🇧🇩 Energy Security of Bangladesh (2 Viewers)

[Saif]

Finance minister shares Bangladesh’s vision for clean, green energy transition

Finance Minister AH Mahmood Ali yesterday said building greater trust and confidence among countries could be key to leveraging enormous opportunities for cross border energy trade and attracting international finance in energy transition projects in South Asia

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Finance minister shares Bangladesh's vision for clean, green energy transition


Photo: UNB

Finance Minister AH Mahmood Ali yesterday said building greater trust and confidence among countries could be key to leveraging enormous opportunities for cross border energy trade and attracting international finance in energy transition projects in South Asia.

Speaking at an SASEC knowledge event, the finance minister presented Bangladesh's vision for a clean and green energy transition.

While speaking as a panelist, he focused on building greater trust and confidence among South Asian countries to leverage their additional capacities in hydro, solar, and other non-fossil fuel sources to meet the region's growing energy needs sustainably.

The minister put emphasis on creating enabling environment for domestic and foreign investors to bring finances to bankable energy projects.

He sought ADB's support to this connection.

As 2024 ADB annual meeting progressed into its second day, Bangladesh's finance minister attended the SASEC knowledge event on "Financing the Clean Energy Transition in South Asia."​

 

[Saif]

Gazprom wants to hike costs for gas production

Gazprom proposes a significant increase in gas production costs for extraction from wells in Bhola, Bangladesh, prompting a potential rise in gas prices.

en.prothomalo.com

Gazprom wants to hike costs for gas production
MohiuddinDhaka
Published: 05 May 2024, 12: 32



Russian energy giant Gazprom has proposed to extract gas from five wells in Bhola for Tk 2.64 billion per well.

The cost for gas extraction will increase by Tk 840 million per well. Earlier, the energy company extracted gas Tk 1.80 billion per well.

The total cost to extract gas from five Bhola wells will increase by Tk 4.20 billion.

The technical committee constituted by Bangladesh Oil, Gas and Mineral Corporation (Petrobangla) carried out verification of the proposal as well as primary negotiations. Bangladesh Petroleum Exploration and Production Company Limited (BAPEX) representatives were involved the process. The proposal was sent to the Proposal Processing Committee (PPC) led by the energy secretary in mid-March for final approval. This committee will finalise the proposal.

About the increase of costs, the committee members said pipes of MS metal are used in all wells of the country. This is not sustainable for long. So high quality chromium metal will be used this time. This will be longer lasting for extracting gas. As a result, the price is increasing. The cost will decrease by Tk 220 million if MS pipes are used.

Speaking to Prothom Alo, energy and mineral division secretary Nurul Alam said the proposal has not been finalised yet. The technical committee has been given responsibility to negotiate further over the price proposal. Gazprom will certainly decrease the cost.​

 

[Saif]

Raising energy prices can’t be our first resort

Frequently increasing prices is jeopardising public interests

www.thedailystar.net

Raising energy prices can't be our first resort
Frequently increasing prices is jeopardising public interests


VISUAL: STAR

We are alarmed by the government's decision to follow up its March energy price hike with three more raises this year, especially at a time when inflation is at its highest in more than a decade. After raising energy prices several times last year, the government again increased prices in March. Worryingly still, prices are likely to be increased in four rounds next year as the government plans to withdraw energy subsidies altogether in accordance with the IMF's $4.7 billion loan condition.

The issue here, as we understand it, is the government's poor revenue collection. As it struggles to increase revenue, it feels it has no other option but to cut back costs. But repeatedly increasing power prices will badly affect businesses, which are already complaining about having to struggle to keep up with foreign competitors amid escalating costs. And since power prices will further decrease people's disposable income, domestic demand will continue to drop, further adding to their woes. This may significantly worsen the economy and negatively impact growth.

Consumers, too, will be hammered by the price hikes. As power prices together with living costs continue to rise, while incomes remain stagnant, people will have no alternative but to further cut expenditures. And while higher power prices will affect all, it will hit the poor much harder. Given that lower-income groups have already reduced consumption of even essential food items, how are they supposed to be able to pay higher electricity bills? Did the government take all these factors into consideration when taking such an untimely decision?

To cut back on costs, the government should have renegotiated with the private power plants to reduce its absurd capacity charge payments—which are reportedly taking up 81 percent of the energy subsidies. But instead of doing that, its decision to put the burden on businesses and consumers is totally ridiculous. This just goes to show the lack of transparency and accountability in the sector which has had an abysmal impact on the economy.

