Law alter views
A corrupt energy regime or a dysfunctional energy policy?
Naser Alam
It is hardly surprising to see the country grapple with energy-hunger-strike. It is equally not so surprising that various quarters are taking this issue as the next agenda for a political dogfight. In any event, those at the government or those who were in government have both failed the nation in terms of its energy policy and its implementation.
The country has seen increased activities in the energy sector as a whole -- in all three sections in the stream up, mid and down. Exploration activities for gas, downstream initiatives for power generation, and some midstream activities for transportation of gas or electricity have dominated the investment arena for a while. The debates on gas reserves have been virtually disappeared currently, tussle with IOCs on cost recovery has been minimised to some extent, and increased advocacy on domestic utilisation of untapped and trapped resources has been going on for a long time. Successive governments have tried and failed to correct the defaulting energy chain. The current government from the very beginning of its term has been active on securing a 'power' point through implementing a '2012 energy vision'. It appears that the last decade has provided less and lesser sustainable energy remedy to the ever-hungry consumers.
Now the 'power crisis' is set to become a 'crisis for power' at the top level of government. It appears inevitable. We have a national energy policy of 1995, which is so broad in its terms that hardly anyone can understand what really the priorities are. An energy policy so broad in terms can only malfunction or refuse to function because of lack of specific directions. There are insufficient directives to meet the stated goals. This conclusion is legitimate considering the current scenario. Even if one may try to give some credit to the current policy, its failures are apparent. The reasons are manifold; but one can easily allege that corruption is the only reason for lack of success in this sector (since the media alleges so). I would perhaps be inclined to think more fundamentally. Do we have a coherent energy policy?
It feels good to see that the successive governments have accepted that the 2012 or a 2020 vision can be implemented through installation of more CCGT power plants. This certainly can use some of the trapped resources. According to the estimations available in public domain, the trapped gas resources already discovered can safely run enough power generators so that there can be excess availability in the country to go for a power polling of the generators by now. In other words, the current crisis must have been impossible even to think of. But the reality is that with the demand raising and outage increasing and availability shrinking, the country is virtually facing the grimmest power crisis in decades.
It can be understood that 9/11 terrorism, internal political unease and global investment trend economically and geo-politically adversely affected inroad of investments into the overall energy sector, especially the power sector. However, a balancing fact is the increasing interest in the energy sector by investors. The government has tried to woo the local investors and this has resulted in several changes of the power generation policy -- with little success, through.
A normal demand analysis would perhaps put Bangladesh as one of the most desired countries for power investors' league table. The current regulatory regime is probably one of the most attractive in terms of investment security. Given all of these positives, it is surprising that the government is losing grounds with the prospective investors. Be it alleged corruption or otherwise, this is unacceptable and a clear failure.
Now let me look at some of the issues that may justify the government's rethinking of the energy policy. It appears that the government may be willing more to set a track record of increased inflow of overall FDI. While this may impress many for the time being, however, reality lies in balancing the demand and supply of energy, especially electricity for agricultural, industrial and domestic needs. The government clearly lacks a clear policy on 'energy in agriculture'. An agro-based economy cannot survive and flourish without a dedicated policy on this. A general energy policy is a sham considering lack of specificities applying to agriculture. There is a sustained and increasing need in this sector. The government has been advocating agro-industrial activities for a few years. What we need now is a comprehensive agro-supportive energy policy, which should include dedicated rules on power plant location, guidelines on load shedding to prioritise the agro-based sectors, and technical facilities on forecasting seasonal demands. This may in the round streamline the policy on agro-industry itself. Similar policy must be catered for the key industrial sectors.
The domestic consumption is growing by the hour. Climate changes are pushing pick hour demands even higher. There is no authoritative certification process for the energy appliances. Rapid unchecked growth of the dependence on appliances is making the demand erratic, and most alarmingly inexplicable. Adequate research facilities are very much lacking on demand forecasting, appliance suitability, and consumer affordability and behaviour. These must be catered for in the rethinking process, if the people were to be governed by any government.
Finally, the government apparently feels shy in advocating more openly to and in creating a level playing ground for the domestic investors. Moreover, the domestic investors are lured into generation side of the business in the power sector, and exploration side of the gas sector. The government is apparently lacking in its efforts to revamp the midstream sector. Understandably, this sector attracts less short-term financial gains for the investors, but public-private-partnership initiative is a real option here.
Absence of the steps mentioned above are bound to make it dysfunctional. One can hope that the government will wake up to the timely call for power!
The author is a barrister and taught energy laws at the Centre for Energy, Petroleum and Mineral Law and Policy, UK.
