Energy Alternatives for Bangladesh

M Azizur Rahman

Experts at a roundtable discussion underscored the necessity to diversify country’s energy sources to meet its mounting demand in industries, power plants and households.

They said that too much dependency on natural gas has already put enormous pressure on country’s gas reserves, which is set to start to be exhausted from 2011 if no new discoveries take place.

Country’s first and only fortnightly magazine on energy issues Energy & Power and German Technical Cooperation (GTZ) jointly organized the roundtable titled, “Energy alternatives for Bangladesh,” at the National Press Club in the city.
Pointing to the potential energy alternatives experts said that Bangladesh’s coal reserves could be the prime energy sources to ensure the country’s future energy security.

Despite having enormous potentials coal is yet to be developed as an energy alternative in the country due to inadequate planning and lack of decisiveness by the government, energy experts lamented.
They said that though the government took an initiative to develop the coal sector about three years ago, it did not make a significant headway mostly because of widespread debate over the mining method.

Now time has come to put an end to the long-lasting debate. And necessary decision should come from the government to expedite development of the coal sector without further delay, said the speakers. Energy Secretary Mohammad Mohsin was the chief guest at the roundtable, while Hua Du, Country Director of Asian Development Bank (ADB) in Bangladesh was the guest of honor. Senior journalist and Bureau Chief of Associated Press (AP) in Bangladesh Farid Hossain moderated the roundtable discussion chaired by Energy & Power editor Mollah Amzad Hossain.

Director (Research) of Bangladesh Institute of Development Studies (BIDS) Dr. Asaduzzaman presented the keynote paper at the roundtable, where Senior Adviser GTZ-SED Khursheed Ul-Islam, Professor of Geology Department of Dhaka University Badrul Imam, ex-Director Petrobangla Muinul Ahsan, Chief Executive Officer (CEO) of Asia Energy Gary Lye, General Manager Asia Energy Mushfiqur Rahman, former Secretary Quamrul Islam Siddique, Editor of weekly Ekhon Ataus Samad, Bangladeshi expatriate Monsoor Ahmed, Adviser Paradise Group Shahed Khan, Managing Director Mohona Holdings KB Ahmed, Senior Scientist of Bangladesh Atomic Energy Commission Dr. Eunus Akon and Tabith M Awal also spoke at the roundtable.

Mohammad Mohsin:

Energy is a basic means of survival round the globe. The world’s current dependency on fossil fuels may not last long because of the limitation of reserve vis-à-vis increase in demand. Like most other countries, Bangladesh is, therefore, looking for energy alternatives.
Considering the importance of energy in development, government of Bangladesh formulated National Energy Policy (NEP) in January 1996. It was aimed at providing energy for sustainable economic growth, meeting the energy needs of different areas and ensuring optimum development of all energy sources.

Sustainable operation of the energy utilities and ensuring rational use of energy sources and environmentally sound sustainable energy development as well as encouraging public and private sector participation in development and management of the energy sector were the other objectives.

Since then Bangladesh has made a significant stride in the energy sector. Gas production has almost doubled, a natural gas liquids (NGL) plant has been established at Kailashtila, system loss in both gas and power sector has reduced, international oil companies (IOCs) have been involved in exploration and development of gas, one coalmine at Barapukuria, which is supplying coal to a 250 megawatt (MW) coal-fired power plant, has been developed, gas and power sector master plans have been prepared and most importantly energy regulatory commission has been formed.

Natural gas, the only indigenous non-renewable energy source accounts for more than 70% of the commercial energy use in Bangladesh.
We had recoverable (proven + probable) gas reserves of around 21 trillion cubic feet (TCF) and as on August 2007, we had remaining gas reserves of 14 TCF.

Our recoverable proven remaining reserve is around 8 TCF. We require about 26 TCF additional gas by 2025 to attain a 7% gross domestic product (GDP) growth. Currently 17 out of 23 fields are yielding gas.

Four transnational and three national companies are working in the sector. We are going for the next round of offshore bidding very soon.
Since last decade, gas consumption has been increasing at an average rate of 8% per annum. Major consumers of gas are the power plants and fertilizer factories. 

To date, we have discovered five coal deposits with probable reserves of 3,300 million tonnes.

The quality of coal is good and contains very low sulphur. We are trying to finalize the coal policy on which our future action plan to extract coal critically hinges.

Bangladesh imports about 1.2 million tonnes of crude oil along with 2.6 million tonnes of refined petroleum products per annum.
Locally liquid fuels in terms of condensate and other liquid products are also extracted from different gas fields. Major consumers of liquid fuel include the transport sector.