If the government wants to do away with subsidies, it should start by removing all capacity charge payments to private power plants first. It's decision to do otherwise shows how policymaking has been captured by special interests. The government must stop surrendering to vested interests and reverse its decision. Power price hike is only acceptable if the government fixes all such issues draining its coffers and bring much-needed transparency and accountability in the sector.​

 

[Saif]

Bangladesh needs $50-$60b investment in energy sector in next five years: Nasrul

State Minister for Power, Energy and Mineral Resources, Nasrul Hamid today said that the increasing use of technology has created immense investment opportunities in the country’s power and energy sector. Bangladesh will need an investment of $50 to $60 billion in the power and energy techno

thefinancialexpress.com.bd

Bangladesh needs $50-$60b investment in energy sector in next five years: Nasrul
UNB
Published :
May 06, 2024 20:27
Updated :
May 06, 2024 20:27



State Minister for Power, Energy and Mineral Resources, Nasrul Hamid today said that the increasing use of technology has created immense investment opportunities in the country's power and energy sector.

Bangladesh will need an investment of $50 to $60 billion in the power and energy technology in the next 5 years, he told Singapore's non-resident High Commissioner to Bangladesh, Derek Loh, when the latter met him at his ministry office In the Secretariat.

During the meeting, they discussed various issues of mutual interest.

Welcoming the Singapore envoy, Nasrul Hamid said that the power and energy sector has been moving towards automation.

The High Commissioner expressed interest in renewable energy in Bangladesh while discussing use of technology in Singapore.

They had discussions on various issues including development of nuclear power, wind power, solar power, clean energy, price of solar power, smart grid, data center, LPG and LNG terminal, storage system, refinery, automation, electricity import and export.

Sheela Pillai, Charge d'Affaires, Singapore High Commission in Dhaka, among others, was present on the occasion.​

 

[Saif]

Green energy transition needs coordinated efforts, major investment: Nasrul

State Minister for Power, Energy and Mineral Resources Nasrul Hamid has said that green energy transition needs coordinated initiative and major investment. “The developed world, including Europe, is moving towards renewable energy. We also need to increase the use of renewable energy,&rdquo

thefinancialexpress.com.bd

Green energy transition needs coordinated efforts, major investment: Nasrul
UNB
Published :
May 08, 2024 22:13
Updated :
May 08, 2024 22:13




State Minister for Power, Energy and Mineral Resources Nasrul Hamid has said that green energy transition needs coordinated initiative and major investment.

"The developed world, including Europe, is moving towards renewable energy. We also need to increase the use of renewable energy," he said while addressing "2024 Policy Dialogue on Sweden-Bangladesh Partnership in Renewable Energy within the RMG Sector" at a Dhaka hotel today.

The Swedish Embassy, Swedish Energy Agency and Sweden-Bangladesh Business Council jointly organised the event.

The state minister said, in sync with the changing world, Bangladesh is also working to expand and increase the use of renewable energy.

"Efforts to provide clean electricity to businesses are continuing through net metering systems, rooftop solar, import of hydropower, and increased use of energy efficient appliances," he added.

He said the Power Division has already developed a structure of draft on 'Corporate Power Purchase Agreement (CPPA)' to supply electricity generated from renewable energy to factories including the apparel industry. Initially such CPPA will be signed with some factories on a pilot basis.

Under the CPPA, renewable energy will be used round the clock which will require high storage capacity, he said, adding, in that case, costs of electricity will go up due to the use of the storage facility.

"Finally, we need to move to a smart grid. There should also be a policy on these additional costs and technology costs," he observed.

The State Minister also said that sustainable development is not a European agenda or a global agenda, to survive in the competitive world, we also have to live with sustainable development and green transition.

He said that Vietnam and Sri Lanka are doing business focusing on efficiency, automation, business environment and Bangladesh also needs to compete more efficiently to survive.

Nasrul Hamid mentioned that global apparel brand H&M showed in their presentation that Bangladesh exports products worth $3 billion dollars a year to three Swedish companies: H&M, LINDEX and IKEA.

"Garments are supplied to the three companies through 200 suppliers, employing 0.5 million workers. The company aims to reduce greenhouse gas emissions by 50 per cent by 2030," he said.

Among others, Head of Delegation of the European Union to Bangladesh Ambassador Charles Whiteley, Ambassador of Sweden to Bangladesh Alexandra Berg von Linde, Chairman of Bangladesh Power Development Board (BPDB) Md. Mahabubur Rahman and Country Manager of H&M Ziaur Rahman spoke on the occasion.​

 

[Saif]

IMF prescription to raise energy prices is anti-people, illogical

The IMF prescription for the public means increased gas, electricity and transport prices, and so on.

www.thedailystar.net

IMF prescription to raise energy prices is anti-people, illogical


VISUAL: SHAIKH SULTANA JAHAN BADHON

The International Monetary Fund (IMF) has just completed their recent mission in Bangladesh, during which they held various meetings and discussed the terms and conditions of the $4.7 billion loan, which they are set to give out in instalments. We have seen a set of preconditions emerging out of those discussions. Typically, there are two types of IMF conditions—and I say this from my observations and long-term research on IMF activities in developing countries. The first set of conditions relates to much-needed reforms to improve any economy, such as financial sector reform, tax-GDP ratio, ensuring accountability and transparency, etc. Then there is a second set of conditions, whose main objective is more privatisation and commercialisation. For the public, this means increased gas, electricity and transport prices, more taxes, and so on.

