FORTNIGHTLY MAGAZINE, VOL 8, ISSUE 1, JUNE 16 -30Editor Mollah M Amzad Hossain Advisory Editor Anwarul Islam Tarek Saiful Amin International Editor Dr. Nafis Ahmed Contributing Editor Saleque Sufi Dr. A Rahman Managing Editor Afroza Akther Pervin Consultant Editor Enayet Kabir Design & Graphics Md. Monirul Islam Photography Bulbul Ahmed Farzan Karim Chowdhury Magazine Administrator AKM Shamsul Hoque Production Mufazzal Hossain Joy Computer Graphics Md. Uzzal Hossain Technical Support Laser Scan/Colour Touch Circulation Assistant Khokan Chandra Das Editorial, News and Commercial Room 509, Eastern Trade Center 56 Inner Circular Road (VIP Road) Naya Paltan. GPO Box : 677 Dhaka-1000, Bangladesh Tel & Fax : 88-02-8354532 Email: ep@dhaka.net energypower@gmail.com Website: www.ep-bd.com Price Bangladesh: Tk 25, SAARC: US$ 3, Asia: US$ 5, Europe: US$ 6, North America, Africa & Australia: US$ 7.5

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nergy crisis in Bangladesh is so critical now that the government has to compromise with its policies despite widespread criticism. The government is desperate to improve electricity situation by adding more megawatts to the existing generation capacity through quick rental power deals. The gas supply situation too is not encouraging. The gas-electricity twin crisis has emerged as a national crisis. In the recently announced national budget, the government has attached utmost priority to resolving the crisis. But everything depends on smooth implementation of the plans since implementation has been a chronic problem in Bangladesh. We are pleased to announce that Energy & Power magazine steps into its eighth year of publication. This was a long journey with quite a lot of obstacles in every step. But continued support from our readers helped us overcome the impediments. We convey our heartiest congratulations to all our readers, contributors, patrons, advertisers and well-wishers on our seventh anniversary of publication. We believe the sincere cooperation we got from our readers will continue to encourage us to contribute to the energy sector of Bangladesh as well as South Asia.

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and 195 Finance of the lastPlanning Adviser caretakergovernment Dr Mirza Azizul Islam in an interview with the Energy & Power said that he sees nothing wrong with the government to install power plants without inviting tenders.

It does not need an expert to identify and evaluate the reasons behind the prevailing situation in the energy sector. We hope that in the current budget session the treasury bench and the opposition will meet with open mind and discuss the energy situation. There must be meeting of minds. Continued nightmare situation in the energy sector will not benefit anyone. We must develop our capacity to explore and exploit own resources as well as operate and maintain the infrastructures professionally.

COVER

Green Page

The Energy & Power had introduced Green Page marking its stepping into the 7th year to campaign for efficient use of energy, energy conservation and using environment-friendly energy. Encouraged by the readers and patrons, the EP decided to continue with the pages as it is stepping into the 8th year. The EP would make its best effort to keep up the campaignPage: 179, 181, 182

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WORLD WATCH Latest Development in World SNAPSHOT Latest Development COVER The Nightmare Goes On GREEN PAGE Pioneering Renewable For Greener Life Country Needs to Set up Green Industries Having Energy Generation Facilities: Barua Paragon Plans Biogas Plants to Produce Power, Fertilizer REPORT Save Lives from Dhaka Death Trap Bangladesh to Spend $110 mln to Develop Six Gas Wells Tk 61B Budget to Revamp Power, Energy CNG Price Hike may Cause Sufferings to People $100m ADB Loan for Building Cross-Border Power Grid TECHNOLOGY Efficient Power for a Sustainable World COLUMN Want Growth and Peace? Go for Power! INTERVIEW Dr Mirza Azizul Fomer Finance & Planning Adviser

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Prof. M Tamim analyses how Bangladesh becomes an energy deficient country gradually from an energy surplus one. He also dwelt on ways to revert again to an energy surplus nation.ANNIVERSARY SPECIAL

19 27 31 36 41 47 53 61 65 73 79 87 91 95

M. Tamim Professor Dr. Md. Hussain Monsurn A S M Alamgir Kabir Mushfiqur Rahman Dr. Ijaz Hossain Engr. A N M Obaidullah Shamim Ara Hassan M. Rezwan Khan Mohammad Shawkat Akbar Engr Khondkar A Saleque Md. Mosharraf Hossain Farhana Shaon Dr. Thomas von Schwarzenberg

Yameen Farook

Coal extraction has been the most debated issue of the country in the recent times. The EP has been in its best effort to bring out very exclusive write ups on the issue, accommodating in its anniversary publication four renowned experts both from home and abroad. They are: Michael Katz, Dr Thomas Von Schwarzenberg, Mushfiqur Rahman & AKM Shamsuddin.

Its not unknown that the country is suffering from acute power crisis and primary energy for power generation. The government is also taking various measures, including giving it top priority in the budget, to overcome the sorry state of the sector. Four experts looked deep into the crisis and came out with possible recommendations to solve the problem. They are: Md. Mosharraf Hossain, Prof. Md. Hussain Monsur, ASM Alamgir Kabir and Khondker A Saleque.

Bangladesh is now working on energy efficiency and energy conservation as part of its effort to mitigate the energy crisis. The EP also thinks it a right approach and gives special focus on the issue by incorporating four articles by Prof. Ijaj Hossain, Abdul Wadud, Yameen Farook and Engr. ANM Obaidullah.

ANNIVERSARY SPECIAL

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Muinul Ahsan Engr. Md. Fazlur Rahman Md. Maqbul-E-Elahi Dipal C Barua Engr Khondker Rezaur Rahman Professor Dr. Shahidul Islam Khan, Asif Iqbal, Mehbuba Tanzid, Nandinee Fariah Haq Dr. Zebun Nasreen Ahmed Dr. M A K Azad, PEng. Morten Siem Lynge Michael Katz Patricia Stevens Engr. A. K. M. Shamsuddin Abdul Wadud Dr. Habib Siddiqui Manzur Ahmed Matthew Doman

129 135 137 140 145The concept of zero-energy building has now become the buzz word across the globe. Bangladesh is not an exception as it started working on it amid severe energy crisis. Shamim Ara Hassan and Dr. Jebun Nasreen Ahmed gave some light on the issue.

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W O R L D WAT C H

Sri Lanka Power Utility to Lose Rs40bn in 2010

Sri Lankas state-run power utility Ceylon Electricity Board is expected to lose 40 billion rupees or 350 million US dollars in 2010 and short term debt is mounting but there are plans to turn the utility around, officials said. The CEB is expected to earn 120 billion rupees as revenue in 2010 but its operational expenses would be 159 billion rupees. "We initially expected revenue to be around 127 billion but the latest projections show that it will be around 120 billion rupees," power minister Patali Ranawaka said. "In the last 10 years the CEB has lost 148 billion rupees and it will lose 391 billion rupees in the next 10 years." This year, the CEB is expecting demand to grow by 7-8 percent, power ministry secretary M M C Ferdinandez said.

US, France, Russia Unhappy With Iran Fuel Deal Proposal

The United States (US), France and Russia seemed to reject Iran's proposals for a nuclear fuel swap, saying it did not build enough confidence about the peaceful nature of Tehran's atomic program. The three powers -- known as the Vienna group -- handed their views on the deal here to International Atomic Energy Agency chief Yukiya Amano just hours before world powers were set to slap new sanctions on Iran. The IAEA confirmed receipt of the three countries' responses but did not reveal the content of their letters. Nevertheless, comments by Washington's envoy to the IAEA's closed-door session more or less set out the countries' concerns about the deal concluded with Brazil and Turkey. Diplomats attending the meeting said France and Russia had expressed similar worries. Iran's proposed arrangement for the supply of fuel for a research reactor in Tehran "provides no alternative means of ensuring that the confidence-building element of the arrangement would be maintained," US ambassador Glyn Davies told the IAEA's 35-member board of governors. Under Iran's proposal, a total 1,200 kilograms (2,640 pounds) of LEU would be shipped out for treatment, around half of the Islamic republic's current stockpile of nuclear material.

GAIL to Complete Dabhol Bangalore Pipeline by March 2012

GAIL India intends to finish construction of its 1,370 km gas pipeline from Dabhol, Maharashtra, to Bangalore, Karnataka, India, by March 2012. With a planned gas transmission capacity of 30 MMcm/d, the trunk pipeline will extend from Dabhol, and pass through Kinjalkarvadi, Kasari river bank, Kharaklat, Tappalkatti Harva forest, Gadag, Gannaikanahalli, Gullur, Sarajapur, Palmaner, Chittoor, Kattivakkam, before terminating in Chennai. The $US1.1 billion pipeline will supply gas to fertiliser and power plants coming up near Bangalore and Mangalore in Karnataka and Goa, GAIL Chairman and Managing Director B.C. Tripathi has said. Terminals are being constructed in Gujarat, Maharashtra and Kerala to process the imported gas and the company plans to connect households in 201 cities India with piped natural gas by 2015.

