[🇧🇩] Energy Security of Bangladesh

[Saif]

Govt debt swells over Tk 16.97t

Government debt had accumulated to Tk 16.97 trillion until March 2024 in an increase by Tk 840 billion or 5.0 per cent year on year, as Bangladesh grapples to meet its fiscal deficits. The sharp rise in government debts signals growing financial strains on the economy, potentially affecting infl

thefinancialexpress.com.bd

Indian ONGC likely to abandon hydrocarbon exploration in Bay
M Azizur Rahman
Published :
Aug 22, 2024 00:20
Updated :
Aug 22, 2024 00:20

Indian oil and gas exploration company ONGC Videsh Ltd (OVL) is set to abandon its hydrocarbon exploration efforts in two Bangladeshi offshore gas blocks after a decade of operations.

OVL -- the sole international contractor assigned to delineate hydrocarbons in Bangladesh's offshore blocks -- has neither sought to extend its contract tenure nor initiated new well drilling projects before the contract expiration in February 2025, according to a senior Petrobangla official.

Instead, it requested to relocate its two shallow sea blocks to more promising areas in the Bay of Bengal and increase gas prices, the official told The Financial Express on Wednesday.

"It is a clear indication that the Indian firm is not interested in continuing exploration in Bangladesh," said a senior official of the Energy and Mineral Resources Division under the Ministry of Power, Energy, and Mineral Resources.

State-run Petrobangla has never increased tariffs after signing production-sharing contracts (PSCs) or allowed block relocation.

OVL is currently the only international oil company (IOC) with rights to explore two untapped shallow offshore blocks in the Bay of Bengal.

But it has halted its well-drilling activities for the past two years, violating contractual obligations, said the Energy and Mineral Resources Division official.

"After a failed exploration attempt at Kanchan under the SS-04 block in Moheshkhali Island a few years ago, the Indian company did not proceed with its exploration works," said a senior Petrobangla official.

It could not find any commercially viable hydrocarbon resources at Kanchan after drilling a well, he said.

Under the PSC with OVL, the oil and gas exploration company has contractual obligations to drill two more wells: 'Titly' in block SS-04 and 'Moitree' in block SS-09. But OVL management has yet to engage a contractor for the well drilling.

With only a few months remaining in its PSC tenure, the Indian firm is unlikely to complete drilling within the given time, said sources.

They added that the firm has a budget of US$65 million for drilling the wells.

Delays and failures

OVL signed two PSCs with Petrobangla in February 2014, securing rights to explore shallow sea blocks SS-04 and SS-09. These contracts were initially set to expire in February 2019.

Petrobangla extended the PSC tenure twice to boost offshore exploration -- first until February 2023 and then to February 2025. Both extensions were granted at OVL's request following failed exploration attempts.

At Kanchan gas well, OVL drilled beyond its targeted depth of around 4,228 metres in search of a commercially viable gas deposit. But all its efforts found only huge deposits of clay and shell-stone sequence and no sandstone, meaning there is no gas reserve there.


The Kanchan well was up for the first offshore drilling in the country's maritime territory in the last seven years.

Obligations and progress

OVL is the operator of blocks SS-04 and SS-09, having a participating stake of 45 per cent. Block SS-04 covers an area of 7,269 square kilometres, while block SS-09 stretches over an area of 7,026 square kilometres. The water depth of both the blocks ranges between 20 metres and 200 metres.

As per the PSC, the firm is committed to conducting 2,700 line-kilometre 2D seismic-data acquisition and processing as well as drilling one exploratory well in block SS-04.

Also, it has to do the same for another 2,700 line-km 2D seismic- data acquisition and processing as well as drill two exploratory wells in block SS-09.

The OVL owners will be allowed to operate and sell oil and gas for 20 years from an oil field and 25 years from a gas field under the deals. The company has already completed around 3,100 line-km 2D seismic surveys for both blocks.

Currently, the country has no producing offshore gas wells, as its entire natural gas output comes from onshore fields and the import of liquefied natural gas (LNG).​

 

[Saif]

Power sector deserves priority attention

The interim government headed by Dr Muhammad Yunus has been reviewing the activities of various ministries along with other important issues related to law and order situation and macroeconomic management of the country. Secretaries of the ministries of the government are now busy preparing positio

thefinancialexpress.com.bd

Power sector deserves priority attention
Mushfiqur Rahman
Published :
Aug 19, 2024 22:07
Updated :
Aug 20, 2024 20:59

The interim government headed by Dr Muhammad Yunus has been reviewing the activities of various ministries along with other important issues related to law and order situation and macroeconomic management of the country. Secretaries of the ministries of the government are now busy preparing position papers on the priority issues of their respective ministries requiring policy decisions of the government.

