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Energy Crisis in Bangladesh

Introduction: Bangladesh is one of the most densely populated countries with 79% of the population living in rural areas. The primarily agricultural economy of Bangladesh has recorded around 5% annual growth rate over the last few years (ADB, 2001). The main crops grown in the country are rice and jute. Those of us who are living in Bangladesh are victims of energy crisis. It is unfortunate that as a nation we have not been able to resolve this problem even after thirty nine years of our independence. Governments come and go and this issue remains a struggling issue. By 'energy crisis' we are mainly referring to electric power shortages. In this discussion we would try to reflect on some possible solutions that might work for us. Present State: Bangladesh's energy infrastructure is quite small, insufficient and poorly managed. The per capita energy consumption in Bangladesh is one of the lowest (136 kWH) in the world. Noncommercial energy sources, such as wood, animal wastes, and crop residues, are estimated to account for over half of the country's energy consumption. Bangladesh has small reserves of oil and coal, but very large natural gas resources. Commercial energy consumption is mostly natural gas (around 66%), followed by oil, hydropower and coal. Electricity is the major source of power for country's most of the economic activities. Bangladesh's installed electric generation capacity was 4.7 GW in 2009; only three-fourth of which is considered to be available. Only 40% of the population has access to electricity with a per capita availability of 136 kWh per annum. Problems in the Bangladesh's electric power sector include corruption in administration, high system losses, delays in completion of new plants, low plant efficiencies, erratic power supply, electricity theft, blackouts, and shortages of funds for power plant maintenance. Overall, the country's generation plants have been unable to meet system demand over the past decade. In generating and distributing electricity, the failure to adequately manage the load leads to extensive load shedding which results in severe disruption in the industrial production and other economic activities. A recent survey reveals that power outages result in a loss of industrial output worth $1 billion a year which reduces the GDP growth by about half a percentage point in Bangladesh. A major hurdle in efficiently delivering power is caused by the inefficient distribution system. It is estimated that the total transmission and distribution losses in Bangladesh amount to one-third of the total generation, the value of which is equal to US $247 million per year. The country is currently facing 1500 MW of power shortage causing serious dislocation in all spheres of life including production in fields and factories. Projects including rental power, after failing to implement the 3 years' rental power projects in time, the ministry faced in difficulties to implement all its mid-term projects including Shiddhirganj-150, Sylhet-150, Khulna-150, Shikalbaha-150, the Asian Development bank funded Sirajgonj-150 and Khulna-150, World Bank funded Shiddhirganj and JBIC funded Haripur 360 MW power plants as per schedule, power division sources said. The Power Development Board (PDB) is facing serious problem to complete the tender processes for the installation of two public sector power plants as the latest tenders need to be scrapped for three other independent power plants because of demands of bidders. Reasons behind Poor Energy Security: But for wrong policy, bureaucracy dominated energy sector governance, poorly structured energy sector management and corruption Bangladesh is suffering from serious energy crisis. Substantial gas resource at onshore and offshore remains unexploited. Huge reserve of High Quality coal at mineable shallow depth remains unexplored for wrong politics and shallow vision. Bewildered by chronic crisis and misguided by opportunist energy mafia syndicate government policy makers have embarked on unrealistic and improbable import initiative of coal and LNG for meeting prevailing and emerging energy crisis. Countries energy scenario deteriorated over the last 10 years mainly due to the following reasons: Deep politicization of energy sector management. Domination of incompetent beauracrats in energy sector.