Power Tariff-Hike to Crush National Economy: FPCCI

A meeting of Pakistans FPCCI has strongly condemned further increase in power tariffs and said that reason made by NEPRA that increase is due to increase in cost of producing electricity is nothing but to crush the national economy which will result in further enhancing cost of doing business. According FPCCI, President FPCCI Sultan Ahmed Chawla convened this meeting at Federation House here Wednesday to discuss the recent power rates by National Electric Power Regulatory Authority (NEPRA). He criticized the government and NEPRA for frequently increasing power rates and said that they have been increased up to 92pc in the last two years. Chawla said that NEPRA and OGRA do not bother to consult stakeholders before any rise in tariff. Increases burden the industries and the masses. This is injustice to local investors and this will increase the cost of local produced goods in national and int'l market and making them uncompetitive in these markets.9

OPEC Weekly Oil Price Rebounds to Above 70 U.S. Dollars

The weekly average oil price of the Organization of Petroleum Exporting Countries (OPEC) rebounded to 71.79 U.S. dollars per barrel last week, the Vienna-based cartel said. This has been the first time for the OPEC weekly average oil price to pick up following a consecutive price decline of four weeks. OPEC's weekly average oil price hit its record high this year of 83.36 dollars a barrel in the last week of April, which was followed with a continual decline, reaching 68.95 dollars a barrel in the last week of May. It was also the lowest level of the past 35 weeks.

SNAPSHOT

PM Urges Russia to Implement Rooppur Power Plant

Prime Minister Sheikh Hasina urged the Russian government to take immediate steps to implement the Rooppur Nuclear Power Plant Project (RNPP) as soon as possible.

Bangladesh economy in 2009 performed remarkably well despite global economic recession and maintained a steady growth with 5.9 percent growth which is expected to be 6 percent in 2010, International Chamber of Commerce, Bangladesh (ICC,B) President Mahbubur Rahman said. Despite perceived uncertainties during the year (2009), the country achieved 5.9% growth in FY09 and is expecting 6% growth in the FY10, he said while presenting the Executive Board Report at the 15th Council of ICC,B held in its office. Mahbubur Rahman said there is a strong justification to use local coal for power generation considering constraint of gas availability. The estimated reserves of coal are close to 3,300 million tonnes, while the proven reserve is about 884 million tonnes. With adequate power and energy supply and appropriate infrastructure, the country could have achieved a higher GDP growth, he said. Considering energy as the most crucial area for the economic development, the ICC,B president said power and energy crisis should be addressed on a top priority basis. Bangladesh will be one of the 11 countries that have a high potential of becoming a leading economy in the 21st century along with Brazil, Russia, India and China, it said referring to the prediction made in the Goldman Sachs Report released on December 4, 2009.

ICC,B Report Backs Coal-Based Power Generation

PM Sheikh Hasina

The prime minister made the request when a six-member delegation of the Russian Atomic Energy Corporation Rosatom led by its Director General Sergey V Kirienko called on Prime Minister Sheikh Hasina at her official

residence Ganobhaban. Bangladesh signed a framework agreement with Russia on cooperation for its maiden nuclear power plant on May 21 this year.

Chevron to Drill Bangladeshs Gas Field in October

US oil giant Chevron (CVX.N) and a joint venture of South Korea's G S Caltex, will start drilling for hydrocarbons at a Bangladeshi gas field in October this year, a senior official said. The firms had begun preparatory works for oil and gas exploration in block seven located in southern Patuakhali district two months ago, Hussain Monsur, chairman of the state-run Bangladesh Oil, Gas and Mineral Corporation, or Petrobangla, said.

Country Reels under Gas, Electricity Crisis

Steve Wilson

The country is reeling under gas and power crisis again as generation has aggravating public sufferings, reached the lowest level since the onset of the current summer with mounting woes of sluggish business activities and fall in industrial output. Frequent power outages coupled with low gas pressure are taking heavy toll in every sphere of day to day life and in fields and factories. Overall electricity generation Wednesday was around 3,700 megawatt (MW), down by 500 MW from the previous week's average of 4200 MW, while gas output was less by around 100 million cubic feet (mmcf) from the month's average of 1980 mmcf. PDB officials said gas supply shortfall led to closure of Tongi, Haripur and newly installed Shiddhirganj power plants. Low gas pressure has reduced power generation of Ashuganj, Mymensingh, Baghabari, Rauzan and Shikalbaha power plants.10

Petrobangla said drilling of the well in the block would cost more than $20 million and the oil firms planned to drill two more wells there if the first produced positive results. Steve Wilson, president of Chevron in Bangladesh, said last December the firm completed a seismic data acquisition program for the block and evaluation and data processing were under way. "An exploration well is planned to be completed by 2011," he said in a statement. G S Caltex owns a 45 per cent stake while Bangladesh Petroleum Exploration and Production Company Limited, a subsidiary of Petrobangla, holds 10 per cent carried over interest in this block.

SNAPSHOT

ADB to Help Bangladesh Boost Natural Gas Supply

The Asian Development Bank (ADB) and the Government of Bangladesh signed an agreement for $266 million in loans to help Bangladesh address natural gas supply constraints in a bid to spur economic growth and cut poverty.

Barua Urges UNIDO to Help Develop 'Green Industry'

M Musharraf Hossain Bhuiyan, Secretary, Economic Relations Division (ERD) and Thevakumar Kandiah, Country Director for ADBs Bangladesh Resident Mission, signed the loan agreement on behalf of the Government and ADB respectively, at a ceremony at ERD. The assistance under Bangladesh Natural Gas Access Improvement Project, will be used to build new gas transmission and distribution pipelines to meet growing demand, and to expand coverage to less developed areas in the southwest. The project will install compressors and metering systems to boost reliability, improve safety, and strengthen the management of gas supply and demand. An investment program to promote energy-efficient gas use will be drawn up, and training and support will be given to sector agencies. The project will also help improve supply efficiency by developing four new wells and installing gas processing plants in Titas gas Fields to increase gas production by 120 million cubic feet per day (mmcfd). Around 200,000 new households in the southwest, along with 1,400 industrial and commercial establishments, will receive gas as a result of the expanded distribution network.

Industries Minister Dilip Barua sought more collaboration with UNIDO in the areas of technology transfer, capacity building and financial support to ensure greening of industries. He said rapid and sustainable growth of Small and Medium Enterprises (SMEs) could be useful tools to significantly reduce poverty and unemployment.

Dilip Barua

He was speaking at a daylong seminar on "Application of Green Technologies in SME Sector for the Sustainable Industrial Development of Bangladesh". He said local SMEs growth is significant. Around six million SMEs and micro-enterprises are contributing 25 per cent to the GDP creating jobs. Director General of the United Nations Industrial Development Organization (UNIDO) Dr Kandeh K Yumkella assured technological support to supplement its efforts in greening the industries of Bangladesh. Green technologies can increase the GDP by two per cent and solar power is the primary and immediate option for Bangladesh, he added saying "Solar is most developed, available and easy energy to use."

Govt Plans to Hike Power Tariff

The government plans to raise electricity tariff in the next few months as it seeks to pass the financial burden of quick-fixing the country's nagging power crisis on to the consumers. Prime Minister's energy advisor Dr. Tawfiq-e-Elahi Chowdhury said the authorities would propose a tariff hike as part of efforts to offset losses it would incur by buying power at a high-cost from dozens of diesel and furnace oil run power plants. "Power Development Board (PDB) will put forward proposal for tariff hike to the energy regulator in a month or two," Dr Tawfiq told a press briefing. The Bangladesh Energy Regulatory Commission (BERC) would decide on the tariff hike after examining the grounds behind the proposal, he told newsmen at the secretariat. The commission hiked electricity tariff by up to seven per cent in March this year and a new hike in a space of a few months could fuel public anger.

50pc Reduction in Gas Use by 2030, JICA Forecasts

The government looks to almost halve its reliance on gas as a major fuel for electricity generation over the next 20 years as it goes ahead with diversifying the energy use, officials said. ASM Alamgir Kabir, chairman of Power Development Board, said the revised power sector master plan, prepared by Japan International Cooperation Agency (JICA), forecast that gas use should see a 50 per cent reduction by 2030 in view of supply crunch. Currently, 87 per cent of the country's electricity is generated by natural gas, reflecting the overwhelming dependence on a single fuel source. The JICA said the demand for electricity in Bangladesh could reach 30,000 megawatt (mw) to 35,000mw by 2030, the generation of which the power sector officials and experts say will require exploring multiple fuel options. "It's a huge challenge. Diversification of fuel sources is only option we have now," the PDB head said.11

COVER

Considering that an energy growth of 1.7% is required for each 1% growth in GDP, the prevailing dismal situation will definitely impact adversely on the GDP growth, and it will be extremely difficult to achieve the Millennium Development Goals

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Mollah Amzad Hossain Saleque Sufi

Bangladesh has one of the lowest per capita energy consumptions in the region, and about 60% of its 155 million populations have no access to power. Even then, the national power generation capacity is only 4000 MW against a peak demand of 6000 MW, the generation is predominantly dependent on natural gas (mono-fuel), with gas accounting for about 83% of the generated power ...13

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angladesh finds itself in a desperate energy situation. Electricity supply emergency, gas crunch and their associated impacts have panicked the policy makers. The overall circumstances have taken horror dimensions, and seem like an ongoing nightmare. More importantly, the suffering Bangladeshis cannot see any light at the end of the tunnel either. It is not that the country does not have enough basic energy resources; it is not that it does not have the required technical capacity to explore and exploit it. Leading IOCs are operating in Bangladesh to explore, develop and operate gas fields. IPPS are operating modern combined cycle power plants. Well-structured power and gas industries are in place, and an independent Energy Regulatory Commission is in existence. But what is missing good governance, political commitment, and the placement of right professionals in the right places.