Power and Energy Divisions of the Ministry of Power, Energy and Mineral Resources are now in a difficult situation due to shortage of both greenback and local currency. The payment of pending bills against the import of liquid fuel and LNG, purchase of power from neighbouring countries and capacity charges of the private power plants remains a major pressing issue for the government.

As reported by the Bangladesh Power Development Board (BPDB), there are grid connected installed power plants having a cumulative 28,089 MW power generation capacity. Among them 62 plants with 11,246 MW (40 per cent) capacity are installed in the public sector (BPDB, EGCB, APSCL, NWPGCCL, RPCL, B-R Power Gen and CPGCBL). Two power plants that are joint venture initiatives (BCPCL and BJFCL) have been installed with a cumulative capacity of 2,468 MW (9 per cent of total generation capacity). Private sector has installed 87 power plants with a capacity of 11,718 MW (42 per cent of installed generation capacity). In addition, 2,656 MWs electricity are being imported from India under contracts with BPDB (9 per cent). It was reported that installation of 27 more power plants with a total capacity of 9,277 MW is nearing completion. Clearly, the country does not have any problem with power generation, rather the question that is troubling every mind is how to rationally utilise the installed capacity.

Generally, the average daily demand for power is around 14,000 MW during the peak hours. On April 30, 2024, there was the record high generation and consumption of 16,477 MW power in Bangladesh (during the peak hours). It is clear that a huge reserve margin of installed power generation capacity has been created during the recent years, but there were little efforts to analyse why the unutilised power generation capacity remained idle and how far the country would be able to pay the capacity charges to the private power plants.

Also, some power plants installed under various loan agreements in the public sector need funds for loan and interest payments. A few of those plants remain idle or operate well below their capacity due to non-supply of primary fuels.

Experts in the relevant sector believe that installation of 25 per cent maximum reserve margin would have been sufficient for ensuring stable power supply system in the country. The wasteful resource allocation and flawed planning have pushed Bangladesh Power Development Board (BPDB) into serious financial crisis. Former State Minister for Power, Energy and Mineral Resources Mr Nasrul Hamid had informed the now- dissolved parliament a few months back that the government had to pay Tk. 1.0 trillion in capacity charges over the past 13 years. Energy sector analysts believe that the huge capacity charge obligations of BPDB have contributed to higher power generation costs. Repeated power tariff increase could not help BPDB become financially solvent. BPDB has now nearly US$ 5 billion worth outstanding payment obligations. The immediate past government while approving the national budget for the financial year 2024-2025 allocated Taka 400 billion as subsidy for the power sector. Clearly, the subsidy allocation is not enough for the BPDB to meet its soaring budget deficit.

Sector experts, independent research organisations and policy analysts have been offering suggestions to focus on various issues related to power and energy sectors. It is important to analyse why the over capacity of power generation (more than 40 per cent) have been created and who are accruing benefit from it. It is also important to see whether the installed power generation capacity related data are authentic and if the basis of capacity charge payments are based on authentic reports on plant-wise real generation capacity and their idling hours.

It may be mentioned that data tuning and use of inaccurate and obsolete data by the government departments have been causing problems for the decision makers not only for economic management but also for making development plans for various sectors. Economists and researchers have been raising concerns about the quality of official data. Dr Salehuddin Ahmed, the Finance and Planning Adviser of the interim government, in a meeting held on August 13, 2024 assured that 'accurate up-to date data on economic and social indicators will be released'. He further added that 'discrepancies in economic indicators will no longer occur'.

An unbiased power and energy sector review, rationalisation of power plants installation initiatives and reserve margin justification is urgently needed. The government may consider re-negotiating tariff under existing power purchase agreements (for those plants who have failed to meet their implementation deadlines) and penalising the contractors for their non-performance.

Besides, it is very much important to conduct necessary scrutiny of the costs involved in the implementation of large-scale power projects in public sector within the scope of government to government agreements in the past. Media have been revealing financial irregularities in the implementation of 'mega projects' and the lack of transparency. For instance, media report revealed that implementation of four large coal fired power plants in the country involved a cost of about Tk. 1.25 trillion. Of that amount, allegedly, Tk.617 billion was either wasted or misappropriated. Only professional assessments may find out the actual cost of large power plant projects that were implemented bypassing the competitive bidding processes.