Shallow visions and inappropriate policies. Poor energy pricing and weak state owned enterprises. High system loss and huge accounts receivables. Stubborn attitude of a section of civil society about free flow of FDI in Energy sector Exploration and Exploitation. Free for all corruption and mismanagement in Stae Owned Energy Enterprises. High level massive Corruption and failures to punish corrupt Syndicates. Bangladeshi Energy Sector basically developed with donor funding from soft lending windows. Donors always prescribed reform measures to reduce losses and corruption. But after every project implementation Donors failed to follow up the agreed covenants of original loan agreements. These have resultant into virtually dysfunctional sate owned enterprises which cannot raise enough revenues to reinvest in further expansion of networks or explore and exploit domestic resources of their own. The energy pricing remains well below economic pricing, System loss is still staggering. Politics of vengeance cannot create ideal atmosphere for discussions among political divide to reach national consensus on energy sector issues. Major parties blame each other for crisis. Recent Plans: The Ministry of Power and Energy has been mobilizing Tk 40,000 crore ($5.88 billion) to generate 5,000 MW of electricity to reduce load shedding into a tolerable level within next four and half years during the term of the present government. Under the plan, the Power Development Board (PDB) would produce 500 MW gas-fired electricity between July and December 2009 to over come load shedding within December. The PDB would hire furnace-oil based 1,000MW of electricity from private sector from January to June 2010, the plan said. In 2011, the government will install furnace-oil based 800 MW capacity of power plant. Besides the government would also hire another diesel or furnace oil based power plant having capacity of 700 MW in 2012 to keep load shedding into mild level. However, the government also contemplates to establish four coal-fired based power plants with capacity of producing 500 MW of electricity each with public and private partnership (PPP) in Rajshahi and Chittagong region. The government has initially tried to create fund of Tk 6,000 crore ($1 billion) to implement the plan. The power division has tried to utilize the government's budgetary allocation of Tk. 2000 crore for PPP in this regard. "If we can create the fund of Tk. 6,000 crore, it would be possible also to mobilise Tk 40,000 crore under ppp to produce 5,000 MW of electricity within four and half years," PDB chairman ASM Alamgir Kabir told the New Nation on 29 June 2009. Suggested Actions: LNG or coal import and power import from India cannot solve the crisis. We must act positively to explore and utilize our own coal and gas and expand our transmission infrastructures, we must rationalize energy pricing , we must create incentives in energy companies so that quality professionals can make contributions without undue political interference. If Government cannot make immediate changes in its failed strategy it may have to face peoples agitation soon everywhere. Gas sector failed miserably to manage its responsibilities professionally. Still they are not made accountable as persons spearheading have strong political allegiance. Power sector made some success. But it relies so heavily on fuel supply that it can do little without assured supply of gas and coal .It is inconceivable that power generation will continue to remain on imported fuel for a longer term. We desperately need private sector massive investment in power and energy sector at all segments of energy value chain. But BERC is not yet fully functional to give required confidence to investors. It has failed to create level playground for all investors. Moreover identified agitators backed up by parasite political parties are still agitating on the streets against foreign investment . The following actions are recommended Fully corporatize Petrobangla and PDB Complete reforms and restructuring of Power and Energy Sector. Fully operationalize BERC and Reduce Ministry function to policy making and facilitating power and Energy business.

Ensure full autonomy of power and Energy companies. Coal policy or not commence coal mining under mines and minerals acts and policies. Scrap indemnity act of Energy and enage developers through ICB . Allow BERC to independently regulate Energy Business. Go for fresh block bidding for Petroleum at offshore and onshore after carrying out required amendment to Draft PSC. Engage true professionals at key positions of power and Energy Sector management. Discuss Energy sector issues in the parliament and make key Energy sector management accountable to parliament. Beside these, to increase the production of electricity various methods can be used in our country. We can bend upon producing more hydro-electricity. As natural gas production is on the wane at present, it being the major fuel source to produce electricity, serious effort should be put into discovery and management of new gas fields. But most importantly, we need to switch to renewable energy sources like biomass, solar energy and wind. Policy Support: National Energy Policy (NEP), 1995 of Bangladesh has got guidelines for Renewable Energy Technologies. Government has also adopted Private Power Generation Policy, 1996 for encouraging private sector participation in the electricity generation sector of the country along with BPDB and already several Independent Power Producers (IPPs) are supplying electricity to the national grid. Apart from this, another policy Small Power Generation Policy, 1998 has also been introduced to encourage small electricity generation capacity up to 10 MW throughout the country by the private sector. A Draft Renewable Energy Policy has been submitted by the Power Cell of MEMR which is yet to be approved by the Government of Bangladesh (GOB). Bangladesh is endowed with vast renewable energy resources such as solar insolation and biomass. Harnessing these resources appears to be a promising solution for improving the quality of life of rural villagers, who are unlikely to have access to conventional electricity supply in the foreseeable future.

Conclusion: Though only some parts of Bangladesh are privileged with undisturbed electricity, the government is trying desperately to change the scenario and bring the whole country under service. The growing demand of electricity is the prime cause behind its disrupted supply, but this cause is aided by some imperfect planning and corrupt decision-making. Moreover, the unconscious use by the general people also add to the problem. With the effort of the government to increase electricity production if we coordinate our sensible use of it, there is every chance that we may see the end of this daunting problem in near future. Let us work together and hope for the best.