Considering that an energy growth of 1.7% is required for each 1% growth in GDP, the prevailing dismal situation will definitely impact adversely on the GDP growth, and it will be extremely difficult to achieve the Millennium Development Goals (MGD). It does not need an expert to identify and evaluate the reasons behind the prevailing situation in the energy sector. The present grand alliance government inherited an under-performing, crisisprone energy sector. Citizens in huge numbers voted the present grand alliance to power, attracted by an election pledge that it would change the energy situation though appropriate strategies and strong management. As time passes, however, the voters have started asking questions. What positive preparatory actions has the present government taken to explore and exploit domestic petroleum resources? What initiatives has it taken to extract coal resources? The overall situation of coal, natural gas exploration and exploitation remains the same as it was 2 years or 4 years back. There has been no progress in coal mining since 1998. The present government has not taken any meaningful initiatives to increase gas production or coal extraction, and the national coal policy is still hibernating. The Asia Energy Corporation contract is in stagnation, and the PSCs for offshore exploration are yet to be signed. This has left potential petroleum resources untapped in onshore and offshore fields, and a significant volume of coal under the sur-

face. Some policy makers are running after expensive options like the import of coal and LNG. According to professionals and experts, however, the import of coal and LNG in the near future may not be feasible, and suggest that the government should pay more attention to the exploration and exploitation of domestic resources without wasting any more time, i.e. our own coal and our own gas must provide our energy security for the foreseeable future. The election pledge of the Grand Alliance government foresaw the generation of an additional 5000 MW power during their 5 year term. After several rounds of brainstorming, the policy makers have finalized a mega plan to add 9426 MW of new energy by 2015. It merits mentioning here that Bangladesh has achieved an generation capacity of only 4000 MW after 39 years of independence.

Let us try to assess the government steps Bangladesh has one of the lowest per to confront and overcome the crisis over capita energy consumptions in the the last 17 months (about one-third of its region, and about 60% of its 155 milmandated term). The only development lion populations have no access to the government can claim is in the inipower. Even then, the national power tiative for liquid fuel based contingency generation capacity is only 4000 MW power plants. Work on a 520 MW furagainst a peak demand of 6000 MW, nace oil based peaking power plant and the generation is predominantly 390 MW diesel fuelled rental plants are dependent on natural gas (mono-fuel), still in progress. Initiatives to conclude with gas accounting for about 83% of agreements for 1107 MW unsolicited the generated power (other fuels in the quick rental plants [300 MW diesel mix are coal, hydro and liquid fuels). based and 807 MW furnace oil based] Natural gas is also used as the raw are ongoing. It is expected that 1987 material for urea production, for CNG MW (Diesel 450 MW and Furnace Oil and as a fuel for industrial, commercial 1537 MW) may come and domestic purposon-stream by March es. The present elec2011. The peaking tricity crisis is principlants may start power pally due to the failgeneration by ure in arranging suffiDecember 2011. cient fuel for power Diesel based plants generation, and there may come on stream exists a major crisis in by the end of the curthe gas sector as well. rent year. The power A 400 MCFD gas from the diesel plants deficit in the national will cost Tk13-14.00 gas grid has brought a per kwh, while furnear stalemate in nace oil based power trade, commerce and will cost around Tk business activities, 8.00 per unit. thereby stalling the economy itself. PM Sheikh Hasina lays foundation of 150MW combind cycle power station at Chandpur If everything goes14

according to plan, the contingency plants may give some breathing space in confronting the serious electric crisis by the end of 2011. The question now hinges on whether the government exchequer can bear the additional financial burden of the more expensive imported liquidfuelbased power? What are the government plans to absorb the huge subsidy? In their preliminary planning, the government anticipated a subsidy of US$ 1228 million for the power sector over 5 years. The target then, however, was to generate about 7800 MW by 2015. Now the revised target is to add 9426 MW by 2015. This will require a substantial increase of expensive liquid fuel based power generation, and the required subsidy will increase accordingly. Logically, the question arises: Can Bangladesh afford to pay the cut-throat power prices for too long? Uncertainty has already surfaced as to whether Bangladesh Petroleum Corporation (BPC) can organize the required volume of liquid fuel supply in time? BPC is now managing the import and distribution of about 3.8 million tonnes of liquid fuel to meet present annual national demand. Can BPC manage the import and distribution of the additional liquid fuel for the generation of an additional 2000 MW in new power? BPDB is confident that BPC can manage that, however, interestingly, BPC has remained silent on the issue. The government must assess the capacity of BPC without delay. Otherwise it faces the risk of being thoroughly embarrassed if the liquid fuel plants fail to function after commissioning for the want of fuel. BPC will require substantial additional working capital and additional storage facility for furnace oil. What will be the price adjustment for electricity? Can the government afford to increase its power tariff by a wide margin? The cost of doing business will

no clue to when that might happen. One US Company has submitted a proposal for underground coal gasification (UCG) from the Jamalganj coal deposit, but there is been no progress on that either. The import of LNG is widely discussed these days. However, Bangladesh does not have the required infrastructure to receive LNG. It will require significant investment and time to build this infrastructure as an onshore or offshore facility. No feasibility study has been done, and no location for LNG terminal has been finalized. Recently a high powered delegation returned after discussing the import of LNG with Qatari authorities. Qatar has agreed to export LNG to Bangladesh, but at what cost? Without firming up the infrastructure for receiving LNG it is premature to discuss import. The weighted average price of natural gas in Bangladesh market now is about US$ 1.5 per unit. Under no circumstance Bangladesh can get LNG at any price below US$ 12 (for equivalent one unit of gas). Can the Bangladesh market absorb such expensive fuel? Who will invest in the perceived LNG terminal? Can any investor risk investing US$ 1 billion at least for LNG infrastructure development? Has anyone done the underlying calculations? The domestic price of gas has to be revised upwards significantly to make LNG import viable in Bangladesh. Is the government willing to take that risk? According to Petrobangla projections, gas demand will increase to 4200 MMCFD by 2015. The present production capacity is about 2000 MMCFD, which means that the production must more than double in 5 years. It is being said that Petrobangla will add about 1850 MMCFD by this time, of which 500 MMCFD would come from LNG import. According to Petrobangla figures 900 MMCFD will come from IOCs15

Fuel mix for power generation

be significantly increased. Energy at an affordable cost will matter more to small and medium industries than their larger counterparts. Additional power tariffs will increase the cost of production. We must remember that small and medium industries are keeping the wheels of our industrial development in motion. There will be tremendous pressure on the national budget to account for the huge subsidy that will be required for expensive power generation over the next 5 years. The government has virtually taken no positive action to extract the substantial amount of high quality coal lying at mineable depths in Bangladesh. It will not be technically feasible to continue the underground longwall mining method being utilized in the (under-performing) Barapukuria mine after 2011. Serious mine subsidence is already a reality. A plan has been initiated for a Tk 552 crore feasibility study plus pilot scheme for surface mining in Barapukuria, but has not been approved as yet. Upon approval it may take another five years to prepare for the surface mining and start mining operations. In the meantime, the would be affected people need to be relocated and rehabilitated. Asia Energy Corporation submitted a scheme for surface mining at the Phulbari site in 2005. There has been no progress on that. In the recent past they submitted a revised proposal offering 10% stake to Bangladesh government without any investment, but there has been no response as yet, and