The government is considering updating the energy policy keeping in mind some major issues including giving stress on hydrocarbon exploration, reducing gas dependency and introducing nuclear energy within the shortest possible time.

Hua Du ( Asian Development Bank)

Bangladesh faces a gigantic task to meet the growing energy demand. In FY 2007, maximum served generation was only 3,717 MW as against peak demand of 4,500 MW resulting in load shedding for 364 days up to a maximum of 1,212 MW. 

The government has set goal of (i) reliable and quality supply of electricity and (ii) electricity for all by 2020. The government estimates that demand for electricity will grow at an annual rate of about 8% for the next 10 years. The government estimates that $6.4 billion of new investment will be required by 2015 for new generation and transmission.

Bangladesh needs larger power plants to supply power to the national grid immediately. A minimum of 2,000 MW is required to meet the existing demand-supply gap. 

It takes about over 2 years to set up a plant by an IPP; hence the country should plan for 5,000 MW to meet the growing demand in 5 years horizon in a timely fashion. 

International operators will be important for the successful implementation of power plants. The success of existing IPPs is a major strength of the government. While supply of gas has to be ensured through timely exploration of gas reserve, coal-based plant should be explored immediately to reduce pressure on gas reserve.

The plan for increase in power generation has two key elements, the additional fuel requirements and timely implementation of new power plants. The absence of either of them will widen the gap between generation and demand.

The two main energy sources in Bangladesh are gas and coal. Gas is found in a belt running up the eastern part of Bangladesh and coal is found in discrete basins in the northwest of Bangladesh. Gas has carried the burden of Bangladesh's energy demand for the past several decades (90% of the power generation is based on gas) -- but there has been insufficient exploration to raise the gas reserve.

On the other hand, coal was discovered some 15 years ago but little progress has been made to develop the coal sector into a reliable energy supplier.

In Bangladesh, the hydropower potential is limited because of flat terrain. Although the country has some success in small-scale development of renewable resources such as solar and wind power, these are peripheral to the issue of generating bulk electricity for the grid.

The demand for gas is largely driven by increased use of gas fired power generation as the most economic form of new-built generation capacity. The power sector is expected to use, 57% of total gas produced by 2025. The fertilizer sector will require 5% and the non-bulk sector comprising industrial, captive power generation, CNG, commercial, seasonal (brick field and tea) and domestic consumers will require 38% by that time. Gas Sector Master Plan has estimated that the country has gas reserves to meet fully the demand until 2015. Additional gas reserves of 24 TCF (trillion cubic feet) are needed to meet the projected demand until 2025.

The government has plan to proceed with 3rd round bidding for offshore and the deep sea, under production sharing contract (PSC). The bid round is expected to be announced by first quarter of 2008. Additional gas however may not be available by 2015, given the time required for exploration in the offshore and the deep sea for climatic reason, and development with successful discovery. Thus a supply shortfall may begin around that time.

Bangladesh has quality coal reserves of 2.5 billion metric tonnes in four fields (Khalashpir, Barapukuria, Jamalganj, Phulbari), which may be regarded as 72 TCF gas equivalent based on heat value. Coal therefore could serve as future fuel for power plants to meet the growing energy demands of the country on an urgent basis.

All of us well aware of the debates that Bangladesh is currently experiencing on the extraction of coal from Phulbari mine. Some people are suggesting open-cut mining there while others are advocating underground mining. It is natural to have a debate on the method, or the feasibility of the open-pit mining. The choice of mining method must take account of technical, financial, social and environmental considerations.

To achieve physical extraction of coal or mineral resources, there are fundamentally two methods of mining available - open pit mining and underground mining. In deciding which method is best suited to a coal deposit, the geologists and mining engineers carry out extensive surveys to determine the nature of the deposit. They also assess the quality of the coal which determines its market value.

Financial analysis assesses the costs and revenues from alternative approaches, and hence determines which method of mining will maximize extraction and will bring the greatest benefits to the mining company, and to the national economy and the country as a whole. Environmental and social issues have to be evaluated and managed.

For any mining project to be taken forward, it must be mutually beneficial for Bangladesh and investor, and socially and environmentally sustainable. In this regard, we would look forward to an effective way forward so that the country's large and urgent demand for energy can be met.

Equally important is a regional approach to energy use which will harmonize demand diversity between countries and provide long term energy security in the region.