Mushfiqur Rahman is a mining engineer. He writes on energy and environment issues.​

 

[Saif]

Bangladesh's Summit reviewing cross-border power deals after India rule change

Bangladesh's Summit Group plans to renegotiate preliminary deals to import renewable power from India after a recent rule change by New Delhi allowed generators that exclusively export their electricity to sell locally, the utility's chairman said

www.thedailystar.net

Bangladesh's Summit reviewing cross-border power deals after India rule change

Bangladesh's Summit Group plans to renegotiate preliminary deals to import renewable power from India after a recent rule change by New Delhi allowed generators that exclusively export their electricity to sell locally, the utility's chairman said.

India amended its power export rules less than a week after former prime minister Sheikh Hasina fled Bangladesh early this month amid deadly protests, enabling Adani Power to connect its Godda coal-fired plant -- the only generating station under contract to export all its output -- to India's domestic grid.

"After the policy change, my partners in India might be more willing to sell in India. Our company will be investing in transmission in Bangladesh and we will have to assume more risks," Summit Group Chairman Aziz Khan told Reuters.

The conglomerate, which operates over a dozen fossil fuel-based power generation plants, signed preliminary deals with Indian partners including Tata Power Renewable Energy Ltd last year to construct and source supply from 1,000 megawatts (MW) of renewable projects.

A spokesman for Tata Power declined to comment on Summit's plans.

Green power imports are crucial for slashing emissions in Bangladesh, which gets nearly 99% of its electricity from fossil fuels. Land scarcity in the densely-populated country of over 170 million has constrained higher solar additions.

Summit Power International, the Singapore-based holding company for Summit Group's power generation assets, is exploring options including delaying investments until there is more policy clarity, and renegotiating financial terms to account for higher risks, Khan said.

"Such quick changes in policies are always a matter of concern as they have long-term implications," Khan said, referring to India's rule change.

Summit's plans to import clean electricity via India from 700 megawatts of hydro power plants it planned to build in Bhutan and Nepal as a part of $3 billion in regional clean power investments also face uncertainty due to a new government in Bangladesh, Khan said.

No final decisions on the cross-border investments have been taken yet, Khan said, adding that the company would continue to invest within Bangladesh.

Khan said the new Bangladesh government's decision to suspend a law allowing awards of power supply contracts without tenders also contributed to his decision to review projects.​

 

[Saif]

Govt seeks budgetary support from ADB for energy imports

The interim government has sought budgetary support from the Asian Development Bank to pay outstanding dues to foreign energy companies and make more imports of power and energy. The request was made by Power, Energy and Mineral Resources Adviser Muhammad Fouzul Kabir Khan when a delegation of the

thefinancialexpress.com.bd

Govt seeks budgetary support from ADB for energy imports
FE ONLINE DESK
Published :
Aug 22, 2024 21:06
Updated :
Aug 22, 2024 21:06

The interim government has sought budgetary support from the Asian Development Bank to pay outstanding dues to foreign energy companies and make more imports of power and energy.

The request was made by Power, Energy and Mineral Resources Adviser Muhammad Fouzul Kabir Khan when a delegation of the multilateral donor agency, led by its country director Edimon Ginting, met him at the ministry’s conference room on Thursday, reports UNB.

Welcoming the ADB delegation, he informed them that he had made several decisions very quickly soon after taking charge.

He said the interim government will make decisions based on facts rather than just relying on statistics.

He also informed the delegation that from now on, to ensure transparency, he has also given instructions to the ministry officials to go through the tender process to make any kind of procurement.

“The provisions of Public Procurement Act, 2006 and Public Procurement Rules, 2008 shall be used in all procurement processes”, he told the delegation.

He also noted he has suspended the ongoing operations under the Speedy Power and Energy Supply (Special) Act, 2010, and suspended the concerned provision of the Bangladesh Energy Regulatory Commission (Amendment) Act, 2023 that allows the government to raise power and gas tariff by executive order.

Fouzul Kabir, who is also adviser of the Ministry of Road Transport and Bridges and the Ministry of Railway, said that the current government has undertaken plans to increase the use of renewable energy.

Congratulating the adviser on his new role, the ADB Country Director in Bangladesh said that they are the biggest partner of the government in the power and energy sector.