operating in Bangladesh. Gas from block 7, extended section of Jalalabad field, Sangu South, Magnama and Hatiya explorations are included. Petrobangla expects that the PSCs for the offshore would be concluded by that time and about 3000 MCFD would come from that source. In addition, 250 MMCFD may come from BAPEX efforts. It is also being said that about 160 MMCFD additional gas will come on stream by December 2010. Given the present state of the gas infrastructure and past track record, the Petrobangla planning appears to be pretty optimistic. No gas from deep-water PSCs can be expected within this period. There may be additional gas from Sangu and Sangu South, and gas may be available from Magnama and Hatiya as well, but Petrobangla has made a mess of Cairn/ Santos proposal for additional investment. Chevron may increase production from three under-operating gas fields, but evacuation of residual gas is a serious problem. It is required to be seen how Petrobangla companies including BAPEX implement the projects at hand. Experts are very apprehensive that the time of three and half years left of the present government is not enough to organize the required primary fuel supply needed to meet the demand for the projected power generation. Experts are also genuinely concerned about the extent of subsidy that the government can afford for the rental power plants and LNG. There are talks of setting up two imported 1300 MW capacity coal fired power plants at Khulna and Chittagong. Where will the coal come from, and at what price? Bangladesh does not have the port facilities to receive ocean going coal carriers, and no facilities to store the huge coal stocks safely. If deep sea ports are needed to be set up when will that be done? People

have genuine concern about going for the import option while no steps are being taken to exploit the large quantity of domestic coal. If a positive decision for extraction of coal is taken immediately it will take at least 4 years to bring coal on surface and put to use. Some initiatives have been taken on nuclear power generation issue, but nothing is confirmed. Where will the investment for nuclear power come from? It is probably not feasible to bring nuclear power on stream before 2017, even with the most aggressive of efforts. In essence, pragmatically, very little has been done so far to source and ensure stable primary fuel supply for power generation, and immediate and appropriate action is essential here. Otherwise the country's energy security will remain extremely vulnerable to various factors, and there is the danger of a drift to instability. There is also a serious crisis in terms human resources in the energy sector. Experienced professionals are essential for confronting the prevailing crisis effectively and professionally and manage all project implementations. The placement of the right persons at the right places must be ensured. Efficiency must be ensured in regulating, monitoring and operational implementation.. What can the government do? What is the most logical way forward? There is nothing wrong in making mega plans for adding 9426 MW of additional generation by 2015, and the nation

needs it in any case. It is definitely achievable if all the paraphernalia to achieve such an ambitious plan is ready at hand. However, there is no clue so far to where the huge investment required will come from, and there is no guarantee of the needed primary fuel supply. Such a mega plan requires action of a committed team of professionals working on a war footing. It will require billions of dollars of investment, and most of it will have to come from the private sector, more specifically from foreign direct investment. Until now the government has not released any transparent investment policies and action plans. Neither foreign investors nor local private sector investors are therefore encouraged to come forward with investment plans. The energy sector management has very poor coordination between every segment of the organizational structure. Given our past proven track record it is highly unlikely that the government's mega plan will be achieved at all. Prime Minister Sheikh Hasina is very positive, and has taken all important decisions in energy sector so far. The emergency contingency plan options have taken off only after her specific instructions. It seems that positive actions for coal extraction also require a big push from PM Hasina. The sooner she realizes that the import options for LNG and coal are not feasible in near terms the better. She must also assess the performance of the key personnel involved in the energy sector. Valuable time has been lost. The coal policy could have been finalized much earlier, and exploration for new petroleum should have advanced by now. The PM must ask what Bangladesh gained from the Energy Ministry road shows? Not only the loyalty to party be the yardstick for holding key positions of energy sector. She must Photo: BPDB r e a l i z e w h y h e r16

Fenchuganj Power station

government in the early years of her earlier term performed much better. Time is fast running out. The PM must act very quickly to turn the tide. Continuation of the energy sector nightmare will create landslide fall in popularity of the government. Energy crisis is national crisis, and must be viewed as such. There must be bipartisan consensus in the parliament to devise effective ways for confronting the dire strait the country is in. Past bitterness and the game of blaming and counter blaming must be done awayI N T E RV I E W

with. The leader of the opposition in her alternate budget proposal has outlined appropriate actions for the extraction of our domestic coal and for its proper utilization. She has also appreciated the action for nuclear power generation and stressed upon training of professionals to mange the operation safely. She stressed upon greater use of renewable energy. We hope government will take due note of her proclamations. We hope that in the current budget session the treasury bench and the opposition will meet with open mind and dis-

cuss the energy situation. There must be meeting of minds. Continued nightmare situation in the energy sector will not benefit anyone. Our own coal, our own petroleum resources must form the backbone of our energy security. It will take about 8-10 years to make the country ready for imported LNG and coal. We must develop our capacity to explore and exploit our own resources and operate and maintain the infrastructures professionally.EP

Bangladesh Makes Energy Priority in Budget

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nergy supply will be the top priority in Bangladesh's 2010-11 annual fiscal budget this week, as the slow pace of development in the sector is widely blamed for poor investment flow in the country, a government adviser said. "Energy and power sectors have been earmarked for highest allocations after food and agriculture in the annual development spendings," Tawfiq-e-Elahi Chowdhury, an adviser on energy and power to Prime Minister Sheikh Hasina, said in an interview with Reuters on Sunday. Bangladesh has allocated 47.21 billion taka ($680.2 million) in the 385 billion taka annual development plan for the fiscal year to end in June 2011. "We plan to raise both electricity and natural gas production by 1,500 megawatts and 500 million cubic feet (MMCF), respectively, per day at the end of coming fiscal year," Tawfiq said. Bangladesh currently produces about 4,000 MW of electricity and about 2,000 mmcf gas per day compared with daily demand of up to 6,000 MW and 2,500 MMCF. "The new budget will focus on close partnership between private and public sectors to enhance production of these key items, also crucial to push the economy," Tawfiq said. All available options would be explored to meet the fast-growing energy demand, Tawfiq said. He said the government planned to set up coal-based power plants and would look for gas. "There will be separate funds for exploring new gas fields both onshore and offshore along with renovation of abandoned gas wells," he said. The adviser said a two-unit, 1,300megawatt capacity coal-fired power plantTawfiq-e-Elahi Chowdhury

would be set up in joint venture with India, on equal equity basis. Bangladesh and India signed a memorandum of understanding on the exchange of power during off-peak hours when Prime Minister Sheikh Hasina visited India in January. Bangladesh will install a 40-kilometre 400kv cross-border power transmission line at a cost of $150 million by June 2012 aiming at importing electricity from India, officials in the government's Power Division said separately on Sunday. The officials said the government had begun a project to build the two-way transmission line, which will have capacity to transmit 500-megawatt electricity between the two nations. The PGCB, state-owned power transmission company will execute the scheme, under which about 100-km cross-border power grid will connect Bangladesh's western Bheramara and India's eastern Baharampur area in the West Bengal state. The Asian Development Bank has committed $100 million to finance the project, the officials said.EP

Serajul Islam Quadir

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A N N I V E R S A RY

M. Tamim

Apart from uncontrolled & unplanned expansion of gas use, no other decision was taken in the ten years since 1999

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as was first discovered in Chhatak field at the Northeast Bangladesh in 1959. Although the first drilling in Bangladesh started in early nineteen hundred, the major thrust was given after the discovery of Sui gas field in the then West Pakistan. Commercial use of gas commenced in 1962 establishing Chhatak Cement factory. In the height of oil use, gas was not considered a valuable item at that time. It was treated

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as a by-product of oil production and was considered more as a nuisance than of any value. As a result, the best commercial use at that time was its household use. The first household connection was given by Titas Gas Transmission and Distribution Company in Dhaka in 1968. After the 1973 Arab oil embargo, the commercial value of gas rose rapidly. Oil became very expensive and Bangladesh switched fuel for most of its power plants, steel/re-rolling mills and other industries from oil to gas in early eighties. There was a big jump in gas use during the same period compared to the previous one and a half decade. Since then gas use has been increasing between 5% and 10% per annum. A summary of primary energy consumption in the financial year 2007-08 is given in Table 1. It is worth noting the mono fuel dependency of Bangladesh on gas. Seventy percent of total commercial energy comes from gas and 85% power production is gas based. Biomass still plays a big role in rural area where 95% cooking is done by burning biomass. Table 2 shows the energy infrastructure and reserve snapshot of the country. It is quite obvious that the total physical establishment for electricity is inadequate. Less than 45% households have electricity connection, and approximately 45% households have natural gas supply. The Rural Electrification Board (REB) network covers approximately 40% of rural Bangladesh, but within the grid covered area only 50% households have electricity connection because many households cannot afford the connection charge. The country suffers from chronic power shortage. Especially the summer months are becoming unbearable due to increasing load shedding. In 2009,

consideration. Exploration Dilemma In a situation where the gas supply and demand gap is widening everyday, one must look back how we arrived here because it is affecting power production, industrial growth and the overall economy. It all started in 1999 when UNOCAL discovered Bibiyana gas field. At that time, Bangladesh could not use the gas because there was not enough market. It was a short term surplus. As a result, all IOCs essentially stopped looking for any more gas except the minimum work obligation of the contract. They gave up most of the risky areas. The PSC says that if a commercial discovery is made, Petrobangla will have the first right of refusal and if they cannot buy the gas, the IOCs can sell it to any local third party as the second alternative. The third option is to export in the form of LNG that was never viable for the 4 TCF gas situated far away from the shore. As a result, the company proposed a pipeline export to India that was not included in the PSC contract, for a quick return on investment. This created the expected commotion and while vigorously debating the proposal, Bangladesh went out of its way to increase the usage. During the same time a gas utilization committee (2002) suggested that IOCs should be allowed to export their share of gas from new discovery only. This was concluded from a demand analysis that showed that while short term surplus prevailed at that time, there would be supply shortage from as early as 2010 if new gas discovery was not made. The complete idleness of the IOCs was alarming. The export suggestion was more a market signal to invigorate exploration than actual reality as Bangladesh could always exercise its first right of20

