[🇧🇩] Energy Security of Bangladesh

[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.

www.thedailystar.net

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.​

 

[Saif]

Offshore gas exploration fails to attract foreign firms

Seven global oil and gas companies purchased tender documents for gas exploration in the Bay of Bengal, but none submitted the papers within the deadline, which ended yesterday.

www.thedailystar.net

Offshore gas exploration fails to attract foreign firms
Seven purchased tender documents, but ultimately none showed up

Seven global oil and gas companies purchased tender documents for gas exploration in the Bay of Bengal, but none submitted the papers within the deadline, which ended yesterday.

The deadline was initially set for September 9 before being extended by a month. Yet, no company turned up with the documents.

Petrobangla Chairman Zanendra Nath Sarker confirmed the matter to The Daily Star.

At the same time, two other companies did not buy tender documents but purchased seismic survey data, information that indicates the potential for gas and oil exploration in an area, he said.

Gas exploration in the Bay of Bengal was also a long-discussed topic during the previous government's 15-year tenure.

Insiders say the past government was reluctant about exploration, instead focusing on importing high-cost liquified natural gas (LNG).

On March 10 this year, Petrobangla floated the tender, inviting international oil companies to explore Bangladesh's maritime area -- the first major initiative to exploit the natural resources from the sea after maritime border disputes were settled with India in 2012 and with Myanmar in 2014.

The tender process was opened for nine out of the 11 blocks of the shallow sea and all 15 deep sea blocks.

Only foreign companies with experience in offshore daily production of at least 15,000 barrels of oil or 150 million cubic feet of gas a day (mmcfd) were allowed to participate.

The model "production sharing contract" (PSC) attached to the new tender was made more attractive than previous contracts, allowing international companies to a greater share of profits.

This time, the gas price -- which used to be fixed in the past -- was set at 10 percent of the present price of Brent Crude, an international benchmark for oil prices.

Other attractive features of the tender include full repatriation of profits, no signature bonus or royalty, and determination of oil prices based on the fair market value prevailing in South and South East Asia.

In 2019, Petrobangla finalised a PSC but did not float the tender, citing a lack of interest from global companies.

This time, before floating the tender notice, the government conducted a two-dimensional multi-client seismic survey, the absence of which was also blamed for the lack of interest on the part of foreign companies during previous attempts.

Prof Badrul Imam, a renowned geologist, was surprised after hearing the news.

"I don't know if there was any weakness in our campaigning or if there is any lack in promotional packages or the advertising process," he said, adding that the Bay of Bengal is a "textbook example" of a region with huge gas resources.

Petrobangla Chairman Sarker said the state-owned energy company needs to analyse why the companies purchased the tender documents but did not submit any papers.

Petrobangla needs to sit with the companies in official and unofficial discussions, he said.

"We will find out the gaps in the process, discuss those with the government high-ups and then re-evaluate the tender documents," Sarker added.​

 

[Saif]

AL crony keeps raking in abnormal profit

One of the Awami League cronies, who made it to the recently published White Paper on economy for raking in abnormal profit, continues to do so with its business monopoly as an independent power producer, while paying less for years for the gas it uses in its plants...

www.newagebd.net

AL crony keeps raking in abnormal profit
Emran Hossain 10 December, 2024, 00:28

One of the Awami League cronies, who made it to the recently published White Paper on economy for raking in abnormal profit, continues to do so with its business monopoly as an independent power producer, while paying less for years for the gas it uses in its plants.

The United Power Generation and Distribution Company Limited that owns two commercial independent power plants, which are the only power plants of this kind in the country, has refused to pay for years the legitimate price for the gas it uses for power generation.

Years of paying less since January 2018 has led to the piling up of the company’s dues to the state-owned Titas Gas Transmission and Distribution Company Ltd to Tk 486 crore by October 2024, eight months after the Appellate Division had ruled against it holding back the payment.

The company commercially producing power was not supposed to receive the gas in the first place, considering the 2008 policy to enhance private sector participation in the power sector, amidst rapidly depleting gas reserve and staggering energy crisis.