We have to treat these two conditions separately. If we do, we will notice that the IMF is not so serious about the first set of conditions—which are the bare minimum needed for an economy to function. They may talk about these much-needed reforms, but these are not their main agenda. Their priority is to institute the second set of reforms. The IMF has already given out loans to Bangladesh 10 times before, but has there been any improvement in the financial sector? In fact, there has been an alarming degradation of the sector—Bangladesh has now become an example of how a financial sector can become a place of unprecedented and unapologetic looting. But since the 1990s, the IMF and World Bank have brought about many reforms in public banks. The space and scope for private banks have been increased. They have done these in the name of reform in the financial sector, but we have not seen any overall improvement.

It has been the same in the case of corruption in private and public sectors. In the name of increasing the tax-GDP ratio, they have imposed various taxes on the people, but those in whose hands wealth has been centralised have not been brought under the tax regime. It is now universally acknowledged that inequality has increased exponentially in Bangladesh. It is because a large amount of wealth has accumulated in the hands of a few people within a very short amount of time, thanks to large-scale looting in the finance or energy sector, occupation and destruction of our rivers and forests, and different construction projects undertaken at the highest costs. But those who have benefitted from this corruption are not being taxed, even though it is because of them that the country's GDP has increased. So while there is a need to increase the tax-GDP ratio, the burden is ultimately falling upon the ordinary people. New taxes are being imposed on them at different times of the year, even though such decisions are supposed to be made as per the national budget.

The IMF's position is clearly to protect corporate interests and against public interest. If they were concerned with public interest, they would have asked why subsidies are so high, instead of asking to reduce them in the energy sector. Why are subsidies so high? Even though our installed capacity is more than our current need, the government has given one private power plant after another permission to set up, and now are paying them an absurd amount of money to simply sit idle—as much as 81 percent of the subsidies in the energy sector is spent paying capacity charges. Another reason is that, instead of investing time and money in gas exploration, our government has opted for expensive LNG imports. So now we are having to spend Tk 30,000-40,000 crore in importing LNG to get what we could have gotten by spending Tk 400 crore in gas exploration. As a result, subsidies are increasing in the gas sector.

Similarly, instead of investing in renewables, they are setting up import-based coal power plants. Nuclear power plant is being built with huge loans. If the reasons due to which subsidies are so high remain unaddressed, the process of withdrawing subsidies would only mean that instead of solving the energy crisis, the burden of increased energy costs will fall on the general public. Simply put, in order to expand the businesses of some private groups in Bangladesh, Russia, China, US, India, etc, our electricity production costs are increasing. This is what the government wants and also what broader corporate groups want. But, as always, it is the people who must bear the burden.

Instead of addressing the pressing concerns of the energy sector, raising prices is an anti-people and anti-development position. Unfortunately, that is what the IMF consistently does. It is not truly invested in institutional reforms. They gave out loans to Sri Lanka many times, yet it fell into a crisis. Pakistan has taken out loans 22 times, but we all know the state of its economy. So it is important to question the conditions, frameworks and prescriptions recommended by the IMF and World Bank, and hold them accountable. It is time to ask what the results are of the various projects and prescriptions of these organisations. The ruling class in Bangladesh are certainly to blame for the chaotic situation in the railway, education, health and energy sectors, but I also hold the IMF and World Bank responsible for enabling them. It is time we asked whose interests are being served ultimately by the various projects and prescriptions of these international institutions.

As told to Sushmita S Preetha of The Daily Star.

Anu Muhammad is a former professor of economics at Jahangirnagar University.​

 

[Saif]

The next budget should push for clean and secure energy

The forthcoming national budget could create a renewable energy fund to further stimulate the renewable energy sector’s progress.

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The next budget should push for clean and secure energy


Source Budget Speech (Archive), Finance Division, Ministry of Finance; IEEFA Analysis.

Bangladesh's drive to fulfil energy demand, riding on quick-fix strategies and relying on imports, has helped in the short-run but exacerbated the country's financial health. While fixing the problems will require long-term efforts, the upcoming national budget, to be unveiled in June 2024, will provide an opportunity to address some of the key challenges of the energy and power sectors.

