[🇧🇩] Energy Security of Bangladesh

[Saif]

Plan ahead for steady power supply

The government must take timely steps to keep the power plants running and the power supply uninterrupted.

www.thedailystar.net

Plan ahead for steady power supply
The government must take timely steps to keep power plants running

VISUAL: STAR

Amid the ongoing gas crisis in the country that has hit us on several fronts, including power generation, it is worrying that the coal-based power plants are also scaling down production, owing to a number of issues. According to a report in this daily, these power plants have been reducing production, and in some cases completely shutting down, due to financial, legal or technical difficulties. This has led to increased power outages in the country, especially in rural areas, affecting not just households but also businesses.

Per the report, Bangladesh gets power from seven coal-fired power plants, which have a combined generation capacity of 7,099MW. But lately they have been producing less than half—around 3,199MW. Production in Matarbari and Barishal power plants are completely off, while Rampal, SS Power, and Barapukuria are operating at a significantly reduced capacity. These power plants have been hit with either coal shortage, mechanical problems or maintenance issues. Only the Payra power plant has been operating at full capacity. Meanwhile, the Adani Godda power plant in India's Jharkhand cut its power supply by half on October 31 and has threatened to stop supply completely if Bangladesh does not clear its outstanding dues by November 7.

As a result, except for Barishal division, which is covered by Payra, the country has been experiencing increased power outages, which are impacting people's lives and livelihoods, especially in the rural areas. One onion trader in Dinajpur said he lost half of his imported produce due to frequent load-shedding. A rice miller in Mymensingh said his mill's output dropped significantly due to four to five hours of power cut daily. This does not bode well for the country.

The press secretary to the chief adviser said the government was working to expedite payment to Adani. This ought to help with the resumption of supply from Godda power plant. But what about the ones that can't operate due to coal shortage? Officials said coal procurement had been delayed by legal issues that were raised due to a change of supplier. They said it's unlikely that the Matarbari plant would resume production before mid-December. Given the time of the year, when power consumption is typically less due to reduced demand, we may not see the situation take a critical turn now. However, if it continues to persist, we are looking at a potentially worse situation from March onwards when the temperature is supposed to rise, and especially if the gas shortage continues. The government needs to figure out—and quickly—how to resolve the current situation. It should plan ahead to keep the power supply across the country stable and ensure that further power shortages are averted.​

 

[Saif]

Power generation halves amid coal crisis

The AL government went for coal powered plants citing cheaper production cost. However, these plants failed to go into production within the stipulated time

en.prothomalo.com

Power generation halves amid coal crisis
Mohiuddin
Dhaka
Published: 05 Nov 2024, 13: 12

Payra coal-fired power plant in Patuakhali File photo

The country has a power generation capacity of more than 7000 MW from coal powered plants. However, power generation from coal powered plants has declined to less than 3000 MW.

Relevant people say the power plants are struggling to maintain a supply as per the demand due to the pending bills, dollar crisis and complications over tender.

As a result, two of the seven coal power plants of the country were forced to shut their operations. Besides, power generation has been greatly hampered in four other coal powered plants.

Despite objections from the environmentalists, the Awami League government opted for coal powered plants citing cheaper production cost.

However, these plants failed to go into production within the stipulated time. The Power Division could not clear the bills regularly after these plants went into production. As a result, these plants are under pressure now with mounting pending bills. The interim government is increasing payments for pending bills in phases.

Sources in the Power Development Board (PDB) say the demand for electricity is comparatively low as the temperature is falling due to season change. The highest demand at night is 13000 MW at the moment.

Efforts is being made to increase production from oil powered plants at a higher cost due to the decline in production at coal powered plants. Despite that, the demand is still higher than the supply. So the PDB is being forced to impose load shedding in many places outside Dhaka. The country witnessed the highest 700 MW load shedding per hour on Sunday.

The three units of the Barapukuria Coal Based Thermal Power Plant, the lone plant in the country which produces coal from its own mine, have a power generation capacity of 525 MW per day together.