the peak hour (6-11 PM) loadshedding on some hot days was about 1200 MW whereas in the current year it is estimated to be 2000 MW. This year is being considered as the worst in terms of power cuts that some days has been as high as 10 hours. Since the middle of 2007, the country started experiencing gas shortages as well although it was exposed to the public in early 2008. Presently Petrobangla and IOCs are supplying about 1950 MMCFD gas with an estimated demand of 2300 MMCFD. A total of 700 MW of power generation is stranded due to gas supply shortage. A large number of industries are producing at fifty percent capacity due to the gas deficit. The country turned from a gas surplus situation into a gas deficit position within a span of five years (2005-2010) time. There are several reasons for todays energy crisis. Most of them have been due to policy indecision on both technical and political

refusal to buy the gas. Apart from uncontrolled and unplanned expansion of gas use, no other decision was taken in the ten years since 1999 to find new gas field despite written warning. The result is the leanest decade of gas discovery in the history of Bangladesh. Only 0.5 TCF Bangura field was discovered from a know structure and after all these talks, UNOCAL had to sit on their investment for eight years before Bibiyana came into production in March 2007. The indecision also affected BAPEX, the national exploration company. No attempt was made to activate them either. The prediction of the 2002 Gas Utilization Committee has come into effect couple of years early due to unexpected and uncontrolled growth of captive power and CNG sector. Due to a court case by an environmental law group and supported by a section of political activists, no new PSCs were signed for last ten years. The notion that PSC is too expensive or detrimental to the interest of the country propagated by this group created enough pressure for the governments that kept all exploration work frozen. At the same time no government seriously tried to extract coal either. Table 3 gives the estimated cost of IOC gas up to December 2007. In the mean time Bibiyana cost recovery is almost finished and Bangladesh share has increased considerably. It can be seen that for Sangu where large investment was made by IOC for a small reserve, Bangladesh got only 20% free gas. On the other hand in Jalalabad, Bangladesh got 70% share. Maulabhi bazaar is 50:50 and after cost recovery both Bibiyana and Bangura will be 50:50 on a cumulative basis. Most impor-

tantly the country have to spend only about Tk 80/MCF on average for all the IOC gas including the free share. The notion that the country has to buy its own gas from IOCs at a so called high price and PSCs are bad for the country is completely baseless. It is a much cheaper option than importing gas at 67 times higher price. Pricing & Subsidy The price of gas in 1974 for both power and fertilizer was Taka 3.7/MCF. The price of oil was $10.41/bbl and the dollar-taka exchange rate was taka 8.08. In terms of energy parity, 1000 cubic ft (1 MCF) of gas is equivalent to 0.1765 bbl of oil. Using all these numbers it can be concluded that the price of gas in Bangladesh was about $0.46/MCF for power sector and in terms of equivalent price for oil this was $1.83/MCF. For generating electricity, the alternate or replacement fuel for gas is furnace oil or heating oil where no other fuel is available. Assuming the cost of furnace oil being 70% of crude price, the alternate fuel price is $1.28/MCF - a net saving of over 170%. The case of gas price for electricity generation was

picked up because that sector is most heavily subsidized and the highest user (about 50%) in Bangladesh. Despite the system loss (pilferage and technical), the subsidy in electricity tariff along with the gas subsidy did not allow to save any money for even maintaining a reasonable service, let alone adding new generation. Table 4 gives these numbers for the subsequent years. In the early seventies, gas became the focus of international oil companies due to sudden increase in oil price. Bangladesh started feeling the pain of increasing oil import bills and decided to switch fuel. Chittagong steel mill, rerolling mills, several power plants started switching fuel from early eighties. By 1990, most of the power plants and other industries completely converted to gas in the eastern part of the country. When the use of gas in the decade of 1970-80 was only 0.3 TCF, it jumped to 1 TCF during 1980-90. Due to lack of vision and understanding of economics, Bangladesh lost the opportunity to raise the gas price to the level of price of the fuel it was replacing. Instead, it supplied it at 1/6 of the replaced fuel price (1985 oil price is indeed the average for the decade). It definitely reduced the import bill but at what cost? Within a decade the generation efficiency plummeted to 25%, some of the fertilizer factories were using 1.5 to 2 times more gas than a more efficient newer plant, domestic sector was using gas for drying clothes and saving match sticks! The slide could not be checked even by doubling the real price of gas in 1990 from the 1985 rate (see table). By looking at the table, it can be seen that the gas price has remained virtually constant since 1990 in21

nominal dollar term. The average generation efficiency has now increased to 30% due to the introduction of 1000 MW of combined cycle (50% efficiency) IPP power plants. The country went through another historic mistake of energy subsidy. The CNG feed gas was being sold at $1/MCF (Tk. 8.5/CM) since its large scale introduction in 2004. One cubic meter of gas is roughly equivalent to one liter of octane. The savings in fuel initially was about 75% but with increase of gasoline price it was never adjusted till early 2008 by the Caretaker Government. The saving in fuel cost went up to as high as 87.3% for a CNG driven vehicle making the fuel cost virtually nothing. Despite saving in foreign currency and subsidy, the government was losing large revenue and by keeping low CNG price it encouraged tremendous growth in private car ownership that has resulted in unbearable traffic congestion in Dhaka and other cities. The CNG sector now consumes 6% of total gas in the country. The uncontrolled growth due to high subsidy is a major parameter for the present gas deficit. The entire philosophy of raising gasoline price is completely defeated here. The richest segment of the society is being supplied almost free fuel for their vehicles! As of 2008, the price advantage of CNG over other fuel in some select Asian countries is given in Table 5. With the exception of Iran where diesel is sold only to trucks, buses and other heavy vehicles along with abundance of unused natural gas, Bangladesh CNG as a replacement fuel is still the cheapest in Asia even after doubling the price in 2008. Coal Debate Although the contribution of coal in Bangladesh primary energy supply is negligible, its potential remains significant. The biggest challenge of coal development is geology. The regional aquifer over all our coal beds poses a tremendous engineering test

Chinese supplier credit using a deep shaft technology with the initial target of supplying 1 million tonne per year primarily for a 250MW power plant. The production in the mine started in 2006. Moreover, the price of coal was not high enough to attract any investor. Only in 2005, when Asia Energy proposed to develop Phulbari mine by open-cut technology, the country woke up and started talking coal seriously. Presently there is no other alternate but to develop the coal for reasonably priced electricity generation. Rehabilitation, crop loss compensation or environment protection (except the challenge of the huge aquifer water management that need to be thoroughly examined) are solvable problems at internationally acceptable levels. Tax, Revenue & Commercial Framework Although the upstream side of both power and gas value chain have multiple participants both private and public, the single buyer model in the downstream side is taking away all competitive nature from the market. The classical political dilemma of states responsibility of providing universal service and market force is not serving anyones purpose. The entire system of energy supply has become intermittent without providing quality service for any segment of the clientele. As a result, key economic sectors like industry, power and fertilizer are suffering. Multiple buyers market with quality assurance is essential for a proper commercial framework of business that will support participation of private sectors in the downstream instead of the present state monopoly. The government energy companies are also not allowed to work independently. Instead of applying proper corporate tax, a whopping 55% revenue is taken away from Petrobangla in the form of SD and VAT, leaving almost no money for the23

irrespective to the method of extraction. Political bickering by the so called experts on both side of the debate have confused everyone and delayed the inevitable. There have been seven or eight drafts of a coal policy that is still lying on the Ministers table. It was recognized in the 1996 energy policy that fuel diversification was essential for energy security and coal should be developed for power production. There was hardly any interest from any quarter to implement that except the development of Barapukuria coal mining project. This was developed with