He expressed interest in working wholeheartedly with the present government. They will seriously consider the current government's request for budgetary assistance in the power and energy sector.

Senior Secretary of Road Transport and Highways Division Md. Ehsanul Haque, Senior Secretary of the Power Division Md. Habibur Rahman, Senior Secretary of Bridges Division Md. Manjur Hossain, Railway Ministry Secretary Mr. Abdul Baki, and Energy and Mineral Resources Division Secretary Md. Nurul Alam were present on the occasion.​

 

[Saif]

Tackling energy problems will be tricky

The energy advisor has stated on the first day of joining office that the Speedy Supply of Power and Energy (Special Provision) has been put on hold with the promise of not raising tariffs on energy prices and alongside bringing past contracts under review. This is a welcome move but the fact remai

thefinancialexpress.com.bd

Tackling energy problems will be tricky
Syed Mansur Hashim
Published :
Aug 23, 2024 21:42
Updated :
Aug 23, 2024 21:42

The energy advisor has stated on the first day of joining office that the Speedy Supply of Power and Energy (Special Provision) has been put on hold with the promise of not raising tariffs on energy prices and alongside bringing past contracts under review. This is a welcome move but the fact remains that the country is presently burdened with a US$5.0 billion energy-debt and it is the task of the interim government to navigate the country out of this situation.

As stated, umpteen number of times by energy experts in the country, the open flouting of rules that the Act allowed in terms of public procurement had become the norm and it created the perfect opportunity for a total lack of oversight in procurement of energy supplies and power contracts. The full scope of the graft that had occurred over the course of more than a decade will remain a work in progress but that is a separate subject of discussion.

While arguments have been made both in last parliament and in the public sphere that there is nothing wrong with 'capacity payment', one cannot overlook the public disclosure made by the former minister for energy and power that the state had paid Tk 1.06 trillion as capacity payment to the private energy sector. The crux of the problem lies elsewhere i.e. correct demand forecasting. For years, policymakers went on building one power plant after another in what is now totally obvious - over and above the power needs of the economy! As capacity payment or charge takes into account return on investment, interest payments on loans (both domestic and foreign), capacity payment as a whole went on rising and today, by an average estimate the energy sector is burdened with around 10,000 MW (megawatts) of excess power generation capacity.

Again, as energy planners wilfully chose to divert energy sourcing from national to international at the expense of sustained exploration of own natural resources and concentrating on an import-driven fuel supply, external shocks like a war in Europe pushed the production cost of energy through the roof. None of this helps the present government though because it is now burdened with multi-billion-dollar debt in foreign currency because these energy supplies have to be paid in foreign exchange.

The question is what will the government do about these unnecessary power plants, particularly those that were commissioned after 2017? Since, there is no need for a lot of these plants, what will the decision about keeping them operational? Whatever may be the contractual obligation under the said Act, can the country afford to keep paying capacity charge? The answer obviously is a resounding NO! This is evidenced by events over the last one year when the previous government had resorted to taking short-term hard interest loans from foreign institutions simply to defray the payments to foreign suppliers of liquefied natural gas (LNG) and to meet import of fossil fuels. The situation today has taken years in the making and by putting a cap on energy prices for now will not make the problem go away.

Many years ago, Pakistan had followed the same path to prove power for its economy. It had landed in the same mess as Bangladesh. A skewed energy policy that was overly dependent on independent power plants which increasingly became the dominant suppliers of energy! That country too had reached a situation where it couldn't afford to pay off the producers of power or the suppliers of energy and indeed the country was going bankrupt and this was avoided by a generous bailout from the Kingdom of Saudi Arabia.

Bangladesh presently isn't on the verge of bankruptcy but it is in serious economic trouble. As pointed out by numerous energy experts in the country, there has to be a shift in policy to take energy exploration seriously. The country is now energy-starved. Entire sections of industry are now facing ruin because natural gas production in the country has been waning for some years now. With state-owned exploration companies effectively sidelined as policymakers had moved towards procuring energy supplies from the international market, natural gas can no longer be supplied to either industry or power generating plants. For more than a decade, we have become less energy-independent and that is where the focus must now return. The energy advisor is tasked with the unenviable job of rejuvenating the exploration of on-shore and off-shore natural gas. While it may be politically expedient for some in government to forgo the issue of coal extraction, can Bangladesh be choosy? Pragmatism demands that Bangladesh must explore all its domestic natural resources if it wishes to preserve the economy and move forward.​