However, two of these mostly remain closed due to the coal crisis. At the moment, two of these units are in production. These two units generate 220-230 MW electricity together.

The plant needs 5,000 tonnes of coal per day to become fully operational. This power plant now supplies half the demand. The remaining six power plants are run on imported coal. The PDB is struggling to arrange the money for imports.

Two plants completely shut down

The Matarbari Coal Power Plant in Maheshkhali of Cox’s Bazar has been completely shut down since 31 October. The 1200-MW-power-plant is likely to resume production by next March. One of the two units of this power plant is scheduled to return to production next month.

Speaking to Prothom Alo, Monowar Hossain Majumdar, supervising engineer of the power plant, said this plant would remain closed until coal import resumes.

The Coal Power Generation Company sources say coal import has been delayed as the prevailing tender-related complications have been taken into the cognisance of court to reach a settlement. Already the purchase order to supply 3.5 million tonnes of coal for a year has been issued.

The power plant needs 300,000 tonnes of coal every month. The two units of the power plant went into commercial production on 18 December last year and 28 August this year respectively.

However, the power plant is yet to be granted any bill. It could not pay the bills as it does not have any Power Procurement Agreement with the PDB, which is likely to be signed soon.

Apart from these, production at the 307-MW-power-plant in Amtali of Barguna has been completely shut down since 27 October for maintenance works. It will take two months to resume power generation at this plant.

Adani pressurising for loan repayment

Indian power company Adani and PDB have been exchanging letters concerning the due bills. However, the issue has not been resolved. According to Adani’s claims more than 850 million (85 crore) dollars are due.

The Adani Group is putting in pressure for repayment of the unpaid bills of the power plants. Adani closed down one of the units on last 31 October.

More than 700 megawatts of electricity is being supplied from the remaining unit. If the matter of arrear bills repayment is not resolved, Adani can close this one as well.

The power plant of Adani is located in Godda area in the Indian state of Jharkhand. This coal-based power plant has a capacity of 1,600 megawatt.

There are two units with the capacity of 800 megawatts each in this plant. Bangladesh is supposed to buy the electricity produced there for 25 years. The first unit started producing electricity commercially in April last year while the second unit went into production in June the same year.

Two officials from PDB told Prothom Alo, the amount of bills repayment has been increased than before. Their electricity bills was USD 87 million (8.7 crore) last month.

Meanwhile, USD 97 million (9.7 crore) has been paid including the arrear. Earlier, the bills used to be paid through the Sonali Bank. An initiative has been taken to pay the bills through letter of credit (LC) at the Krishi Bank now. Ten million (1 crore) dollars was to be paid on Monday.

PDB chairman Md Rezaul Karim told Prothom Alo that it’s not possible to pay the total dues at once. Apart from that there’s no steady supply of dollars according to the demand. So, the amount of arrear bills repayment is being increased in phases.

Shortage in supply of coal

Since it went into production, Payra 1320 Megawatt Thermal Power Plant in Patuakhali has been supplying electricity uninterruptedly according to the demand. However, the plant had to keep the production of electricity closed for a month last year as the bills for coal went into dues for the crisis of dollars. Right now, this plant is in production as the only coal-based power plant running on full capacity. This plant is running under Bangladesh and China’s joint initiative.

After ten years of the construction of Rampal 1320 Megawatt Power Plant being started, one of the units has gone into production. Afterwards, this plant has remained closed several times so far. Among the reasons there were technical errors and crisis in coal purchase for lack of dollars as well. Right now, less than 600 megawatts of electricity is being supplied from one unit of this power plant built jointly by Bangladesh and India.

Meanwhile, one of the units of SS Power 1224 Megawatt Power Plant in Banshkhali of Chattogram is running at present. Currently, it’s producing 400 to 460 megawatt of electricity. The other unit is left closed for quite a few days. Since the arrear bills are piling up, the coal supply cannot be retained to normalcy. There’s not enough coal at the plant to run both units.