The story of how the company, which fetched, almost without failing, 50–74 per cent annual profits over the last decade, used the scarce national resource for commercial purpose is a telltale sign of Awami League’s brazen favouritism, according to energy experts.

The United Power that purchased gas for Tk 988 crore between 2017–18 and 2023–24, earned Tk 3,799 crore from electricity sale.

‘The United has refused to pay legitimate price for rather a long time. Its gas supply should be disconnected,’ said Shahnewaz Parvez, managing director, Titas.

But business monopoly stood in the way, he said, reminding that the United Power was the only company supplying electricity in the Dhaka and Chattogram export processing zones. The power plants, with installed capacity of 164MW, were established with Bangladesh Export Processing Zone Authority’s approval in 2008 and 2009, just around the time Awami League assumed power. The two plants’ establishment cost was over Tk 1,005 crore.

Energy experts explain that a commercial power plant is essentially different from other power producers such as independent power producers, given that the government takes no risk and responsibility for the commercial one, leaving its construction and business to be operated on its own. Independent power producers, also known as IPPs, on the other hand, enjoy privileges from government, such as, guaranteed fuel supply and electricity sale. The government buys electricity from all the IPPs in the country.

The ‘Policy guidelines for enhancement of private participation in the power sector, 2008’ states that commercial power plants’ investors will have to arrange their own fuel and energy.

The policy, however, also allows commercial power plants to obtain licence as an independent power producer. But such a licence, known as COIPP, combining two types of power plants, was awarded only to one company: United Power.

The White Paper released by the interim government cites United Power as a member of Awami League’s favoured groups that received special terms. The company receives gas at the IPP rate of Tk 15.75 per meter cube instead of the captive rate of Tk 30.75 per meter cube, the paper says.

‘…selling power at the commercial rate to the Dhaka and Chittagong EPZ, thus raking in abnormal profit,’ reads a line of the White Paper.

A year before the United Power obtained the licence in October 2009, it had signed a deal with the Titas for purchasing gas at the captive rate for its Dhaka EPZ power plant.

The captive rate for purchasing gas, applicable to captive and commercial power plants, has always been higher than the IPP rate. In 2009, the difference in gas prices for the IPP and captive was Tk 1.12 per unit, which is Tk 15 at the moment.

The United Power started paying the IPP rate after obtaining the licence and continued to do so until August, 2022, when the High Court ruled that the company must pay separate rates—the captive rate for electricity sold commercially and the IPP rate for electricity sold to the government.

The High Court order came following a legal battle triggered by Titas asking for separate rates in 2019.

The United Power’s outstanding bills resulting from paying less stood at Tk 377 crore in 2022 when the High Court ordered in favour of the Titas to charge separate rates. In December 2022, the United Power agreed to pay back the dues in 40 instalments, only one of which—Tk 30 crore—has so far been paid.

But after the company had started paying the separate rates from August 2022, it stopped paying higher heating value which is obligatory under the contract when the supplied fuel produces heat higher than contracted. Fuels with higher heating value yields more production.

The United Power had tried to have the High Court order reviewed by the Appellate Division, but its petition was discharged in February this year.

Still, the company did not clear its dues.

‘The bill the company paid was barely half of what it had owed,’ said Hasan Mehedi, member secretary of Bangladesh Working Group on Ecology and Development, analysing data obtained from the Titas.

How much the United Power owed to the Karnaphuli Gas Distribution Company Limited is unknown.

The working group’s analysis also revealed that 23 per cent of the power produced between 2017–18 and 2023–24 was supplied to the national grid, while the rest went as a commercial supply to the Bangladesh Export Processing Zones Authority.

Last year, the United Power declared 20 per cent profit. Its profit stood at 74 per cent in 2018, followed by similar profits made in 2016 and 2017. In the other years, since 2013, the company reported 50 per cent or more profit.

Neither the Bangladesh Power Development Board nor Titas or Bangladesh Energy Regulatory Commission officials have any idea about the rates at which the United Power sells power commercially.

BERC officials recalled the pressure under which they issued the COIPP licence to the United power. There are seven other commercial power plants, all holding COPP licence, which is awarded exclusively for commercial power production, despite desperate attempts to have it changed to COIPP.

