Vol. 4 Num 213 Wed. December 31, 2003  

Looking into 2004
Hopes and concerns in the energy sector

One would be horrified to hear that the energy sector in Bangladesh has become rudderless. Reportedly, it is now operating on borrowed impulses, at times misdirected by verbosity. The usual allegation is that the authorities responsible for managing the energy domain has so far failed to prepare a doable road-map to guide the nation in the present tortuous energy path, let alone express their clear views it terms of hopes and concerns. The Ministry of Energy and Mineral Resources (MEMR), in particular, may call such an allegation untrue. It may even send a strong letter of protest for such an acquisition. But, would be Ministry be able to deny that it has only conceived some hypothesis for energy development and has failed to produce even a megawatt of electricity or a MCF of natural gas on its own accord over the past twenty-six months? In fact, the authorities have fallen far behind of what was expected of them. Allah alone knows that it would do in 2004 or in 2005 or even in 2006 to help bring discipline in the electricity and gas sub-sectors for the benefit of the citizens!

Over the last five years considerable debate has taken place about the future supply of indigenous fossil fuel (natural gas in particular). On one side are those who believe we are rapidly depleting reserves and that the resulting shortage will have a profound impact on our citizens' lives. On the other side are those who see no impending crisis because long-term trends indicate the possibility of finding alternative sources of energy. This riddle is yet to be resolved. However, scientific endeavors worldwide indicate that natural gas will remain a preferred form of cheap fuel for at least another four decades, if not more. Consequently, the country's natural gas will remain a valued source of energy.

Nevertheless, the concepts of resources and reserves have created considerable misunderstanding in the minds of many non-geologists. The National Gas Reserve Committee deliberately aggravated the situation by not providing the Proven Gas Reserve figure in their report submitted on 27 August, 2002. Scientific predictions of energy production also assume that there is a finite supply of energy that is measurable; however, estimates of resources (hypothetical and speculative) and reserves (known) are inventories of the amounts of a fossil fuel perceived to be available over some future period of time. As the reserves are depleted over time, additional amounts of fossil fuels are inventoried through proper exploration and development of geological structures. In Bangladesh, the authorities in the gas sector unfortunately prefer to well on extraneous factors rather than depend on internal scientific basis. This has led to wide disbelief about the country's policy planners and decision maker's attitudes and intentions.

In short, energy system in Bangladesh can be widely criticised for poor targets and goal setting by the government. The general allegation is that it has not been pursued in the recent years in its correct tracks. At the same time impacts of our cheap gas-based electricity generation have not been adequately evaluated, rather electricity and gas prices have been enhanced inconsistently at the behest of the World Bank and the Asian Development Bank. Consequently, the questions that were asked in the late 1990s are the questions that are asked again in the public debate about our energy future and energy security. Concerned citizens also ask how did the question of energy mix become the captive of narrow and single minded mania that saw the energy future in terms of more gas-based power plants? Many others like to ask, "don't we have other options for generation of electricity in the country?" Yes, we do. But they are relatively more expensive (not affordable by common citizens) and not as cost competitive as indigenous natural gas-based one.

Then why bother what the ambassador of the United States Mr Harry K Thomas keeps on saying? We are amazed that Mr. Thoma's comments on gas-export have not been condemned as yet. Mr Thomas is doing all this since his arrival in Bangladesh, and it's not a coincidence, rather deliberate because he has a stake. As a representative of the US government he should have thought twice before he said, 'We would like to see a certain amount of natural gas to be exported?" Does he know how much proven gas reserve Bangladesh posses now (in 2003) and what would happen to the country after 2015 when the present reserve will get exhausted? Indeed, we are almost ninety percent dependent on gas for generation of electricity. And our wise government apparently has not worked out any alternative for generation of electricity beyond the next decade. Isn't that good enough a reason to comment that the authorities in the energy sector are operating without a rudder?

Theoretically, out aim for the coming years should be to make an effort for energy self-sufficiency. The paths of self-sufficiency involve an arduous, disciplined effort. And we are perhaps far from it. Those who know say, any possibility of getting here beginning 2004 is a dream. The past two years (2002 and 2003) should have taught us some lessons, but it didn't. Assuming that we are beginning to settle down and see what the problems are, our definition of self-sufficiency may be suitably amended to give a meaningful expression of our thought process. The rigid definition of the term, as it is understood now, implies zero (0) energy imports. But the reality is different. The country imports about 3.5 million tons of oil for which the exchequer spends about US$ 600 million (equivalent to Tk 3,500 crore) annually. On the other hand, through energy substitution (by natural gas use) the treasury saves about US$ 2 billion (two billion) by not importing around 10 million tons of oil equivalent annually. One can easily imagine what would have happened to our balance of payment situation if a total of 13.5 million tons of oil equivalent at a cost of Tk 15,000 crore annually was needed for energy import alone. Incidentally, the gas export proposal by Unocal stipulates an earning of only Tk. 20,000 crore in 20 years against export of about 3.65 trillion cubic feet of gas during the life of the proposed project.

The next five to ten years will be our greatest period of stress, before our drive toward self-sufficiency begins to reduce our energy import requirements. It will also be our greatest testing period as two whether we are going to continue to live in hardship from one summer to another because of shortage in electricity supply and one winter to another winter due to gas crisis. In working towards a balance of energy supply and demand, our domestic supply (of gas) must be increased in the next few years.

One should however be mindful that there is an element called lead-time of three to four years after the discovery (of gas) is made, or for erecting a major power plant. Therefore, plans and programmes must be made in a conscientious and pragmatic manner.

A commonsense approach will be to tighten our belts, conserve energy and initiate energy efficiency procedures and at the same time encourage the public sector energy industry, which has the know-how, technological capabilities and the experience to do the jobs needed for the country. Hopefully, gas and coal will dominate the mind-term scenario up to 2010, the ground work must be consolidated and expanded. New energy supplies should also be explored and developed. The point is that energy supply must be tackled on many fronts. The cost estimates for such options must be carefully worked out and prioritised. The next question is where the entire money is going to come from? It is for the government to make a pick and choose from amongst the private and public sector. Energy investments so far has not been commensurate with the demand. In fact, it was never tagged to our GDP and to meet the new requirements, the need will be much higher than it is today. The energy sector's share of total business capital expenditure is to be projected to rise for obvious reasons.

Though the country's money supply is limited (perhaps due to poor management) and the energy industry has to compete successfully with other users of capital to get their jobs done, the key to financing our energy future will be determined by the political decisions we make starting 2004.

Therefore, in working toward a balance of energy supply and demand, our domestic supply (of electricity and gas) must be increased in the next few years. As our gas network expansion in the western zone (across the river Jamuna) enhances, hopefully, beginning 2004, the need for domestic use of gas will continue to increase. However, the awesome magnitude of our energy problems must be addressed in its proper perspective and dramatic improvements made without any further delay. In the years ahead we also should hope to reach the end of the rainbow by mustering the technology of tomorrow. Before the coming of those happy days, we have nothing but hard work and hard decisions ahead of us. For beyond the year 2004 looms a prospect of even greater demands for energy from ever increasing and ever rising expectations at home. Unless correct decisions are made now a grim reality will engulf our thought process and Bangladesh's energy security will be severely jeopardised.

Nuruddin Mahmud Kamal is a former government official and now a column writer in the print media.