If the coal-based power plants cannot be kept running, the demand of electricity will soar in next March and the situation might get even worse. In this regard, former professor at BUET Ijaz Hossain told Prothom Alo that the dependency on import has increased. Now arrangements must be made to collect the dollars required for coal import and to repay the bills.

* The report, originally published in the print and online edition of Prothom Alo, has been rewritten in English by Ashish Basu and Nourin Ahmed Monisha​

 

[Saif]

Adani cashing in on a ‘one-sided’ deal

Moreover, within a week of Sheikh Hasina’s resignation last August, Adani established an alternative market for selling electricity by amending the contract in India

en.prothomalo.com

Adani cashing in on a ‘one-sided’ deal
Mohiuddin
Dhaka
Updated: 01 Nov 2024, 18: 54

Adani power plant File photo

The situation with the Indian power company Adani Group remains complicated. Since last July, Adani has been charging electricity bills based on the increased price of coal used in its power plants.

Additionally, the company is putting pressure on Bangladesh to pay outstanding bills, having already reduced electricity production to less than half. Observers have noted that Adani is taking advantage of a “one-sided” deal signed during the government of Bangladesh Awami League.

Adani’s power plant is located in Godda, Jharkhand, India. Last year, before power generation began, there was significant controversy surrounding the price of coal.

The Power Development Board (PDB) refused to pay the high coal prices, prompting Adani to agree to reduce them. The company also promised to supply coal at a lower price than the Payra and Rampal power plants. However, a year later, Adani is now demanding a 22 per cent increase in price.

On 28 October, Adani sent a letter to the PDB amid ongoing disputes over the price hike and demands for payment of dues. The letter stated that the PDB must take measures to pay the dues by 30 October as promised; otherwise, Adani would be forced to stop power supply from 31 October, citing a working capital crisis.

According to PDB sources, the letter of credit (LoC) for power imports from Adani was supposed to be opened by 30 October, facilitated by Krishi Bank, but this did not occur. The PDB has requested additional time. As a result, Adani shut down one of its units on Thursday.

Currently, a little over 500 MW is being generated from the operational unit, which has a capacity of 750 MW. Meanwhile, the Matarbari power plant is closed due to a lack of coal, and production has decreased at the Rampal and Banshkhali power plants due to outstanding issues. There was a load shedding of over 1,500 megawatts per hour on Thursday.

According to sources from the Power Development Board (PDB), the 1,320 MW power plant at Payra in Patuakhali is charging USD 75 per tonne of coal. In contrast, the coal prices at Chattogram’s Banshkhali SS Power Plant and Bagerhat’s Rampal Power Plant are both under USD 80 per tonne.

Adani, however, is requesting USD 96 per tonne of coal, which is USD 16-21 more per tonne than the prices at Payra and Rampal.

Adani’s coal-based power plant has a capacity of 1,600 MW, and Bangladesh has committed to purchasing the generated electricity for 25 years.

Commercial power generation from the first unit began in April last year, with the second unit starting in June of the same year.

In February, an Adani delegation held a meeting with the PDB to discuss coal prices, which resulted in billing based on the actual price of coal for one year. Since last July, Adani has been billing in accordance with the agreement.

In a written response to the public relations agency of Adani Group in Dhaka, the company stated that it has been submitting bills based on the coal price index since July, asserting that there has been no change in the pricing structure. Thus, they believe complaints about high coal prices are unfounded.

Sources within the power department and the Adani power plant indicate that Adani’s weekly bills range from USD 22-25 million, while the PDB is only able to pay about USD 18 million. Previous repayments were even lower, and as of October, the PDB owes approximately USD 850 million.

Two PDB officials informed Prothom Alo that the board has deposited Tk 10 billion in a bank to settle outstanding bills for Indian power plants, including Adani.

However, banks are struggling to process regular payments due to a dollar shortage. Despite Adani’s submission of increased coal price bills, these have yet to be considered. There are suggestions to amend the contract if necessary.

Muhammad Fouzul Kabir Khan, an adviser to the Ministry of Power, Energy, and Mineral Resources, told Prothom Alo that Adani’s billing does not alter the situation.