Hydropower potential in India, Pakistan, Nepal and Bhutan is high. Bangladesh is rich in gas and coal resources. India has plenty of coal resources. The present development and use of these vast resources in the region is low compared with what is needed and feasible to raise the peoples' living standards. This calls for measures to accelerate commercial energy development in the region. Diversification into other energy sources such as hydropower will help reduce dependence on petroleum imports, relieving stress on the balance of payments and ensuring greater energy security for the region. Complementarities exist in the diversity of resource endowment and in the seasonal characteristic of the supply and demand for power, geographical proximities of demand centers and technological base of power industry. All these can be usefully integrated to benefit the participating countries of the region.

To this end, we believe interconnection of the regional power grid will be a major step ahead to benefit the participating countries. Outside the immediate borders of the region (central Asian countries and Iran), there are enormous reserves of oil and gas that could be piped into the region, provided there is agreement among the countries on transit energy trade.

Finally, for sustainable development of the energy sector, the increasing and widespread subsidy for energy products, including power and gas, which generates substantial fiscal and quasi-fiscal costs for the government, must be dealt with on an urgent basis.

Dr Asaduzzaman ( Bangladesh Institute of Development Studies)

Energy resources should be utilized properly so that it plays key role in developing the country’s economy as well. Bangladesh is an energy-starved country having low energy consumption and only 89 kilogram oil equivalent is the country’s per capita energy consumption, as per the statistics of International Energy Agency (IEA). Only Nepal has lower energy consumption than Bangladesh in South Asian region. In Bangladesh energy is consumed in five separate purposes including –commercial, industrial, agriculture and residential. Gas is the prime source of energy and around 85 percent of the country’s total electricity generation comes from gas. Country’s electricity demand is mounting with growth rate of the country’s national economy. If the gross domestic product (GDP) grows around 1.0 % cent the demand for electricity rises nearly by 2.0 %. The country’s future electricity demand will thus depend on how GDP grows in future. Considering the country’s GDP growth between 5.2% and 5.8% in future, I project that the country will require electricity between 73 and 129 terawatt hours (TWH) by 2025. The GDP growth rate was projected considering the country’s GDP growth rate in last three years, which was not beyond 6%. The country would require natural gas between 40,000 and 45,000 million cubic meters per day by 2025 due its whopping rise in demand. To meet the country’s gigantic demand of energy in future, the supply side options that remains are – firming up reserve of gas, provision of substitutes of gas like liquefied petroleum gas (LPG) and alternative sources of primary energy – coal, renewable and hydro. In last three years nothing significant was happened regarding gas exploration. Then there are the issues of supplying alternative energy – alternatives to gas, in terms of LPG, coal, the renewable and hydro. And how good are their prospects. By world standard we have very small reserves of coal. Despite this fact a hot debate is going on whether we would go for opencast mining method or underground mining method. We have experiences on Barapukuria underground coalmine and though the activities of Barapukuria coalmine picked up recently, the fact remains that overall experiences on this coalmine so far is not all satisfactory. The proposed Phulbari coalmine development project is now facing enormous debate over its mining method, issues of environmental and livelihood aspects—which are genuine concern  There are concerns over the productivity – opencast and the underground. There is question regarding export, royalties and some of these are now trying to be handled by the national coal policy.
It is, however, still in draft and we don’t have formal coal policy. The mining method of any coalmine -- be opencast or underground – should primarily be dependent on geology of the concerned coalmine. But the production cost from opencast coalmine is around US$2 per billion of calorie, while for underground it is around $5-$6 per billion of calorie. If both opencast and underground are feasible then we should go for open cast mining. Overall productivity from open cast mining, if it is feasible, would be around 85-90%. But from underground coalmining it would be 15-20% or 25 % in maximum. And for Barapukuria underground coalmine where the long wall technology, one of the costliest technologies in underground coalmining, the productivity is further less due to costlier production. So these are issues I think, which should not lead to any debate.  If it can be done technically it should be done technically and that should be decided under geological consideration. If it is possible to have an opencast mine obviously that is going to lead issues of environmental and livelihood disruptions. Underground mining will also have some similar environmental problems. So there is not much difference there.  The difference is during extraction whatever happens and how it is handled with. These issues should be considered with economics perspective. But the committee to protect oil, gas and port is not coming up with the relative economics of these issues. And unfortunately some of those people who seemed to be the bureau of environment, who were involved with some of the background studies relating to Phulbari project of Asia Energy, they are now keeping their lips tight on mysterious ground. As we are leading to a real shortage of energy issues these should be resolved soon. And regarding export it needs to be flexible as from the mining there might be some elements that have no use inside the country. Coalmines have two types of coal – steaming and cocking. Steaming coal is used in the coal-fired power plants, whereas the cocking coal is used only in steel plants. The issue of royalty should be fixed through negotiations with the concerned parties. Country’s energy potentials for renewable - wind, solar, hydro, biomass – are not feasible for bulk source of energy. Installation of nuclear plant is, however, an issue to be concerned with due to its security problems. The government needs a bold but decisive and integrated approach to ensure the country’s future energy security through proper utilization of all available energy alternatives.