Aview of Habiganj gas field

companies for reinvestment. Table 6 shows the bar chart of the revenue sharing from gas sales proceedings from different sectors. This practice along with lack of financial independence kept all these so called independent companies under complete government control. As a result, even after forty years of energy business, Bangladesh has not seen the creation of a world class energy company. Now, the critical question that needs to be asked is how the country is going to meet its primary energy requirement to produce power. Rigorous exploration for new gas must be started by both IOCs and BAPEX immediately so that the existing plants can be run without interruption. Provided, another 15 TCF gas is found, will it be wise to use that gas to feed a new power plant, especially when there is a vast reserve of coal? Thirty six countries produce more than 25% of their power from coal that includes China, India and USA where more than fifty percent power comes from coal. Coal was also the fastest growing fossil fuel in 2009 after renewable energy sources. Moreover clean coal technology is becoming less expensive by the day. Gas use must be prioritized. The economic multiplier of gas use is highest in its industrial use. CNG use has two fold effects. The primary benefit is environmental and the secondary but equally important benefit is import replacement of liquid fuel. Care must be taken so that government realizes maximum economic rent from both uses which will require opening up the market for private participation. For power production, the country does not have too many options but to develop coal. The nuclear option can also be explored as

a long term alternate. LNG import is another long term alternate that must be initiated immediately. Recently adopted renewable energy policy (2008) now allows the government to embark large scale projects with incentives that can play a good supplementary role. There are several barriers to achieve the coveted energy security everyone is talking about. The biggest is the mind set and the next is the money. A thousand megawatt coal fired power plant requires one billion dollar, a 1500 MW nuclear power plant requires 4 to 6 billion dollars, one TCF of new gas will require a billion dollar for exploration and development. The tk 3.15/kWhr average electricity rate is the cheapest in the region because of the heavy subsidy at one dollar gas for electricity production in Bangladesh. Coal based (local or imported), imported gas based (LNG or Myanmar pipeline), Indian or Nepal power none will be cheap. The days of cheap power are over. Anything less than Tk 5.0/kWhr by end users is not commercially viable in todays global energy market. Energy, even gas is not a local product any more. The regional price of gas is anywhere between Tk. 300/MCF (Reliance India new discovery) to Tk 500/MCF (Myanmar gas to Thailand and China). Unfortunately, there is no quick solution to the countrys present suffering.

All mistakes and indecisions have a price to pay. While major emphasis must be given for long term energy security the immediate relief remains in demand management (both gas and power) and production enhancement from existing gas fields. BAPEX is incapable of achieving the kind of intervention required to quickly increase gas production at this moment. Third party contracts must be handed over to specialized companies that would require use of advanced technology and large investment. Any dilemma or indecision will aggravate the present crisis even more. All sort of inefficient use of both power and gas must be terminated strong handedly. All pilferage and system loss must be minimized to get by before the mid and long term solutions kick in. In the mean time two imported coal based 500-1000 MW power plants should be set up one in Chittagong and the other one in Khulna. The MOU with India to buy 200 MW must be implemented immediately. All regional cooperation must be vigorously pursued. For energy security, fuel and source diversity is absolutely essential. BAPEX alone cannot solve the immediate gas exploration requirement of the country. Due to the generous allotment of fund and gas price adjustment by the last caretaker government that approved a seven year self reliance target, BAPEX is fully tied up with all their manpower and equipment for the next three years. Moreover, no country in the world has been successful relying only on NOC. The negligence of BAPEX for years has been a cardinal offense but to discard the IOCs in future will be a big mistake. For optimum and reliable supply of24

energy, both local and international investment is required. The risk and the amount of investment are enormous. All gas exploration embargoes must be lifted. A quick decision in favor of offshore exploration is also warranted. In the mean time, businesses and industries are suffering. There are some short term solutions for them. Until new gas is discovered or enhanced production is ensured, new or stranded businesses can look into starting the production using imported LPG to replace gas. The same equipment can be used for both sources. The merchant power plant policy approved by the last government may play a role in providing reliable electricity to private business. It allows any company to produce and sell power to any bulk customer at any price negotiated between them. Government will neither supply the raw material nor buy the final product. Both these options have one catch. Electricity and gas are going to cost more than the government subsidized supply. For reliability, the business in

the country will have to adjust to this higher price of energy. Obviously the price disparity creates unfair competitiveness, especially for local market. On the other hand, these solutions can be attractive to many export oriented industries whose energy cost is only 38% of their total product cost. For the massive investment done by the private sector in the last decade, it is almost impossible for the state subsidiaries to cater the need for reliable energy at their present state of commercial or organizational status. Single buyer model for both power and gas must be replaced by a multiple buyer/supplier model. Merchant plants with mutual understanding of all the parties can be a good starting point where relationship between proper price and reliability can be demonstrated. Our business cannot run on subsidized energy any more. There is massive scope of efficiency improvement in both management and technical operation that can be only achieved through gradual adjustment of energy price.

By taking the following steps, a twenty year energy security can easily be achieved. Find new gas, enhance existing production Release maximum gas from power production using coal fired generation Prioritize gas use for industry, CNG and fertilizer Promote LPG for cooking (freeze all lateral expansion of household connection) Promote renewable, especially biogas and solar (photo-voltaic and heating) for both rural and urban areas Immediate adjustment of all energy prices based on any rational formula Reform of organizational and commercial framework of energy business After years of free ride, energy security comes with a price and a lot of pain.EP

M. Tamim Professor, Petroleum Engineering, BUET

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A N N I V E R S A RY

Professor Dr. Md. Hussain Monsur

Upon successful implementation of the short term program about 158 MMCFD gas is expected to be added to the national gas grid by December 2010

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supply was 1974 MMCFD. This product is evident that the energy sector of lization of that area. Bangladesh (or any other country) is To achieve these goals indigenous oil, tion increase has been through approthe driving force for the economic gas and coal resources deserve due priate gas management during the onedevelopment of the country. Bangladesh attention, and as such, short term, mid year tenure of the present government. has the potential to achieve the desired term and long-term plans including Nevertheless, in respect of gas demand GDP growth rate to improve the living some fast track programs have been and supply, presently the country has standard of its huge population through taken up by Petrobangla/Government been, and is, facing gas shortages. proper harnessing and utilization of the for domestic primary fuel, particularly Because of the inaction of the past two energy resources, though it is yet limit- gas and coal exploration, development recent governments in indigenous gas ed. It may be mentioned here that the extraction/production and distribution. sector development, particularly for present energy crisis has taken an acute Furthermore, to meet the immediate reserve enhancement through exploshape due to the absence of proper ini- energy supply gap necessary steps are ration, this sector has lost valuable time tiatives for the last seven years. As a being taken to import 500 MMCFD of in harmonizing the gas demand and result, the GDP growth of the country is LNG by 2012, and importing fuel for supply balance. It is known that gas being hampered in the industrial and diesel/furnace oil based power plants. exploration cannot be conducted other production sectors, including Parallel to these, initiatives have also overnight even you have sufficient funds power sector. To overcome the energy been taken for the development of coal in hand; it is time consuming due to the stagnancy of the country the present fields including finalization of the coal nature of the technology and sub-surface geological/reservoir conditions. government has been putting its best policy. However, to meet the incremental efforts for ensuring energy supply to expedite the economic development. Petrobangla through its companies has demand, tremendous efforts have been Driven by its election manifesto, the been functioning, for and on behalf of taken up by Petrobangla (thereby by the present government has been prioritiz- the government, for the indigenous oil government) for gas exploration, proing efforts toward achieving energy and gas exploration, production, trans- duction, transmission and distribution security at the earliest possible time. As mission and distribution. With govern- including strengthening the national such the government has declared its ment authority it also functions to company BAPEX. Various strategic and Vision 2021. The main features of the extract coal and stones respectively challenging plans like Short, Mid and manifesto vision 2021 of the govern- from the Barapukuria coal field and Long-Term plans as well as Fast Track ment in regard to the energy security Maddapara granite field. As of April programs have been taken up to drill 2010 the total number of gas fields both exploratory and development are: To ensure energy security by 2021 stands at 23, out of which 17 producing wells and to have workover jobs at with consideration of oil, gas, coal, gas fields have been producing gas some existing wells now showing less water, wind & solar energy as primary through 79 wells. At present, the esti- production than originally expected. mated gas reserve (proven + probable) is energy sources in the energy policy. Upon successful implementation of the Increase power supply to 8,000 MW about 12 TCF. Daily gas production short term program about 158 MMCFD by 2015, as well as to enhance power capacity is about 2000 MMCFD against gas is expected to be added to the supply to ensure countrys maximum daily a gas demand of 2500(+) MMCFD, national gas grid by December 2010. In demand of up to 20,000 MW by 2021, resulting in a daily gas shortage of about the mid-term plan to be implemented by inclusive of industries and every village 500(+) MMCFD. It may be mentioned December 2013, Petrobangla compahere that in January 2009 gas producof the country. nies and international oil companies tion and supply was 1766 MMCFD, but Prepare & implement short, mid & (OICs) are expected to add about 585 in the January 2010 gas production and long-term plan at the state-of-the-art MMCFD gas to the national grid. Under level through review of power fast track program some system master plan and development drilling and power sector development workover of some wells are strategy. being completed at a war footing. Under the same proCampaign for regional gram some more activities energy security through mutuare taken up to find out new al cooperation between the exploration drilling locations neighboring countries. through seismic data colIn the national interest, lection, computer processing adopt environment friendly and interpretation. With this policy to acquire mineral view, about 3100 kilometer resources of the northern 2D seismic survey in different Bangladesh area, with priority to energy mitigation, industri- Petrobangla chairman Dr. Hussain Monsur visits Rashidpur gas field for onshore blocks will be conducted. If these exploration alization and manpower utiinaugurate 3D seismic survey by Bapex28