He emphasised that there is no question of paying extra, and the PDB will review the issue of increased coal prices professionally and impartially, in line with international norms. A contract review committee has already begun its work on this matter.

Adani reaps additional benefits

Adani appears to be gaining extra advantages from its contract due to the methods used to determine coal prices. The pricing relies on the Australia (Newcastle Index) and Indonesia Index, which are key indicators since both countries are major coal exporters. These prices are regularly published online.

However, insiders indicate that the announced prices often include special discounts based on the purchase agreements. For instance, the Payra power plant benefits from specific pricing arrangements.

According to two officials from the Power Division and the PDB, costs are calculated based on coal purchase bills from all other power plants. The PDB’s power purchase agreement with Adani specifies that the average price will be derived from the index of Indonesia and Australia, resulting in higher bills for Adani. This means that even if Adani purchases coal at a discounted price, the PDB does not benefit from those savings.

Concerns have been raised regarding the rushed signing of the electricity purchase agreement with Adani in 2017, under the guidance of the Power Division. At that time, no imported coal-based power plants were operational in the country, which limited the PDB’s ability to adequately scrutinise coal pricing.

PDB relied on Adani Group’s experience in operating coal mines and constructing large coal-fired power plants in India, allowing Adani to leverage PDB’s inexperience and its own governmental connections.

Once the Payra and Rampal power plants began operations, the issue of coal pricing became more prominent for the PDB. It notes that the prices for coal of varying quality (calorific value) are published in two international indexes. Adani calculates the average price of high-quality coal from these indices; however, based on the quality of coal used, prices could potentially drop by USD 20-25 per tonne.

In response, Adani representatives claim they are charging according to calorific value and that there is no basis for calculating costs based on higher-quality coal.

However, a PDB officer contested this claim by drawing an analogy: say the market price for one kilogram of hilsa fish, with each fish size is 1kg, is Tk 2,000, and the price of one Kg fish, with each being 700-gram, is Tk 900 to Tk 1,000; the cost of one Kg hilsa of 700-gram size each would be Tk 1,400, if it is calculated considering the price of fish with 1kg size each.

This, the official argued, is similar to how Adani is pricing coal.

Adani takes other advantages

Officials from the Power Division and the PDB indicate that Adani’s dues have been accumulating for long. However, the recent political changes following ouster of Sheikh Hasina’s government have increased pressure to collect these dues.

Adani has even sent a letter to the chief adviser of the interim government requesting payment, to which the adviser responded with a promise to repay the dues.

Moreover, within a week of Sheikh Hasina’s resignation last August, Adani established an alternative market for selling electricity by amending the contract in India.

According to the agreement, all power plants have a capacity charge that must be paid regardless of whether they produce electricity or not. This charge remains high during the initial years and it gradually decreases.

In Adani’s case, the charge remains constant for the first seven years of the contract before tapering off. Cancelling the contract at this stage would result in financial losses for the PDB.

A review of the power purchase agreement signed between the PDB and Adani, alongside insights from an expert at Bangladesh University of Engineering and Technology (BUET), reveals that Adani has secured maximum benefits in the contract by leveraging its experience.

Notably, the contract with Adani stipulates a steep interest rate of 15 per cent per annum for delay in bill payments, which is not the case with the Payra power plant.

Additionally, PDB bears all costs associated with Adani’s power plant, and interest rates on investments will be determined by India rather than Bangladesh.

Furthermore, water consumption charges must be paid, a stipulation not found in the Payra agreement. Adani has also entered into contracts with two other companies within its own group for coal import, port management, and transportation, raising concerns about a lack of transparency in the process. Experts in the power sector have suggested that this agreement should be reviewed in the national interest.

Committee reviews contract

The last Awami League government enacted the Rapid Increase in Supply of Electricity and Fuel (Special Provisions) Act, 2010 (Amended 2021), which allows for contracts to be awarded without a competitive tendering process.

Decisions made under this Act are not subject to legal challenge, leading to its designation as the ‘Impunity Act’. In response, the interim government is establishing a national committee to review agreements made under this legislation.