The United Power has been lobbying for some time now for a COIPP licence for its third commercial power plant, Leviathan Global Bd Ltd, a 53MW power station under construction at Karnaphuli EPZ.

‘The United Power is enjoying absolute monopoly in business,’ said energy expert Mohammad Tamim, who was a member of the committee that prepared the White Paper on the state of economy made public on December 2.

The United Power did not have to look back after its venture of the two COIPP power plants made eye-watering profits. Since 2011, the United Power set up seven more power plants—all IPPs—with installed generation capacity of 1,041MW.

United Power’s company secretary Elias Howladar told New Age that he did not have any comments about any of the matters.​

 

[Saif]

undefined | The Financial Express

thefinancialexpress.com.bd

Gas and oil exploration: yet another failed bid
FE
Published :
Dec 09, 2024 23:43
Updated :
Dec 09, 2024 23:43

Belying expectations of the Petrobangla officials, this time also the international bid Bangladesh floated to woo international oil companies (IOCs) has drawn a blank. Not a single IOC did come for bidding for bay hydrocarbon exploration. The head of the state-run Petrobangla, according to an FE report, was clueless about the lack of response. But market insiders have blamed the lack of confidence and inadequate data on offshore blocks for IOCs becoming non-responsive. The officials concerned have time and again made public statements claiming that the incentives offered to the prospective IOCs this time are far more attractive than before. If it is so, they need to explain the reasons for the latest debacle.

The offer made by the Petrobangla to intending IOCs is no doubt lucrative. A total of 24 offshore blocks — of which 15 are deep sea and the rest nine shallow-sea — are on offer for exploration. Production-sharing contracts (PSCs) are more attractive than ever before. The question is, if the tender has been reviewed well by energy experts in order to protect the country's long-term interests. After all, the instruments of contracts to be signed for exploration of gas and oil between Petrobangla and the successful IOCs were prepared during the previous regime known for leaving leeway for extracting commissions or to put otherwise, graft. Even some IOCs at times proved they are not as credible as they claim to be. The long-drawn litigation between the Scimitar

Exploration Limited and Bangladesh provides for a strong evidence of strained relations and creation of bad blood. Hopefully, the inexperience the ministry concerned showed in the early 90s when the Scimitar was awarded the contract will not recur this time while signing any oil exploration deal.

Let the positive vive as demonstrated by the IOCs sustain for the nine-year period of exploration. Regarding the energy crisis Bangladesh is now facing, it would be wiser had the drilling of a few of the offshore blocks been completed meanwhile. Faulty energy policy pursued by the previous government has drained the country's forex reserve and will continue to do so until the companies engaged in exploration hit offshore gas or oil or both reserves and go for production. Even this intervening period will stymie the country's growth potential.

There are no two opinions about the country's need for achieving self-sufficiency in energy. Bangladesh now faces the dilemma over its options for fossil fuels and renewable energy. Not only the developed countries but also some developing and underdeveloped ones have embarked on ambitious plans for production of targeted green energy by specific periods. Already countries like Costa Rica, Uruguay and Kenya have made tremendous progress in meeting their electricity need from renewable energy. But the world's largest carbon emitter China is also the leading global investor in and producer of renewable energy. On that count Bangladesh lags far behind. Because the Azerbaijan climate conference failed to make any headway in bridging the difference between the developed world and poor and vulnerable countries, Bangladesh will get ample time to make rational use of its offshore gas and oil if and when produced. But it should carry on its renewable energy programmes undeterred.​

 

[Bilal9]

Why is Rampal power plant not being shut down?​

Kallol Mustafa
Published: 27 November 2024, 02:56

The interim government has decided to cancel unprofitable and unimportant projects of the previous government for political reasons. A list of 35 such projects has been prepared, which will be canceled, funding suspended or cost cut. The total cost of these projects is more than one lakh crore taka.

Of the 35 projects that are going to be canceled or suspended, some are in the middle of their work, some have just started, some have not started yet, and some are in the approval stage. The government has said that the projects taken during the previous government are being canceled considering three aspects. These are -

One. To what extent has the project been taken for the needs of the people.
Two. What will be the benefits from the project.
Three. Whether the project is harmful to the environment or not. ( Prothom Alo , 10 November 2024).

