As the process is set on motion, there has been talk in different forums on the justification for raising the prices of different petroleum products. The Finance Minister took the trouble of inviting leading economists of the country to rescue him out of the problem. The suggested measures by the economists to raise the price of petrol and octane to a maximum and enhancing the price of diesel and kerosene to a minimum level reportedly angered the Energy Advisor who opined that the economists have no knowledge about petroleum operations in the country. According to him, octane and petrol share only ten percent of the total products while diesel and kerosene fill the rest.

It is incomprehensible as to why the government chooses to take all the trouble of keeping the petroleum business within its authority. May be it has remained a milking cow for the government since long without caring for the hidden danger of the mountain of debt that have been accumulating with its nonchalant callous pricing policy Bangladesh Petroleum Corporation (BPC), the official crude importer, has an outstanding loan of Tk. 12,000 crore with interest of below 5 percent. Without paying this loan, BPC is again borrowing a huge sum of money at an interest of 14 percent reportedly from some foreign banks. With these, BPC has incurred a cumulative loss of Tk. 5,804 crore till date. On the other hand the corporation has deposited to the government exchequer Tk. 34,833 crore during the same period. So who runs the show anyway?

Now that the internal transfer of debt-liability is no more feasible, the bosses are shaken and loudly talking about the abnormal crude price in the international market as if it started from yesterday.

According to the energy experts, the share of petroleum products in the national energy sector is only around 20 percent. Now with such a share if the situation has turned so bad then think of a situation when the natural gas will not be available either due to its normal depletion or accelerated drying up of the gas reservoirs due to suicidal decisions like direct or indirect export or giving the gas at a throw away price to a prospective investor who might lure the government that with such a gas based Direct Foreign Investment to Bangladesh, milk and honey will start flowing here.

To make the long story short, it may be pointed out that the energy sector in Bangladesh is in a very bad shape. It is the cheap domestic gas (price set arbitrarily by the government) that has made the policy makers blindfolded about the consequences that will happen on its non-availability. The economy has failed to take advantage of the benefit of natural gas to make the economy strong enough to stand on its own feet and to face the situation even without natural gas in future.

Under the present circumstances it will not be too much to comment that Bangladesh economy will face serious consequences with the exhaustion of the gas reserves in the country. Sooner it is understood, the better.

A ray of hope is however visible with the discovery and prospective production of high grade bituminous coal in the north-western part of the country. Unhappily, it is again attacked by the virus of foreign investment syndrome. One may argue that foreign investments would be needed for development of the coal fields and this needs to be of high magnitude to justify higher rate of production. This argument might have prompted the young energetic Advisor to become instrumental in framing the draft coal policy-2006 incorporating the provisions of export of coal together with the open pit mining concept making way for higher rate of production.

But when one's own domestic requirement of energy has not been clearly identified, which will definitely be much more than what we are witnessing as of now, on what ground will it allow export of the same? No sane person can agree to sell its family silver today when the same will be required at a later date. Even the gas and coal reserves as known today in Bangladesh, will not fully meet the requirement of energy need of the country if we consider the electricity for all by 2020 policy in all seriousness.

Coming back to petroleum products, the methodology of overcoming the crisis of pricing of petroleum products has been on the forefront of discussions in different forums. While the Energy Advisor has dismissed the idea of increasing the price of octane and petrol to compensate the price increase need of diesel and kerosene suggested by economists as nonsense, a reputed banker of the country has in an article in The Daily Star, suggested that it is the rich people using petrol and octane should foot the bill of the price discrimination and not the government subsidy on diesel and kerosene should do the trick. The theory is very interesting and if his assumptions are correct, it will be a very good idea to set the octane price at say, Tk 100 per litre and that of Petrol at Tk 99 per liter so that there is adequate contribution by the car owners and poor people are relieved of enhanced price as a result of $70+ per barrel of crude. This will also have another positive impact, that no smuggling of these products will take place.

Energy pricing is not as easy as some people may think. We are not even aware that so long in pricing of primary fuel, we have never considered the intrinsic value of gas or coal. With the blessings of administered price, it has so far gone scot free with any pricing having little or no consideration for the value of the resource itself. One of the reputed economists in the country in a recent article in the press has opined that economists know price of all things but they seldom understand the value of a thing. Energy is probably one of these items.

The growth of petroleum consumption in Bangladesh has been somewhat contained with uses of natural gas. Introduction of CNG in the transport sector has reduced the consumption of petrol and octane to a great extent. However, the use of diesel has been rising, as CNG could not yet be successfully introduced in diesel engines. Since petroleum sector is import oriented, except the marginal production of NGL derived LPG and petrol derivatives from condensate obtained along with gas stream in some eastern gas fields, it will be appropriate to frame the energy policy in a way that will lead to minimum use of imported petroleum fuels. This will call for appropriate policy for the transport sector which uses the bulk of petroleum products.

Time perhaps has come to consider if the transport system should be restructured with modernised railways with electrical traction having electrical grid connections to the railway system. Electricity generated from natural gas will be cheaper and secured system of energy for railways which can have greater frequency of shuttling between the stations than reliance on diesel operated traction. This approach will also do away with huge maintenance cost for the diesel engines. The tracks must be overhauled to suit high speed electrical locomotives.

In the recent past there was a plan to set up a pipeline network to carry petroleum products to different parts of the country instead of using river and road tankers which not only consume huge diesel and petrol itself but also expose the petroleum distribution system to vagaries of manipulation and corruption adding to the cost of petroleum products to the ultimate consumers. But such attempt was successfully nipped in the bud by the vested interested groups. Petroleum pipeline is an age old concept in oil transportation, both normal and strategic. The riverine transport system should expeditiously be converted to CNG to reduce consumption of diesel in the ferry, launch and steamers.

Our energy policy should have lesser dependence on imported fuel so that it would call for lesser amount of foreign exchange allocation for import of fuel making the nation less exposed to the vagaries of volatile international politics dominated crude oil market.

Petroleum sector, if opened to private sector with strong regulatory measures, will pay more dividends to both the operators and the consumers. With the need of lesser volume of diesel and petroleum products, the importers could take advantage of spot market prices instead of being tied to long term contracts.

Bangladesh is in the take off stage in private sector participation in the energy sector. Issues related to energy are so diverse and technicality connected that unless these are addressed by professionals with adequate experience and having updated information of the global energy trend and international energy events, one is likely to be taken aback with the sudden turn of events. It is appropriate that private sector institutions are encouraged to have regular studies, research and compilation of data base, dissemination of knowledge through holding national and international seminars, talks and workshops for guidance of the energy sector investors and those who are associated with the energy activities in Bangladesh.

One small advice to the Energy Advisor to the present government is that energy is a subject which cannot be taken lightly and brushed aside through big talk. By talking irrelevant and airing wishful thinking, enough damage has already been done to the government and to the people, as have been done by some others, notwithstanding that some of them having been duly removed. When the government is passing through a bumpy road in the energy sector there should be a cautious approach and talks by those who are at the helm of affairs in their respective fields. By ridiculing the few available energy experts or ignoring the advices of the renowned economists of the country through press statements, the Advisor has only continued to demean himself in the eyes of the general people who are already tried of the energy crisis. The Advisor has willingly or unwittingly added salt to the injury. Energy is a national issue and it should not be taken on at a personal level.

We humbly submit that the government will take note of the situation. Though it is not expected to make any meaningful remedy to the problems in the energy sector within the short time available before the election; yet, no time should be lost to make amends and to steer the energy issues in right direction in the country.

The writer is a retired Additional Secretary to the Government and former Chairman of Power Development Board.