The forthcoming national budget could create a renewable energy fund to further stimulate the renewable energy sector's progress, which has seen increased interest on the back of high energy prices and energy security concerns. Additionally, the budget may allocate more to the energy sector, to explore domestic gas resources and reduce reliance on imported liquefied natural gas (LNG).

With fiscal challenges eroding the country's capacity to clear full payments against imported fossil fuels and electricity produced by private power producers in the last couple of years, investment in clean energy is taking centre stage. Other factors, such as high and volatile fossil fuel prices and concerns about energy security, tempted the government to sign contracts with private investors for renewable energy projects of several thousand megawatts (MW) capacity in the last two years.

However, prior experience points to a gloomy picture. Although new renewable energy projects have come online in the last two years, the pace and scale seem slow and inadequate.

Difficulty arranging expensive land, where ownership is fragmented, limits the country's accelerated deployment of renewable energy. Furthermore, private project developers shoulder the cost of long transmission lines, increasing the overall project cost.

Against this backdrop, the Bangladesh government may create a dedicated fund to turbo-charge the renewable energy sector amid the country's heightened exposure to the international fossil fuel market. Allocating through the fiscal year (FY) 2024-25 budget, the government may aim to support at least three areas of renewable energy.

It may cover the transmission costs of selected renewable energy projects. Likewise, it may allocate land to some renewable energy projects through the renewable energy fund, which can support land acquisition costs. Shouldering such costs, the government may introduce reverse auctions in carefully selected projects to reduce tariffs. The government can further utilise the fund to pilot renewable energy projects with battery energy storage systems.

Bangladesh can take inspiration from its past support for private-public-partnership (PPP) projects to create such a fund. Notably, the country allocated Tk 25 billion ($227.5 million) to PPP projects in FY2009-10 to bridge the infrastructure investment gap. This fund included PPP technical assistance worth Tk 1 billion ($9.1 million), a viability gap funding of Tk 3 billion ($27.3 million) and an Infrastructure Investment Fund of Tk 21 billion ($191.1 million).

A similarly bold and landmark ambition, if translated through a budgetary allocation, will help transform the country's energy sector while containing costs and improving reliability.

The Annual Development Plan (ADP) 2023-24 already considered that nine renewable energy projects planned within its framework were "insufficient". Therefore, the ADP, in the upcoming fiscal year, may strategically take up more renewable energy projects. This will be pragmatic as some of the power plants commissioned in the last year or so have not received sufficient gas to operate at their optimum capacities.

As new nuclear facilities will likely be online during FY 2024-25, Bangladesh will have significant baseload capacity. Based on allocation in the forthcoming national budget, the ADP may turn the tide towards renewable energy.

However, Bangladesh continues to allocate more of its budget to the power sector instead of the energy sector. For instance, the Power Division, which takes care of the power sector's development, received around 90 percent of the total budget allocated for Energy and Power Divisions from FY 2016-17 to FY 2022-23. Notably, it received a massive 97.1 percent of the allocated Tk 348.2 billion ($3.17 billion) in FY 2023-24, leaving the Energy Division with a paltry Tk 9.9 billion ($89.5 million).

A decade ago, Bangladesh's lagging power system capacity influenced massive investment in power infrastructure, but the need and outlook appear quite different now. Allocations of hefty budgets to the power sector on a yearly basis have already thrown up several challenges for the Energy and Mineral Resources Division, which has become increasingly import-dependent.

The national budget may consider allocating more funds to the latter to strengthen Bangladesh Petroleum and Exploration Company (BAPEX), to enhance the company's ongoing onshore gas exploration efforts and limit the reliance on imported LNG.

An important step in driving Bangladesh away from fossil fuels towards a renewable energy future is the rationalisation of duties on electric vehicles and renewable energy. Following approval of the budget of FY 2023-24, any individual willing to buy a second personal transport—be it an electric vehicle (EV) or an internal combustion engine (ICE)-based one—needs to pay an environmental surcharge ranging from Tk 25,000 ($228) to Tk 3,50,000 ($3,187). As EVs are environment-friendly, and interested buyers may already have an ICE car, the government should waive this environmental surcharge on EVs.

Furthermore, total tax incidences on EVs at the import stage are 89.2 percent, including a supplementary duty of 20 percent. A similar supplementary duty is also applicable for hybrid cars. As the government envisages reducing 3.39 million tonnes of carbon dioxide (CO2) emissions from the transport sector by 2030, such import duties on EVs will limit the country's ambition. Instead, the government may increase the duties for second ICE cars and channel part of the revenue to build charging stations for electric and hybrid vehicles.

energy price hike in Bangladesh, clean energy in Bangladesh, power tariffs in Bangladesh, power generation costs in Bangladesh, solar power in Bangladesh, gas price hikes in Bangladesh, Institute for Energy Economics and Financial Analysis (IEEFA), Bangla

Additionally, rooftop solar accessories are subject to import duties ranging from 11.2 to 58.6 percent. As rooftop solar can help generate clean energy without affecting land, the government may revisit the tax structure and bring it down.