Erich Otto Gomm: ( German Technical Cooperation)
To ensure country’s future energy security it is necessary to explore its renewable energy potentials apart from the conventional energy sources. Renewable energy like solar, bio-gas could be a good source of energy and promoting and disseminating of the alternative energy is necessary in the fastest possible way. Energy savings in efficient was can also mitigate the country’s energy crisis. Electricity to the tune of 40 MW could be saved through its efficient use only in the country’s garments factories. Gary Lye Bangladesh has great prosperity for gas and potential for coal. Proper utilization of these resources can help attaining the country’s future visions including that of the millennium development goals. The country’s port facilities need to be developed so that it can bring in energy to meet its future demands if necessary. Bangladesh’s gas reserve is diminishing due to over dependency on this resource to meet the energy demands along with slow down of the exploration activities. Despite having enormous potentials the country could extract only 1 million tonnes of coal in last 15 years since discovery of its first coalmine. Asia Energy is, however, committed to provide all domestic needs of coal from its Phulbari coalmine project in northern Dinajpur. We are committed to utilize safe mining method supported by geological structure. A study carried out on the Phulbari coalmine project revealed that an open-pit mining method would be the most feasible for its sustainability. Extraction of 15 million tonnes of coal per annum throughout its 30 years plus is also necessary for its sustainability.

Dr. Khursheed Ul-Islam: ( Consultant : - German Technical Cooperation)
Bangladesh has total energy consumption of 31.87 million tonnes of oil equivalent in terms of caloric value having the per capita energy demand of around 328 kilograms oil equivalent. These include 53% biomass or inefficient energy and 47% commercial or efficient energy.
Bangladesh currently suffers from a chronic crisis of energy both in urban and rural areas.To ease this crisis utilization of energy resources is necessary in efficient way.  Biomass can also play a key role in this regard. Bangladesh has around 24–25 million cooks of market in rural areas, where biomass can be used efficiently.

Prof Badrul Imam:
Currently Bangladesh is facing two types of crisis as far as energy is concerned – crisis in energy supply and policy crisis. People here talk much on energy issues as the energy scenario is not encouraging. But we have limited options as the crisis is looming large. Gas and coal can be the country’s most appropriate energy resources to meet future needs. Maximum efforts should be given for maximization of both these resources to meet the future energy demands. The country must have a serious thought to explore gas potentials, which also include an option to import gas from Myanmar. Given the situation of geology and social context Bangladesh cannot go aggressive coalmining. A cautious step is necessary to utilize coal resources.  The country is limited scope to rely on alternative energy sources to meet the bulk quantity of its future energy demands  Nuclear can also be an option considering its cheap tariff rate though the installation cost is expensive.

Muinul Ahsan 
Bangladesh is reeling under an acute gas crisis and its southern part is the worst affected. The country might not have gas beyond 2011 if no new gas reserves take place. Despite having huge unutilized coal reserves, it is unfortunate that debate is continuing over the mining method. Those who oppose opencast mining method do not have much idea regarding technology and geological aspects. But unfortunately they are misguiding others providing wrong information. The policy makers are also confused in taking proper decision. Opencast mining method is feasible to develop the country’s two big coalmines – Barapukuria and Phulbari. Due to underground mining in Barapukuria a good number of villages are now under threat to land subsidence. Formation of CoalBangla, as proposed in the draft national coal policy, might not be possible in time when the country requires quick decision and its implementation to meet the mounting energy demands.

Dr Mushfiqur Rahman :
Bangladesh needs to diversify its energy resources and a quick decision is necessary to augment national economy. Over the years we depended much on natural gas giving very little attention to coal. Though we could develop one underground coalmine at Barapukuria the production cost is very high --around US$ 100 per tonne -- compared to the coal price in the international market which is hovering around $55 per tonne. The wrong mining method – underground – pushed up the Barapukuria coal price. Despite this fact many experts are confusing people with their vague logics in favor of underground mining method where it is not feasible.

Quamrul Islam Siddique:
The role of the multilateral donor agencies like the ADB and World Bank (WB) is necessary to ensure the country’s future energy security as they are now doing in India. They can come forward to install at least two units (2X100) MW of hydropower plants at Kapati. The ADB can also play necessary role in developing Bangladesh’s coal sector as it is now doing in India. The donor agencies can also take part in the rehabilitation processes of the affected people as they did during the rehabilitation process, while constructing the Jamuna Bridge.

Ataus Samad :