Following the Pakistan model

THANKFULLY, we haven't got to Pakistan's stage, but rest assured that we will. Now there is a country that went the rental power way and today is sitting with load-shedding 20 out of 24 hours per day! It is interesting to look upon the Pakistan experience, since we here in Bangladesh appear to be following in our former masters' footsteps to the letter. As pointed out by Dr. Mushfiqur Rahman in a recent article published in the Financial Express "Mr. Nawaz sharif's government intends to generate 2,000-3,000MW of electricity within the first three months. Two-thirds of Pakistan's electricity is generated with oil-based power generation to coal and gas-run power generation as well as hydroelectricity. It also plans to add 16,000MW of electricity of electricity to the national grid in midterm of Mr. Sharif's government to be sworn in on June 5….Mr. Sharif's government will disclose its plan to sell treasury bills worth US$5 billion to 'pay off a chain debt choking the country's power sector and its economy and boost electricity output".

Like Bangladesh, Pakistan has been facing a critical shortage of primary fuel supplies. Pakistan is not a gas rich country. As per the Express Tribune 14 March 2011 published information, Pakistan's total proven gas reserves were 31.3 trillion cubic feet as of January 1, 2009. Iran's reserves are 32 times higher and Russia's are 54 times greater. Even tiny Qatar has 29 times more gas than Pakistan. Pakistan's domestic gas production is expected to fall from the current 4 billion cubic feet per day (cfd) to 2 billion cfd by 2020. Demand, on the other hand, is expected to soar to 8 billion cfd by that time, creating a 6 billion cfd shortfall. Therefore, Pakistan now is trying to diversify its fuel sources and developing its coal and hydro electricity potentials. Also, it intends to reduce its import oil dependence for power generations.

Going the rental-way was meant to be the stop gap solution which, like Bangladesh turned out to be a financial nightmare. Unlike Pakistan, Bangladesh is not strategically located next to resource rich countries like say, Afghanistan or Iran. Fortunately for Pakistan which has entered into a natural gas supply contract with Iran that will supply the former with 750million cubic feet of gas per day from 2014. So in effect, should the Iran-Pakistan deal survive US objections on alleged UN embargo violations , Pakistan could indeed have found a way out of the rental-power quagmire.

What could Bangladesh have done different not to be in this situation? The coal policy remains a document that has not been finalised. Why is that? Or are we to assume that the government has no plans to ratify the policy during its current tenure? If it is the intention to form future power generation on imported coal, why have no contracts been initiated with any of the major coal-exporting countries? Why was the Rampal coal-based power plant planned for the Sundarbans? And if that was best geographic location for setting up a plant (leaving aside the arguments of both environmentalists and energy experts), why have preparatory works involving construction of infrastructure not taken off?

These are some of the basic questions, which till date remain unanswered. The stark resemblance between Pakistan and Bangladesh is dumbfounding. According to a report published in Pakistan's Express Tribune, the state-owned Pakistan State Oil had been forced to halt fuel supplies to power plants due to unpaid oil bills amounting to nearly $2billion. Bangladesh is following a similar trajectory with many plants lying idle since it has been found that it is easier for the exchequer to pay plants for not producing electricity, rather than foot the import bill for oil.

Pragmatism would have dictated the adoption of energy efficiency measures in some of the most inefficient sectors of the economy including steel and fertilizer. Yet, as we approach the end of a full-term in office we find ourselves in a situation that shows no light at the end of the tunnel. That is why we find our erudite policymakers admitting that there is no recourse to coal. Well that is just grand. In the final analysis of things, should there be a change in government or even if the present government were to be re-elected, the brunt of the rental-saga would have to continue for nearly the whole of the next term. For meaningful coal-fired power generation that would be cost effective (in contrast to rental power) is full four years away were the first contracts signed today. The energy fiasco will undoubtedly be the subject matter of countless case studies in business schools for years to come.

The writer is Assistant Editor, The Daily Star.