The current reality reinforces the urgency of frontloading efforts for renewables, creating a conducive ecosystem for EVs and reducing demand growth in imported fuels like LNG. By creating a renewable energy fund and increasing budgetary allocation to the energy sector, the upcoming budget can help attract more private capital and improve Bangladesh's overall energy security.

Shafiqul Alam is lead energy analyst for Bangladesh at the Institute for Energy Economics and Financial Analysis (IEEFA).​

 

[Saif]

Beximco's Teesta Solar powers up nat'l grid with 443.8 million units

Bangladesh's largest solar power facility Teesta Solar Ltd has transmitted around 443.8 million units of electricity to the national grid in the past 15 months. The 200-megawatt (MW) plant, spanning 650 acres on the banks of Teesta River in Gaibandha's Sundarganj upazila, was officially inaugurate

thefinancialexpress.com.bd

Beximco's Teesta Solar powers up nat'l grid with 443.8 million units
SAJIBUR RAHMAN, BACK FROM GAIBANDHA
Published :
May 04, 2024 09:35
Updated :
May 04, 2024 09:35




Bangladesh's largest solar power facility Teesta Solar Ltd has transmitted around 443.8 million units of electricity to the national grid in the past 15 months.

The 200-megawatt (MW) plant, spanning 650 acres on the banks of Teesta River in Gaibandha's Sundarganj upazila, was officially inaugurated by Prime Minister Sheikh Hasina on August 2 last year.

During a recent visit to the site, it was found that Teesta Solar Ltd, a subsidiary of Beximco, installed around 550,000 solar panels.

Unlike conventional power plants that rely on gas, coal, or fossil fuels, the plant generates electricity without requiring fuel or incurring raw material costs -- a capability it is expected to maintain until 2043.

To connect the plant to the national grid, a 35 km power transmission line with 122 towers was constructed. The line operates at 132 kilovolts and stretches from the plant to Rangpur.

To safeguard the plant against natural disasters like floods and river erosion, a dam and a seven-kilometre road was constructed, which also benefits the local community now.

The project's total cost exceeded Tk 30 billion, with Tk 22 billion financed through Beximco's Sukuk Bonds. This initiative represents a significant step for Bangladesh in generating cleaner electricity and promoting environmental responsibility.

A study suggests that adding 2,000 MW of rooftop solar capacity could help the Bangladesh Power Development Board (BPDB) save between Tk 52.3 billion to Tk 110.32 billion per year by reducing reliance on expensive power generation and input purchases.

Engineer Md Tashikul Alam, who manages strategic planning and government affairs at Teesta Solar Ltd, said, "Around 65 per cent of our technology and equipment are imported from China. The remaining 35 per cent comes from India and other countries, including those in Europe."

He said it is possible to explore cultivating suitable agricultural products, such as nuts, underneath the solar panels.

Gautam Das, in-charge of projects at Beximco Power Company Limited, explained the advantages of solar power projects in Bangladesh compared to traditional options that rely on heavy fuel oil (HFO), coal or gas.

"Solar power is cheaper to maintain, more efficient in the long term and doesn't pollute the environment," Mr Das said.

He commented that as more solar projects are built, economies of scale will bring down costs.

However, building solar projects in Bangladesh still remains expensive compared to countries like India, according to him, due mainly to logistical and infrastructure issues.

Shafiqul Alam, lead analyst at the Institute for Energy Economics and Financial Analysis (IEEFA), said Teesta Solar Ltd accounts for roughly 50 per cent of the country's total installed utility-scale solar capacity.

"Green sukuk was used to finance the solar project, marking the first such instance in the clean energy sector," Mr Alam said. "This paves the way for renewable energy project investors to utilise similar instruments, such as green bonds, to mobilise private funds."

He added that such instruments have the capacity to streamline renewable energy project implementation and strengthen local entrepreneurship in the coming years.

According to IEEFA lead analyst, green sukuk can also be a viable option when securing international investors for independent power producer (IPP)-based renewable energy projects proves challenging.

The use of proceeds from green sukuk in this project is innovative, being the first case in Bangladesh, commented Mr Alam. "This success story may encourage other project developers to consider green sukuk as a financing option in the future."​

 

[Saif]

Why must the public bear the burden of capacity charges?