On 28 September, the National Review Committee convened and decided to collect data from 11 power plants, including those operated by Adani in India.

The Power Division has instructed relevant authorities to supply all necessary data and documents to the committee.

Shamsul Alam, energy advisor for the Consumers Association of Bangladesh (CAB), told Prothom Alo that the contract with Adani includes numerous additional costs that have been gradually introduced, allowing Adani to siphon substantial amounts of dollars out of the country.

He described the agreement as one-sided and argued that Adani is exploiting the situation.

Alam urged the government to withdraw from this agreement immediately, warning that CAB would take legal action if the government fails to cancel it.

* This report, originally published in Prothom Alo print edition, has been rewritten in English by Farjana Liakat​

 

[Saif]

Coal conundrum stages a comeback

The sheer folly of the country's master plan on the power sector that had envisaged generation of thousands of megawatts using coal as primary fuel was evident right from the beginning. It was considered a folly primarily due to the fact that the previous government had decided that it would not ut

thefinancialexpress.com.bd

Coal conundrum stages a comeback
Syed Mansur Hashim
Published :
Nov 05, 2024 21:28
Updated :
Nov 05, 2024 21:28

The sheer folly of the country's master plan on the power sector that had envisaged generation of thousands of megawatts using coal as primary fuel was evident right from the beginning. It was considered a folly primarily due to the fact that the previous government had decided that it would not utilise its own coal reserves and embark on an import-only policy. Well, the year is now 2024, and the country's present government is stuck with the very expensive Matarbari power plant project that has been built with Japanese loans and it is out of production due to shortage of coal.

Experts at the time had stated that this import-dependent policy to source primary energy raw material was fraught with danger. First, it would put Bangladesh at the mercy of foreign coal producers and suppliers. Second, the infrastructure to handle the millions of tonnes of coal that would have to be imported did not exist and would have to be built from scratch. Hence, millions more would have to be borrowed to build that infrastructure. In fact, that is precisely what happened.

The Matarbari coal-fired power plant has been sitting idle since October 25. Implementation of the project has cost the national exchequer Tk 570 billion. The power plant is a state-of-the-art facility and is capable of producing 1,200 megawatts (MW) of power. Yet it sits idle because the Bangladesh Power Development Board (BPDB) is in no position to import coal. While there have been some indications of importing coal before the end of the year, the situation with the country's foreign exchange remains fluid at best.

The problem with this project and with all the other coal-fired power plants is essentially the same. Why did the country's policymakers take the suicidal decision to import its primary energy in the first place? It is now obvious that the idea of embarking on such expensive mega projects was to line the pockets of foreign contractors and those in power at the time.

While these plants remain idle, the country is bereft of the reliable power that could have been produced. Unless the plants go into operation, industrial production will continue to suffer further hampering economic recovery. Without sufficient power, many productive sectors of the country, some of which are exporting in nature, will not stay in operation. What does that mean for foreign exchange earnings? Everything is tied to reliable power supply and the future is looking bleak.

Yet, one still hears about how Bangladesh must not explore its own proven reserves of its coal because it will destroy the environment. Now that is very funny. It is alright to let thousands of illegal brick kilns operate all over the country - spewing out black smoke and soot into the air, causing all sorts of health and environmental problems. It is alright for industrial waste to enter the water supply untreated wreaking havoc on both marine life and drinking water and even that is acceptable. But should we extract coal using open pit mining? No, we must not. It will destroy Bangladesh; at least that's what people have been duped into thinking. Until the time comes when policymakers decide to get their collective heads out of the mud and start calculating how they are going to pay back those billions of dollars in foreign loans, nothing will change. There is no choice but to start mining coal domestically if the objective is to pull off an economic recovery. All this will take a few years, but that's the price one pays for short-sighted energy policies of the past.​

 

[Saif]

‘Domestic gas exploration is the most economical option’

Dr Badrul Imam, honorary professor at the Department of Geology in the University of Dhaka, talks about the reasons behind the ongoing gas crisis and the possible way out in an exclusive interview with Naznin Tithi of The Daily Star.

www.thedailystar.net

‘Domestic gas exploration is the most economical option’

Dr Badrul Imam, honorary professor at the Department of Geology in the University of Dhaka, talks about the reasons behind the ongoing gas crisis and the possible way out in an exclusive interview with Naznin Tithi of The Daily Star.