activities are successful gas reserves will be enhanced and there will have a possibility of increasing gas production in the near future. Besides this, considering the crying need and to allay the immediate gas shortage at the Chittagong region, the government has been considering whether present gas supply gap of about 500 MMCFD could be met through LNG import by the year 2012. During mid-term gas production augmentation program necessary steps have been taken to evacuate the producible additional gas to the customers end. With this view, besides constructing transmission pipeline compressor stations will also be installed as necessary. At least three compressor stations at Ashuganj, Elenga and Muchai are likely to be installed by the year 2013. During the long-term plan, to be completed by the year 2016, programs have been taken up with the target of adding 1080 MMCFD gas in the national grid by Petrobangla companies and IOCs. Therefore, the comprehensive programs that have been taken (and if completed as per program during 2012 2016) is expected to add 2323 MMCFD gas (including 500 mmcfd through LNG import) to the national grid. Alongside, necessary steps are being considered to conduct more exploration and production activities through onshore bidding round under PSC where scope has been opened up with the withdrawal of the embargo by the Honorable High Court. The strengthening of the only national oil and gas exploration and production company (BAPEX) has been being ignored for long. The present government has prioritized to strengthen it both technologically and financially. With this view various noticeable steps have been taken which will lead us to be independent of foreign help and to go forward with using state-of-the- art technological know-how by BAPEX in order to mitigate the energy demand by strong exploration activities in the onshore and offshore areas of the country. BAPEX has been doing its exploration activities by very old rigs since long. A highly sophisticated rig with drilling capacity of more than 5000 meters depth has been bought and has already reached the Fenchugonj drilling

for the first time 3D seismic survey has been started at Rashidpur gas field. Besides drilling program at Fenchugonj gas field, Petrobanglas next programs for drilling production wells are at Saldanadi, Titas and Rashidpur gas fields, and the exploration wells will be drilled at Sundalpur, Kapasia, Srikail, Mobarakpur and Netrokona. It is expected that the exploration and production activities of our national company BAPEX will help in fulfilling the growing energy demand in the power, industrial, agricultural, transport and domestic sectors. It is expected that the consumers will keep patience and have confidence on our earnest efforts. It may be mentioned here that the present government has effectively launched and created a fund namely Gas Development Fund which will be generated from the gas sales price and will be utilized in the gas exploration and development activities of the respective national companies. As a result, dependency on foreign aid will be decreased gradually as well as exploration and development activities will be accelerated in line with the national requirements, conducted by the national companies. Finally, it is to be mentioned that the oil and gas exploration and production business is hugely investment dependent. It is also a time consuming and risk oriented business by nature of its technology and uncertainty. It deserves proper technological know-how with appropriate equipment and application which was not properly taken care of by the past two governments. The present government has to take care of the backlog and to go forward with the vision of energy security. Considering the above situation the follow-up of necessary strategies, steps and programs/projects have been taken up by Petrobangla, and hence by the present government. We believe, the outputs/outcome from them will help the nation in the efforts of achieving a poverty free Bangladesh.EP

A view of a BAPEX drilling rig

site. This new rig is now under commissioning with the target to start drilling operation there by the first week of August 2010. Moreover, a draft agreement has already been signed with the supplying organization to buy a workover rig. The final agreement will be signed after the completion of vetting by the National Board of Revenue (NBR) and it is hoped that supplier will delivery it as soon as possible. 2D and 3D seismic survey activities are essential in order to accelerate the gas exploration and development. Two modern seismic equipment (one 2D and 3D each) have already been collected with their auxiliaries. Besides, related data processing and interpretation hardware and software have also been procured. In order to support financial solvency of BAPEX, the price of the gas to be produced by BAPEX has been increased from Tk 7.00 to Tk 25.00 per thousand cubic feet (MCF). Also, GOBs grant financing has been increased significantly in case of oil and gas exploration and development activities of BAPEX. Rigorous activities have been started by BAPEX. Three rigs are now in simultaneous operations for workover programs at Habigonj # 11, Megna Ghat # 1 and Titas # 12. The 2D seismic survey is going on over Kamta gas field area and

Professor Dr. Md. Hussain Monsur Chairman, Petrobangla; Edited by: Dr Nafis Ahmed CP Eng, Internatonal Editor29

A N N I V E R S A RY

A S M Alamgir Kabir

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lectricity is critical for supporting economic growth, poverty reduction and social development. Due to improvement in the quality of living of the people, development in agriculture and industry sectors and the overall expansion of the economy, demand of electricity is increasing day by day. However, power generation capacity of the country has not increased at the desired rate required to meet the demand for the past several years. This has resulted in an inevitable power shortage, both in the urban and rural areas. The present government has placed the highest priority to power sector development since they came to power in early 2009. After some initial quandary due to inherited problems, the government has reformulated Power Generation Expansion Program with pragmatic immediate, short and mid-term plans. The government has also introduced strict monitoring system on the project

Indigenous natural gas has been the most reliable, efficient & cost effective fuel for power generation

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implementation to avoid possible delays due to various bottlenecks. Existing power generation scenario at a glance is summarized below: Table 1. Present Power Supply Situation The present power generation capability is about 3800 4300 MW. Without fuel constraint this capacity would be about 4500 4800 MW. Due to shortage in supply of natural gas, about 500-700 MW of power cannot be generated in spite of available capacity. The highest peak demand is 5500-5800 MW, and loadshedding of about 1200-1800 MW is thus inevitable in hot summer days. The share of private sector is 35% and remaining is from public sector. About 30% of public sector power plants are running beyond their economic lifetime and have become less efficient and capacity derated to about 5400 MW. However, due to concerted efforts, the power generation capacity of the country has increased significantly since 2009. Following figure has illustrated a comparison of monthly average peak generation during present and the last four (4) years (Figure 1). Strategic Approach for Power Generation Planning Power generation in Bangladesh is still mono-fuel dependent, i.e. indigenous natural gas. The remainder is from oil, coal and hydropower. Share of renewable is still insignificant. (a) Fuel Diversity Indigenous natural gas has been the most reliable, efficient and cost effective fuel for power generation.

energy. The government is also considering i m p o r t e d Liquefied Natural Gas (LNG) based power generation projects, which can take advantage of the countrys reasonably developed pipeline infrastructure. (b) Regional Cooperation Another important strategic step in long term planning is the initiative to add power to the national grid through regional cooperation. Recently a project on regional grid interconnection has been adopted as per an MOU signed between the Bangladesh and India governments. About 500 MW of power is expected to be imported from India through this regional grid interconnection by July 2012. Initiatives are also underway to harness hydropower resources in Nepal, Bhutan and Myanmar. The power would be transmitted through the regional grid. The grid will also be used to export power from Bangladesh to the regional countries in future. (c) Demand Side Management (DSM) One watt of electricity saved is more than one watt of electricity generated without burning of fuel. Therefore, in addition to generation expansion activities, various Demand Side Management (DSM) measures have been adopted to curb power demand, for example: 1. Limited use of air conditioners keeping temperature at 25C. 2. Encouraging the business community to adopt solar energy options 3. Holiday staggering. 4. Introduction of Energy Star32

However, in recent years, supply of natural gas has become uncertain due to depleting gas reserves. Due to uncertainty in exploration of new gas reserves, the natural gas based power generation projects (committed and under construction) have to convert to duel fuel options. Power Sector now, is in the midst of a challenging period. The strategic change in the power generation planning has been made in terms of fuel security. Unless new gas reserves are discovered, after 2014, coal has been considered as the key fuel for base load power supply. Liquid fuel is taking an important stake especially for peaking duty and short term solution. Introduction of renewable energy based power projects has been adopted as a new strategy for sustainable future

Rating system in the electric appliances through BSTI. 5. Closing of markets and shopping malls by 8 p.m. 6. Installation of quality pre-paid and smart meters all over the country. 7. Inclusion of energy conservation and solar power uses in the National Building Code. 8. Inclusion of Energy Conservation and Alternative Energy concepts in the school curricula. 9. Installation of solar panel in the govrnment., semi-government and autonomous organizations within next 3 years. 10. Replacement of 40 million incandescent lamps (IL) nation wide with CFL (10 million in 2010). 11. Use of CFL bulbs in all ministries and public sector entities. 12. Conventional street lights to be replaced by LED and solar subsequently. 13. Public awareness for energy conservation. By adopting the above mentioned measures, about 700-800 MW of electricity could be saved. Power Generation Expansion Program (Up to 2015) In the election manifesto of the present democratic government it was promised to add generation capacity of 7,000 MW by 2013, 8,000 MW by 2015 and 20,000 MW by 2021. The generation expansion program has been reformulated to fit in that goal. Pragmatic steps have been taken to add new generation capacity each year according to the demand. According to the power generation augmentation program, about 7,000 MW of power will be added to the national grid by 2013. Initiatives are also underway to add about 11,000 MW of

power by 2015. In this development process, private sector will have a significant role since 63% of the capacity addition is expected to be from private sector. Loadshedding Within Tolerable Limits: Immediate Priority Conventional power projects need substantial time to implement. Therefore, the present power expansion program will not be able to solve the immediate power crisis, and power deficit is