There is no justification for raising electricity prices four times a year

www.thedailystar.net

Why must the public bear the burden of capacity charges?
There is no justification for raising electricity prices four times a year


VISUAL: SHAIKH SULTANA JAHAN BADHON

The government has decided to increase electricity prices four times a year over the next three years to withdraw all subsidies from the power sector. At present, the wholesale price of electricity is Tk 7.04 per unit on average. If the subsidies are withdrawn, this rate will have to be raised to more than Tk 12. In that case, the average electricity price at the consumer level, which is Tk 8.95 now, will almost double to Tk 15.
This decision has come at a time when people are already under a lot of pressure due to the increased prices of daily commodities. Last year, gas prices were increased by an average of 82 percent in January and electricity prices were increased by an average of five percent in three phases between January and March, contributing to inflation. In March this year, electricity prices were again raised by Tk 0.34 to Tk 0.70 per unit.

If this decision is implemented, this will surely add to consumer spending, more so because of the increased production costs of everything that requires electricity for production. In addition, these price hikes will affect electricity bills in residential areas, irrigation, industries, education, religious institutions and healthcare facilities, among others. A rise in irrigation costs will impact agriculture as higher production costs will in turn raise the prices of all agricultural products, including rice. This will have a ripple effect on the economy, and as a result, the lives of low and fixed-income people will be even more adversely impacted.

It is being argued that the price hike is required to reduce subsidies in the power and energy sectors to comply with IMF conditionalities. The question is: why do the subsidies have to be paid in the first place, and where does the subsidy money go? Moreover, increasing prices is not the only way to reduce subsidies—they can also be reduced through cost-cutting. Why is the government then only interested in increasing prices, rather than reducing costs by preventing irregularities, corruption and waste?

First of all, subsidies are required because Bangladesh Power Development Board (BPDB) has to buy power at high prices from privately owned power plants run by imported and expensive liquid fuel. The purchasing cost from the private sector is much higher than the cost of generating power from the public sector. When power generation in the private sector increases, the average cost of power generation in the country increases. According to BPDB annual reports, the average cost of power generation per unit was Tk 6.61 in 2020-2021, Tk 8.84 in 2021-2022, and Tk 11.33 in 2022-2023. In 2022-23, the generation cost of BPDB's own power plant was Tk 7.63 per unit, and the cost of other state-owned power plants was Tk 6.85. On the other hand, the average generation cost was Tk 14.62 for independent power producers (IPPs) and Tk 12.53 for rental power plants. Just a year earlier, IPP and rental electricity generation cost was Tk 11.55 and Tk 9.80, respectively (BPDB Annual Report 2021-22, page 96; PDB Annual Report, 2022-23, page 98). As a result, the BPDB is incurring losses by purchasing power from IPPs and rental power plants, and the government has to cover these losses with subsidies.

According to a report in Bonik Barta, the revised budget for the 2023-24 fiscal year estimated the power sector subsidies to be Tk 39,406 crore. On the other hand, the capacity charge payment has been estimated at more than Tk 32,000 crore—around 81 percent of the subsidies given to the power sector. In FY2022-23, capacity charges were paid to the tune of Tk 26,000 crore, which was 65.76 percent of the total subsidies given to the power sector.

Now, we know that a large part of the power generation capacity remains unused throughout the year. But even if the power is not purchased, as per the agreement, BPDB as the sole buyer of power has to pay the capacity charges to the power plants. Last year, capacity charges of more than Tk 26,000 crore were paid when 41 percent of capacity remained unused. Capacity charges have cost Bangladesh more than Tk 1 lakh crore in the last 14 years. Every year, with the increase in power generation capacity in the private sector, the amount of capacity charges keep rising and the losses incurred by the BPDB rise in tandem. To reduce these losses, electricity prices have been increased 12 times at the wholesale level and 14 times at the retail level over the last decade and a half. Yet, the losses and subsidies have not decreased; rather, pressure has been created to increase the prices of electricity repeatedly.

Meanwhile, despite the underutilisation of the existing power generation capacity, new capacity addition has not stopped. For example, while the capacity of the existing gas-based power plants cannot be utilised fully due to lack of gas, new gas-based power plants are being constructed. Recently, two gas-based power plants of Summit and Unique groups started operating in Meghnaghat, Narayanganj with a total capacity of 1,167 MW. Aside from this, there is a 718 MW Reliance power plant waiting to start operating. All these will increase BPDB's costs even more.

The real problem in Bangladesh's power and energy sectors is the implementation of power and energy projects one after another, without competitive bidding, under the umbrella of the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act, 2010, for the benefit of various domestic and foreign investors—without any accountability. As a result, on the one hand, power plants with excess capacity have been constructed with the provision of capacity payment. On the other hand, power generation has become more dependent on imported primary fuels like LNG, oil and coal. Meanwhile, due importance has not been given to the exploration and extraction of domestic gas reserves, as well as renewables. Without addressing the root causes, no matter how much the price of electricity is increased, the crisis in the power and energy sectors will not be solved. Rather, the country's economic crisis will deepen and people will suffer even more.