Our industrial sector has been suffering due to gas shortage for the past few years, but lately the crisis has become acute. It is also severe in residential areas. What factors contributed to this situation?

The main reason behind the ongoing gas shortage is that we only depend on the available reserves. We have not discovered any new gas reserves for a long time, while our existing gas reserves are depleting quickly due to increased demand. Generally, in countries with significant gas reserves, exploration is done continuously so that if one source is depleted, another source can replace it. In Bangladesh, however, exploration is minimal. So, once the production drops, it's difficult to increase it again. This, in my view, is the main reason for the current crisis.

You have always emphasised the importance of becoming self-reliant in gas resources, for which exploration is urgent. What is stalling exploration in Bangladesh?

There is a serious lack of initiative and urgency among the authorities responsible for gas exploration in Bangladesh. There needs to be a visionary leader in this sector, someone who understands our vast potential for gas reserves. We also need experts who truly understand the technicalities of the energy sector to lead exploration drives. Many countries with similar geological formations like ours—Nigeria, parts of the US, and Indonesia—have successfully tapped into their gas resources. There's no reason to believe that Bangladesh has less potential. However, achieving self-sufficiency in gas resources requires a robust exploration policy, which we are lacking. Our past governments were content with small-scale explorations that yielded enough to meet the immediate demand only. They did not implement any comprehensive long-term plan. To make a significant impact, we need a massive exploration drive. If our local companies can conduct the exploration, the cost will be minimal. Even if we engage foreign companies, it will still be cheaper than importing liquefied natural gas (LNG). So, domestic gas exploration is the most economical option to meet our energy needs.

In the Sylhet region, for instance, surrounding the Surma basin, which includes large gas fields like Habiganj and Bibiyana, there are still enough scopes for exploration. Bibiyana, in particular, is a giant gas field in the global context. Exploration in these areas is still in the primary stage. If we could explore these fields, I believe we could get even larger reserves than we currently have.

Do we have the required technology and resources for gas exploration?

Well, our resources are limited. Our state-run company, Petrobangla, does not have the capacity to conduct such extensive exploration alone. To overcome this limitation, we need to bring in foreign companies with the expertise and equipment for large-scale exploration. Engaging reputable international companies could lead to significant discoveries. But even if we start exploration today, it could take at least five years to see significant results.

What could be the short-term solution to the current crisis?

As I have said, in the short term, we can reactivate the old gas wells that have not been fully utilised. These wells have already been drilled so we can start producing gas from them with minimal work. Ideally, we should not go for LNG import because it is much more expensive. Relying on imports is also not sustainable in the long run, especially given our high dependency on gas. However, to immediately manage the crisis, LNG import may be unavoidable.

Quite a few. Each of our gas fields has at least four to five wells that can be reactivated. That means there are about 20-25 wells in five fields that can be put to use. A substantial amount of gas can be extracted from these wells.

What is the status of our offshore exploration?

Unfortunately, exploration of offshore gas reserves has not progressed much. There were talks of exploration years ago, but it did not happen. So, this area remains largely unexplored. Dividing the Bay of Bengal into exploration blocks and launching competitive bidding for them could yield great results. What we need is a strong push to initiate international bidding and invite foreign companies to explore these offshore blocks.

If we go for both onshore and offshore exploration on an urgent basis, how long do you think it may take for us to achieve self-sufficiency in gas resources?

It's hard to give an exact time frame. If we had started five years ago, we would likely be self-sufficient by now. Even if we had started exploration three years ago, we would have seen some results by now. Gas exploration takes time. For the areas that have already been explored, production can start within one to two years, but for new exploration, it will take more time.​