We welcome the interim government's decision to cancel unnecessary, unprofitable, and environmentally harmful projects. We also believe that the three considerations that are being used to cancel projects under construction or planning should also be applied to projects that have already been launched.

Planning and Education Advisor Wahiduddin Mahmud's words are important in this regard. In a meeting with officials of the Planning Ministry on August 19, he said, "Just because a project is ongoing doesn't mean it should be kept. If the remaining money is spent, it should be considered whether there will be a profit or a loss. This is economic rationality. If there is a loss, it is better to drop it."

In this regard, if a project is unnecessary, if it is proven to be harmful from an environmental perspective, it must be canceled even after it is built. Because, the longer the harmful project continues to operate, the greater the damage will be. Rampal Power Plant is one such project, which is unnecessary on one hand, and on the other hand, the economic and environmental impact it will have on the Sundarbans is immense.

The Rampal power plant is not essential to meet the country's electricity demand. About 40 percent of the power plants in the country are idled and capacity charges are paid. Apart from that, the power plant is often partially or completely shut down due to technical faults and coal shortages. The fact that the construction of the Rampal power plant at the expense of the Sundarbans is unnecessary has been said by the National Committee for the Protection of Oil, Gas, Mineral Resources and Power and Ports, as well as many others, including Syeda Rizwana Hasan, the current government's advisor on environment, forests and climate change.

He and his organization Bangladesh Environmental Lawyers Association (BELA) had opposed the construction of the Rampal power plant since 2012. He questioned why a polluting coal-based project like Rampal was needed even though the country had overcapacity in electricity. (Daily Star Online Bangla, July 6, 2021)

Therefore, the environmental advisor clearly understands how harmful the Rampal power plant is to the Sundarbans. Now it is necessary to take steps to quickly close the power plant to protect the Sundarbans. It has already started having a harmful effect on the Sundarbans. Citing a report by the government organization Center for Environment and Geographic Information Services (CEGIS), news has been published that the waste water of the power plant is being discharged into the Maidara and Pashur rivers of the Sundarbans without any treatment.

According to this CEGIS report, completed from February to April 2024, coal is being transported without being properly covered. The construction of coal storage sheds, coal stack yards and ash silos has not been completed as planned. As a result, the environment of the Sundarbans is being polluted and the amount of pollutants mercury, nitrates and phosphates in the river water has increased more than before. (New Age, 2 November 2024; Daily Star, 10 November 2024)

This CEGIS, however, conducted an environmental survey of the Rampal power plant and declared it environmentally friendly. As a result, there are questions about how much the actual picture of the pollution of the power plant will be revealed in this organization's report. Even so, what has emerged in the report is quite worrying.

Apart from the deposed dictator and his cronies, the Rampal power plant was opposed by all political, social and cultural circles of the country at that time, including the National Committee for the Protection of Oil, Gas, Mineral Resources and Power and Ports, the National Committee for the Protection of the Sundarbans, various environmental organizations and many domestic and foreign independent experts. The then main opposition party BNP and the 20-party alliance also demanded the cancellation of the Rampal power plant. BNP Chairperson Khaleda Zia held a press conference in August 2016 and presented a picture of the negative impact the Rampal power plant could have on the environment, economy and above all the Sundarbans. (BBC Bangla, 24 August 2016)
The United Nations organization UNESCO also urged the government to withdraw from the construction of the Rampal power plant, which is harmful to the Sundarbans. But the government, desperate to protect India's strategic interests in exchange for support to stay in power, built the Rampal power plant in an authoritarian manner, ignoring all public opinion. In this regard, Syeda Rizwana Hasan once said, 'The Rampal power plant has no acceptance among the people, it has been imposed by force.' ( Prothom Alo , 10 July 2020)

There is a consensus within the country that the Rampal power plant is harmful to the Sundarbans. The current government, like the previous government, has no responsibility to look after India's interests. Therefore, before further damage is done to the Sundarbans, the interim government should take the initiative to close the Rampal power plant and initiate the necessary legal process for it.

● Kallol Mustafa is a Writer and Analyst