Kallol Mustafa is an engineer and writer who focuses on power, energy, environment and development economics.​

 

[Saif]

Inefficient gas-fired captive power plants waste $460m

Bangladesh could save $460 million a year by increasing efficiency of its gas-fired captive power generation plants, revealed a report released on Monday by the US-based Institute for Energy Economics and Financial Analysis...

www.newagebd.net

Inefficient gas-fired captive power plants waste $460m
Staff Correspondent 13 May, 2024, 18:23



Bangladesh could save $460 million a year by increasing efficiency of its gas-fired captive power generation plants, revealed a report released on Monday by the US-based Institute for Energy Economics and Financial Analysis.

Captive power plants refer to power generation systems installed by industries for meeting their own electricity demand. Establishment of these power plants were allowed since the national grid could not be relied for quality power supply.

The report estimated that greater efficiency in captive power generation and efficient utilisation of the heat generated during the power generation could reduce the import of liquefied natural gas by 50.18 billion cubic feet.

The report also revealed that the average efficiency of industrial gas-fired captive power plant is 35.38 per cent whereas generators with 45.2 per cent efficiency are available in the market.

A survey on 51 industries with 124 gas-fired captive generators with a combined generation capacity of about 250 megawatts was conducted to find out energy efficiency in the captive power plants.

'Low efficiency in gas-fired captive power generation consumes a significant amount of gas annually. This is despite the average efficiency in captive generation increasing to 35.38 per cent from 30 per cent in the last decade,' said Shafiqul Alam, lead analyst, Institute for Energy Economics and Financial Analysis, the author of the report.

'Additionally, a significant percentage of industries do not utilise the waste heat released by these generators,' he said.

The report found that 54.28 per cent of the studied generators have an operational age of more than eight years.

Although age is not the only parameter affecting generator efficiency, the report said, when industries procured the old stock of generators, the rated efficiency was not as high as the efficiency of newly purchased generators.

This report further finds that 44.22 per cent of industry samples do not use waste heat released by generators, while 79.6 per cent do not use jacket cooling water in productive applications.

'By using the waste heat recovery boiler/plant and jacket cooling water in a chiller or heater, a substantial amount of gas can be saved,' said the report.

Replacing inefficient power generators in the captive power production may incur an upfront cost, the report noted, adding that the cost would be recovered between 1.5 and five years.

The return on investment in waste heat recovery is only about one year, the report said.

Bangladesh entered the LNG market in 2018 with a modest import of 31.45 billion cubic feet (Bcf) of LNG. In 2023, imports swelled to 238.72Bcf, more than seven times the 2018 figure.

Over the six years since 2018, rapidly rising imports in a volatile global market exposed Bangladesh's energy sector's weak financial health earlier than anticipated.

The power sector is the single largest gas consumer as it accounted for 41.76 per cent of gas production or 389.38Bcf in the fiscal year 2022–23.

Regarding gas consumption during FY2022–23, industrial processes, excluding fertiliser and tea production, consumed 19.17 per cent, while captive power generation consumed 17.6 per cent, the report said.

Bangladesh's plan to power its economic development with LNG imports was not designed to cope with extreme global fuel market volatility, depreciation of the local currency and weak fiscal conditions, the report noted.

The high dependence on gas is raising import bills and with it, the tariffs paid by consumers, the report said, adding that Bangladesh must urgently re-evaluate its energy strategy and take steps to improve energy efficiency to contain the growing demand for gas.

Bangladesh's current installed power generation capacity is over 27,000MW, excluding captive power capacity of 2,800MW.​

 

[Saif]

Nasrul advocates for AI in enhancing Bangladesh's power and energy sector

State Minister for Power, Energy and Mineral Resources, Nasrul Hamid, has said that a roadmap that integrates artificial intelligence with modern technology to advance Bangladesh's power and energy sector is being developed. Speaking at the closing session of a seminar titled “The Engineers

thefinancialexpress.com.bd

Nasrul advocates for AI in enhancing Bangladesh's power and energy sector
FE ONLINE DESK
Published :
May 13, 2024 20:17
Updated :
May 13, 2024 20:17



State Minister for Power, Energy and Mineral Resources, Nasrul Hamid, has said that a roadmap that integrates artificial intelligence with modern technology to advance Bangladesh's power and energy sector is being developed.

Speaking at the closing session of a seminar titled "The Engineers for Transforming Technology Driven Smart Bangladesh" at the Engineers Institution, Bangladesh (IEB) on Monday, Hamid emphasised the pivotal role of power and energy as the main drivers of Bangladesh's economy.

