No escape from energy crunch

AT the recently ended US-Bangladesh partnership dialogue on the energy sector, the realisation appears to have finally dawned upon our venerable policymakers that there is no alternative to developing coal as a primary fuel source. One must thank Mr. Tawfiq-e-Elahi Chowdhury, Energy Affairs Adviser to the Prime Minister for his candid remarks that Bangladesh must go for coal-based power plants.

Time needed to develop proven coal fields is a long one. Even more daunting are the costs involved. As pointed out by US Deputy Assistant Secretary for Energy Transformation Robert Ichord, Bangladesh would require at least $15billion to implement its energy sector plan by 2030 where coal features prominently. But before getting into the whole argument on why coal has been sidelined for practically the entire tenure of the present government, one should look at the current scenario. With a proven reserve of about 16 trillion cubic feet (tcf) of gas and annual consumption standing at 0.74tcf per annum, the country is set to literally run out of gas in a little over 15 years.

The question here is that why are we discussing coal at the fag-end of the current term of government? What has the government been doing all these years? And to ask for foreign assistance and investments in developing on and off-shore reserves on the premise that Bangladesh has "never reneged on any of our contracts" is perhaps asking for a little too much, especially in the face of the fact that there is no scope for bringing changes to current traffic structure for the onshore fields.

No foreign investment is likely given the present political climate. Until things improve on that front, nothing much is going to happen on any other front. Besides politics, there have been hardly any movement to stop wastage of natural gas, particularly in the gas-guzzling fertiliser factories. The sad fact is that we are in a mess of our own making. We are out of time. Any concrete initiatives for mining coal if started today, the benefit of getting the coal for its commercial use will take 3-4 years.

While the arguments for developing coal may now be grabbing headlines today, it was effectively put into cold storage at policy level some time ago. And what had been adopted as primarily an interim solution, i.e. the use of rental/quick rental power plants has now become our mainstay for supplying energy to the economy. Today, we are actually being forced to extend many rental contracts since the base-load power plants (running on gas/coal) that had been envisaged have not materialised. Today the national exchequer is dishing out nearly US$3billion to pay for the import of oil, a drain that is taking a massive toll. The constant upwardly revision of energy bills (as mandated by the stringent conditions set forth by International Monetary Fund) is, on the one hand eating into consumers' dwindling pockets and on the other, making electricity supplied to industry so expensive that many industrial consumers have resorted to producing their own energy.

So precisely who has benefitted from the rental scenario? Not the economy and certainly not the consumers. Industry is not particularly happy with the tariff and lack of steady supply. Obviously, it has helped a certain coterie of vested interests reap windfall profits. The manner in which such contracts have been handed out have raised questions. Little wonder that a special piece of legislation had to be passed in parliament, namely, Speedy Supply of Power and Energy (Special Provision) Act in 2010 that guarantees immunity from prosecution for actions taken in 'good faith.'

As pointed out in the Editorial of The Financial Express on May 27, "there have been many allegations of irregularities by a section of unscrupulous rental power plants. But what has been revealed in a recent FE report may sound incredible to many. Exploiting loopholes, kept, deliberately, or otherwise, in their contracts with the Bangladesh Power Development Board (BPDB), the sponsors of a section of rental power plants, which are mere junks, have been exacting a substantial amount of fund from the government in a deceitful manner. These plants, allegedly, generate no power because of their own faults. But those somehow manage to show that they are in fact generating power as required under the contracts. It is none but the BPDB which is blamed by the rental power plants for purchasing less or no electricity from them. However, the refusal to buy electricity has a cost that the government has to pay to the power plants concerned in the form of 'capacity payments.' The rate of such payment to a 50 megawatt capacity generator per day is Tk 3.36 million."

This is ground zero. In military parlance, this is Def-Com 1. Wake up and smell the coffee.

The writer is Assistant Editor, The Daily Star.