December this year and another 850 MW will be added by March 2 0 1 1 . Procurement of those quick rental projects have been done following the government purchase rules (Article No. 68 of PPR 2006). The major cost component of the rental plants is fuel (80%), while the rent and O&M charges account for the other 20%. The price of the recent rental projects is competitive. Demand Supply Gap with Generation Capacity Addition The generation addition plan first adopted was without Quick Rental Power Plants as illustrated below: Figure 3. With the above plan, it was found that, the power supply would not be adequate to meet the demand until 2012. Even after 2012, power supply would narrowly exceed demand and in 2014 power demand and supply would coincide again. Unless there is significant surplus, reliability of power supply cannot be actually ensured. That is why the government has opted for quick rental power plants to provide reliable power supply at the earliest by adding additional power to the grid within 3-9 months. The demand-supply situation with inclusion of Quick Rental Power Projects in the generation expansion plan is shown below: Figure 4. It is expected that with the addition of Quick Rental projects, the supply situation will improve substantially beyond 2011. Therefore, we can now expect to provide reliable and quality power supply in 2012, and beyond. Financing Power Generation Project Power projects are capital intensive & needs substantial33

expected to continue to rise in the coming 2-4 years, until the conventional power projects are commissioned. Under the above scenario, the government has adopted a Fast Track Rental power plant projects to mitigate the immediate irrigation and summer loads of 2011 and 2012. Due to natural gas shortage and non-availability of low cost alternative primary fuel(s), these projects will run on liquid fuel. The projects are to be commissioned within 3 to 9 months from the date of contract signing, with contract period of 35 years. About 650 MW of rental power should be added to the grid by

investment to materialize. Power generation projects under government sector would need about US$ 3.84 billion in investment. The government may invest about US$ 1.72 billion from its own fund. The remaining US$ 2.12 Billion will come from multilateral and bilateral donors (about US$ 1.4 billion already committed). For power projects to be developed under the private sector, it is estimated that about US$ 9.32 billion will be needed 25% of the investment (US$ 2.33 billion) will come from equity financing by private sector. The remaining 75% (US$ 6.99 billion) will be debt financing. Government is going to form an Infrastructure Financing Company to provide debt and equity finance (about US$ 1.0 billion) for IPP and PPP projects. Power Evacuation: Transmission Requirements Evacuation of power from power plants to the load center and ultimately to the customers is to be ensured to achieve the exact benefit from power generation expansion program. Several Transmission Projects have been taken for power evacuation from Bibiyana, Sylhet area, South-west Zone (Bhola) and from two mega coal power projects in Khulna and Chittagong. Bangladesh-India Regional Grid Interconnection project is also under implementation. Initiatives are underway to evacuate power from other

planned power generation projects including rental power plants. It is estimated that about US$ 1.8 Billion investment will be required for the transmission projects. 45% of such investment will be sourced from government funds. The remaining will be sourced from development partners. Tariff Adjustment Due to prevailing gas crisis, power generation from more expensive fuels, like liquid fuel and imported coals will be costlier. As a result, supply cost of electricity will be higher and sustainability of the power system development will be at risk without price adjustment. It may be mentioned that Power Pricing Framework 2004 has illustrated plain guideline for cost reflective tariff adjustment. Without cost reflective tariff adjustment, huge compensation

from national exchequers will be needed to meet the revenue shortfall. This is not desirable as those money could be utilized to meet other much needed social objectives of the government. Thus, it would be more rationale if cost of supply of electricity could be realized from customers by tariff rationalization in phases. Lifeline tariff up to a suitable limit (may be 50 Units) shall be introduced for poor and vulnerable customers to reduce the burden. This will address social responsibility of the government. Cost reflective tariff adjustment also gives a price signal to the customers to motivate them to save electricity. However, tariff adjustments should be carried out gradually so that it is within tolerable limit for the customers. Conclusion Since independence, this is the first time, the government has adopted a pragmatic, timely and massive power system expansion program and has taken multifaceted efforts to meet the power demand and development goal of the country. Concerted efforts from all quarters including stakeholders can only make the mission successful.EP

14000 12000 10000 8000MW

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Max.Demand considering DSM

Depandable Capacity( with gas crises)

A S M Alamgir Kabir Chairman, Bangladesh Power Development Board (BPDB). The content of this article reflect only his personal, and not official views. Edited by: Dr Nafis Ahmed CP Eng, International Editor35

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Hopefully the investigation committees would discuss and make recommendations for likely way outs of the problems surfaced now. But one thing is sure, that the concerned parties and the miners became scared and put serious doubts on the possibility of mining in the slices bellow the so called top coal slice of the seam VI. Earlier the Chinese Contractors claimed that they could mine 8 subsequent slices in the seam VI and the consultants had serious doubt about the practicality of such claim. Now the Chinese Contractors are limiting their projections for mining maximum three slices of coal from the working seam VI observing serious threat of bumps in the face 1108 and adjacent mine districts. Already, the justification of the huge capital investment for the insignificant recovery of coal from the underground coal mine is questioned. The further limiting of the production targets will definitely be inviting more questions. Also the attempts to coal recovery from subsequent coal slices of the seam VI will require additional capital and operation investments and the mining will be more risky. The manifestation of wide spread land subsidence on the surface above the coal extraction areas and beyond put forward the major land subsidence issues and its social agonies. The Contractor clearly has pushed the responsibility of land subsidence induced impact management including agricultural and settlement land loss, and resettlement issues for several thousand people of the area to governments shoulder. Surely, more coal extraction will have more subsidence impacts on the surface as well as the underground mine strata control problems. There are skeptic views on the suitability of continuing mining of coal with longwall method in Barapukuria mine and thus the underground mine may end up with the accomplishment of mining coal from the remaining 4-5 smaller size tar-

areas floor may suddenly heave. Such a failure is usually accompanied by a very loud noise and tremors or vibrations that can be detected at some distance in the surrounding earth and mine atmosphere (the villagers living in the mine area and the miners both reported such noise and tremors during the accident at Barapukuria on 11 May 2010). There are reports of geological disturbances in and around the place of the Barapukuria mine bump (in the underground mines geologically disturbed areas are usually risky in terms of roof and floor stability). The stability of the belt gate of the long wall face 1108 has been critical as the neighboring faces 1104 and 1106 were mined out and with the retreating 270 m long hanging roof with minimum artificial support (the roadways are having steel support with 0.7m intervals within coal with wooden planks in between). Once the mine face and connecting roadways are placed in between the worked out areas in the sequence of mining, the overall support system became week. This situation demanded close monitoring and appropriate and prompt measures of strata pressure control from the mine operators. But the reality of the industry is different. In absence of the regulatory control and systematic monitoring the underground mining has been in the free hands of the contractors and seldom the contractors are willing voluntarily to take care of occupational health, safety and miners welfare. The miners violent protests in the recent past in Barapukuria coal mine reiterated the state of affairs there. Unfortunately little change has been taken place since then in terms of mine safety and occupational health. Roof falls rarely occur without warning. Usually before the roof fall the timber used for support cracks and splits under the increasing load, giving an indication of the approaching danger. Also the38

get faces (1112, 1116, 1110, 1111 and 1113) from the top slice of seam VI within the year 2011. The recent sudden roof fall accident in Barapukuria coal mine is a similar phenomenon of bump which is not desired but not uncommon in the underground coal mines (the term bump first was used in the eastern USA to cover the sudden roof or wall collapse in the coal mines. Available data suggests bumps have caused 49 accidents during 1978-1984 and resulted 14 fatalities in 1959-1984 in the eastern USA coal mines) relating to excessive stress accumulated on the hanging roof. This stressed situation is made worse when mining is conducted in areas encased in rigid associated strata. Coal and overlying rock when subjected to an increasing load adjust the stressed situation by deformation and fracturing of the roof, floor and coal pillars. Strata pressure in mine workings manifests in various ways, e.g. convergence, prop loads, crush, creep and heave etc. Commonly high strata pressure with consequent increased convergence, prop loads, crush etc. are encountered in the extraction phase, particularly when roof falls are imminent. But in certain geological environment even drivage of roadways may result in largescale squeezes causing considerable roadway closure and buckling of supporting arches. Occasionally, the ground failure is catastrophic when bump takes place. As a result coal may expel violently from the pillar. In some

ground itself in breaking emits a cracking noise, sometimes as loud as a gunshot. Finally a few seconds before the fall, small stone begin to drop out of the roof. To avoid falls of ground in the mine working area several actions are taken: the method of working must be selected appropriate to the geological conditions and the physio-mechanical properties of the rock, the face/area under strata pressure must be quickly a