The event was presided over by IEB president and Member of Parliament, Engineer Md Abdus Sabur, with General Secretary Engineer SM Manjurul Haque Manju also in attendance, reports UNB.

Nasrul Hamid said that artificial intelligence will make daily work easier.

"Technology will work behind the scenes to build a knowledge-based society. Engineers should make a responsible contribution to increase the use of technology at all levels of the workplace," he said.

He highlighted the digital connectivity established under Prime Minister Sheikh Hasina's leadership as foundational to creating a 'Smart Bangladesh.'

"We must build a smart country by making timely decisions," he added, suggesting that learning from technologically advanced countries could spur innovation and a study-based approach to overcoming challenges.

Hamid outlined a vision where "a resilient strategy will transform Bangladesh into 'Smart Bangladesh' through intelligent integration of infrastructure, health, education, and other sectors by leveraging innovation."

He stressed the importance of the engineering community in accelerating the country's development: "The faster our engineers can harness technology for human welfare, the quicker Bangladesh will evolve into a developed nation."

Detailing specific applications of technology in the energy sector, Hamid explained, "With smart metres, we can calculate and control the electricity load for power distribution. Artificial intelligence and SCADA systems will enable quick identification of power disruptions in any area."

Despite the commitment and sincerity of the engineers, Hamid noted that it is crucial for them to work with determination and loyalty to the people to realise the vision of a 'Smart Bangladesh.'

The seminar saw the presentation of 10 papers, with the main article delivered by BUET Professor Dr Engineer Munaz Ahmed Noor at the 61st convention of the IEB.​

 

[Saif]

Power producers may lose zero-duty benefit

Power generation companies, including rental ones, may see an end to a zero-duty benefit on their import of machinery, equipment and spare parts from next fiscal year as the government moves towards generating more revenue curtailing the practice of handing out tax exemptions.

www.thedailystar.net

Power producers may lose zero-duty benefit



Power generation companies, including rental ones, may see an end to a zero-duty benefit on their import of machinery, equipment and spare parts from next fiscal year as the government moves towards generating more revenue curtailing the practice of handing out tax exemptions.

The companies may need to pay a 5 percent customs duty when importing goods from the upcoming fiscal year of 2024-25, according to officials of the National Board of Revenue (NBR).

The rental power plants have been enjoying the duty-free benefit since 2008. Prior to that, there was an import tax of around 10 percent.

The government exempted the rental power companies from paying the duties to enhance private investment in this sector at a time when there was a huge deficit in power production, said the officials concerned.

There were times when Bangladesh Power Development Board (BPDB) had no option but to impose power cuts around the country by rotation for hours on end.

"The government awarded contracts to a good number of small power plants at that time to increase the power generation capacity within a short time," said a BPDB official wishing anonymity.

"But later the validity of contracts with them were extended several times. Besides, they were provided advantages, including different VAT and tax exemptions," said the official.

According to a private sector power generation policy (PSPGP) of Bangladesh 2004, private investors enjoy a corporate income tax waiver, relaxed customs duties, exemptions from stamp duty payments and interest on foreign loans and other benefits.

Such decisions were changed and extended several times.

About the customs duty, a government circular of March 11, 2008 reads that rental power companies have been exempted from paying all kinds of import duties, value added taxes and supplementary duties.

This was applicable whenever equipment or spare parts were being imported for power plants being set up temporarily.

There were some conditions in the circular, including one that stipulated that rental companies would have to export their plants and parts after the end of the contracts.

But later, most of the plants got extensions on the durations of their contracts. The validity of the circular was also extended multiple times, the last being till June 2026.

The new proposal for imposing the 5 percent customs duty comes at a time when the government is facing pressure from the civil society to stop availing power from the rental plants for it being more expensive than that from other sources.

The other sources are government-run power plants and independent power producers, which have a much larger power generation capacity than the rental ones.

On the other hand, the NBR is also seeking ways to enhance revenue collection in order to finance public expenditure and reduce government dependence on borrowing.

"We are working to place the proposals as duty measures for the next fiscal year with the objective of coming out of the culture of giving out tax breaks," said a senior official of the NBR, seeking anonymity.

"A 5 percent customs duty will be applicable on all types of equipment required for setting up any power plant," said the source in the NBR.

According to the NBR's data, investors in this sector have received duty exemptions amounting to Tk 1,853 crore in the last two years from July 2022 to March 2024.

There were at least 32 rental power plants operating in fiscal year 2015-16.

Now there are 18 with a combined capacity of 1,170MW. Of it, 797MW is being availed on a "No Electricity No Payment" basis following renewals of associated contracts, said the BPDB officials.​