

TITAS Gas Transmission & Distribution Company's profit grew at 27 per cent year-on-year for the October-December quarter of the FY23, mainly riding on non-operating income. Its non-operating income was Tk 674.89 million in the quarter while operating income was Tk 543.66 million. The...

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Higher non-operating income: State-run energy companies deviating from business norm
Mohammad Mufazzal | Published: February 26, 2023 08:48:49

TITAS Gas Transmission & Distribution Company's profit grew at 27 per cent year-on-year for the October-December quarter of the FY23, mainly riding on non-operating income.

Its non-operating income was Tk 674.89 million in the quarter while operating income was Tk 543.66 million.

The non-operating income of another listed state-run company Padma Oil was almost four times its operating income for the second quarter of the ongoing fiscal year.

Like TITAS Gas and Padma Oil, non-operating incomes far outstripped operating incomes of other state-owned fuel and power companies, hence comprising a bigger pie of the net profits earned.

This is not a new trend perceived only in FY23. Rather, the financial data of the last five years reveals that the state-owned energy companies heavily rely upon income generated beyond their business operations to maintain their profit growth.

Dhaka Electric Supply Company Limited (Desco) is, however, an exception with operating income higher than interest income.

In cases, non-operating income kept companies from going into the red. For example, Except Eastern Lubricants Blenders reported operating loss in FY22 and FY20, but both the years saw hefty non-operating income of the company helping it to gain a profit.

A former director general of Power Cell, BD Rahmatullah was surprised when informed that the state-run energy companies had recorded higher income from outside the business operations year after year.

"Interest income is not part of the business of state-owned energy companies. It's not rational because the companies' income remains blocked," Mr. Rahmatullah said.

The government had hiked energy prices time to time, he said, which should have been reflected in the operating income. "These companies are supposed to roll out the money to boost services," Mr. Rahmatullah said.

Save Eastern Lubricants, the rest of the companies have not issued stock dividend for a long time.

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