The CG has recently approved seven small independent power plants (IPPs), in expectation that implementation of these would be faster. The conditions on the ground suggest that commissioning of these IPPs is not possible (if, not impossible) by end-2008 as expected by the CG. On the other hand, the economics of IPP is not very encouraging. The issue is further compounded by international/national private sector participation. Lessons should be learned that private sector investment is efficient only when there is a regulatory regime which is adequate and efficient.

It is public information that India itself is an electricity deficit country, although there is some excess generation in the Northeast (not in West Bengal). Nepal and Bhutan have large hydropower potential, estimated at 83000 MW and 30000MW respectively, but none has any excess electricity that Bangladesh can import now.

India has recently agreed to finance a 3,000 MW hydropower project in Nepal. Implementation of this project will take at least five years. Besides, it is most unlikely that Nepal would export any electricity from this project to a third country, i.e. Bangladesh.

Bangladesh has some coal reserves, but it is not necessarily a resource. Resource is defined in terms of commercial viability. For example, North Sea oil will not be considered as a resource if international oil price falls below its production cost, which is six times higher compared to Middle-East.

The CG is reportedly reconsidering the coal policy. It would be a futile exercise unless "resource" is defined first. The new policy should also consider stopping coal production at Barapukuria, since the cost of production is $90/MT while it costs $50/MT only to import. The other key issue is the technology. Only 30% of deposits can be recovered by underground mining (e.g., Barupukuria) against 90% by open pit mining (e.g., Phulbaria) -- which is not however acceptable for land, resettlement and environmental reasons.

Gas exploration in the country has been limited, although the finding rate is considered to be the highest in the world. Government estimates of current gas reserve vary between 8.4 TCF and 14 TCF while, according to an undisclosed study, it is as high as 103 TCF (1999). Increased international interest in Bangladesh's gas is indicative of this.

The US Department of Energy also acknowledges Bangladesh's becoming increasingly important in the international energy market. Bangladesh is perhaps floating on gas, but inadequate policy and hasty deals may subject the nation to exploitation. Nigeria is a classic example. A lesson should be also learned from Indonesia's management of oil resources, which has not been satisfactory, compared to neighbouring Malaysia.

The recent POL price hike in the international market encouraged rich and poor countries alike to develop alternative fuels, including bio-diesel for both economic and climate change reasons. This led to the formation of a forum early this year, of five countries, namely, USA, Brazil, South Africa, China and India, to promote bio-diesel (and, ethanol).

In India, there is a buzz everywhere about bio-diesel. The craze is further fueled by EU's offering 20% tax cut, and also 43 euros/hectare to farmers (under a minimum 10-year contract). Success of the pilot projects is encouraging. However, it might not be so in the long run, given the magnitude of poverty, unemployment and malnutrition in India.

What would happen if all the wastelands are taken away for (Jatropa) plantation? What would happen if agricultural lands are also claimed in phases, compromising food for energy? Conditions in Bangladesh are more challenging. We are a chronic food deficit country. We have a small land area and hardly any wasteland. We have to think bio-diesel twice before its promotion.

The government must recognize that there is no short cut to energy security. The only option, which can generate immediate result is "negawatts." It focuses on using electricity efficiently, e.g., Australia recently banned tungsten bulbs to make room for energy saving bulbs. More efficient use is already America's biggest energy source -- not oil, gas, coal, or nuclear power.

By 2000, reduced "energy intensity" (compared with 1975) was providing 40% of all US energy services. It was 73% greater than US oil consumption, five times domestic oil production, three times total oil imports, and 13 times Persian Gulf oil imports. The lower intensity was mostly achieved by more productive use of energy (such as better-insulated houses, better-designed lights and motors, and cars that were safer, cleaner, more powerful, and got more miles per gallon), partly by shifts in the economic mix, and only slightly by behavioural change.

Such energy efficiency programs can save large amounts of energy and money. Also, it has an added benefit of creating new employment opportunities. In the US, 2.1 jobs are created in negawatts compared to 1.0 job for an equivalent amount of BTUs in new energy production.

Regarding power crisis, it is misleading to say that the country has a 800-1000 MW deficit. What this actually means is the difference between installed capacity and production. Actual deficit, or need for power, is much higher. The Ministry of Energy, using old data, has recently prepared a demand projection for the next twenty years.

The government is also reportedly reconsidering the coal policy. All these initiatives look like desperate attempts to put the cart before the horse. What the government needs is the preparation of a comprehensive energy policy, not separate policies for electricity, coal and gas. The policy should be guided by a vision, e.g., what Bangladesh should look like in the year 2050 when population is likely to be stabilized at around 300 million.

The policy must foresee, in view of energy security, what should be the ideal energy-mix, and accordingly consider options including negawatts (immediate); imported coal for electricity generation (unless adequate carbon credit is provided by the developed countries); production sharing contract(s) with Nepal and Bhutan for hydropower (medium term); and, generation of nuclear power (long-term) to address new challenges.

In consideration that the country is currently in a power crisis and there is no short cut, the government should proactively pursue two actions which can be achieved in a relatively much shorter time. Firstly, megawatts -- based on the lessons learned from US, Australia and many other countries; and secondly, minimize dependence on POL by increasing use of compressed natural gas (CNG).

Bangladesh meets all its POL demands through import. Diesel constitutes more than 80% of POL, of which 82% is consumed by the transport sector. According to Bangladesh Road Transport Authority (BRTA), more than 80% of the vehicles in the country are registered in Dhaka. This niche market should be served adequately and efficiently by CNG, which should not be an impossible task for the CG to achieve within next twelve months or less.

A recent study under the Air Quality Management Project (AQMP) financed by the World Bank suggested huge indirect savings if the government distributed CNG refueling equipment, buses, kits and cylinders at no direct cost to the entrepreneurs.

The government should also give top priority to management of (sensitive) gas resources. A plan of action should be prepared to provide every household, manufacturing unit and service industry as applicable with access to gas. Savings will be much higher than gas export revenue incomes.