Energy Sector of Bangladesh: Current State and … Sector_March...Energy Sector of Bangladesh: Current State and Challenges. 4 Country Country Profile Per Capita Gas Consumption in

Ali Imam [email protected]

Energy Sector of Bangladesh: Current State and Challenges.Energy Sector of Bangladesh: Current State and Challenges. March 2010March 2010

Bangladesh has every potential to evolve as one of the major emerging economies. Despite a non-performing public sector, lack of political stability, health and education services for huge population and frequent hits by natural disaster, the country managed to grow at 6% annually over last couple of years as measured by real GDP. But lack of reliable energy supply is the main reason behind the falling national in-vestment rate. Double digit growth may not remain a distant dream once the long term reliable energy plan has been implemented successfully. Development of the energy sector is very critical since per capita energy consumption in Bangladesh is lower than most of the comparable countries. Over the last decade, energy demand grew heavily with little supply addition. Hence the demand and supply gap is increasing that constrains the growth of industrializa-tion and improvement of standard of living. Only 47% of the population is covered by the national electricity grid and yet supply is unreliable with frequent and lengthy blackout sessions. We have recoverable gas re-serve (proven & probable or 2P) for only 7-8 years given current rate of consumption growth. As 83% elec-tricity is gas fired, with rapidly depleting gas reserves the country may suffer serious energy crisis if appro-priate steps are not taken immediately. On the other hand, Bangladesh has premium-quality coal reserve of 2897 million tons which has energy equivalence to 67 TCF natural gas. Nuclear, solar and wind energy may become main-stream energy sources in near future. Current Government is mandated to ensure long term energy security besides addressing short term power crisis across the country. Some of the initiatives that the ruling Government has taken are- 1. To narrow demand-supply gap, a fresh plan has been declared recently to add 5,275 MW generation

capacity besides existing plan of generating 3,547 MW over 2010-15 horizon. 2. Govt. has mandated Tullow & Conoco Phillips to explore offshore gas discovery possibilities. 3. To formulate and declare National Coal Policy immediately to alter major fuel source to coal from gas. 4. Rationalize energy pricing to minimize system loss and optimize usage of non-renewable depleting re-

sources. 5. Regional co-operation to undertake joint venture power generation project and national grid inter con-

nectivity. 6. Plan and implement Demand Management mechanisms to effectively use current production and re-

duce system loss. We initiate this sectoral research by focusing on the current energy situation in Bangladesh and its future challenges. In this study, we try to picture various stages of evolution of the industry, embed and rationalize govt. plan and inter-relate challenges and potentials of dif-ferent sources of national energy. We cover the sector through three sections, for Natural Gas, Electricity and Coal. Our report provides basic facts and most relevant issues of the sectors which we will explore in more depth in later research reports.

Energy Sector of Bangladesh: Current State and Challenges.Energy Sector of Bangladesh: Current State and Challenges.

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Natural Gas: After several big gas field discoveries, Gas sector of Bangladesh started its journey in early years of 1960s. The industry experienced rapid growth in 1970s due to substitution effect after the oil price hike in interna-

tional market. Today natural gas accounts for about 73% of commercial energy in the country and the demand is growing rapidly. Such demand growth is primarily attributable to the lower price of natural gas in the local market relative to other energy sources. But exploitation and production inactivity in recent years together with policy paralysis for sourcing long term alternative energy has caused huge gap between de-mand and supply of natural gas. Currently the daily shortage is around 200 MMCF against current demand of 1900-2000 MMCF. Current crisis is also caused by the overly optimistic

estimation of reserve numbers in earlier years and subsequent complacency in investing in the sector. Industry Structure: Energy and Mineral Resource Division under the Ministry of Power, Energy and Mineral Resources is the primary agency in the power sector. The division oversees the exploitation, production, transmission and distribution of Oil & Gas through Petrobangla, a state-owned holding company. Petrobangla has created different companies to undertake different specialized operations in the Oil & Gas sector.

International Oil Companies (IOC) are producing around 50% of the total gas production in 2008-09 while Bangladesh Gas Field Company Ltd (BGFCL) is producing 39%. Rest is produced by BAPEX and SGFL. IOCs and Petrobangla invested US$ 2.0 Bln since 1990-92 in exploitation and production projects in Bangladesh. Gas Transmission Company Ltd. (GTCL) is transmitting around 70% of the produced-gas. Currently Titas gas (TGTDCL) transmits another 20% gas but their transmission business will be handed over to the GTCL as transmission is planned to be fully separated from the distribution. Titas Gas (TGTDCL) is the major distributor of the country with 74% market share. Bakhrabad Gas System Ltd. ( BGSL) distributes 16%. Reserve Estimates: Till date, 23 gas fields were discovered in Bangladesh with aggregate Gas Initially In Place (GIIP) of 29.235 TCF out of which estimated proven recoverable reserve (P1) was estimated as 15.584 TCF. Upto June 2009, as much as 8.376 TCF has been produced. Additionally 23 gas fields aggregately have “Probable” (P2) re-serves of 5.471 TCF and “Possible” (P3) reserves of 7.691 TCF as per latest estimates.

526.72 562.13 600.86653.89

6.72 6.89

8.83

5

6

7

8

9

10

0

150

300

450

600

750

2005-06 2006-07 2007-08 2008-09

Gas Production (BCF) Growth (%)

Energy and Mineral Resources Division

Petrobangla

Gas Transmission & Distribution

Titas (TGTDCL)

Bakhrabad (BGSL)

Jalalabad (JGTDSL)

Gas Transmission Co Ltd.

Oil and Gas E&P

BAPEX SGFL BGFCL IOC


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Currently the Remaining Recoverable Proven reserve (remaining P1) is estimated by Petrobangla as 7.2 TCF. The remaining reserve considering Proven and Probable (P2) sources is 12.679 TCF. However Central Intelligence Agency, USA and Energy Intelligence Agency, USA have reported 5 TCF as the available gas re-serve for Bangladesh. At current consumption level (no demand growth) Petrobangla’s estimated proven and probable reserve can serve the country for 21 years. But according to the CIA’s estimate, the country will deplete its gas re-serve with in 8 years. Production: Gas is the main source of primary energy in Bangladesh as broader economic activities is heavily gas inten-sive. Over the last four years, gas production increased by a CAGR of 7.65% to 653.89 BCF in 2008-09. Gas production growth is expected to decline in 2009-10 to around 6.8%. Currently Petrobangla produces 47% of the natural gas while International Oil Companies (IOCs) are pro-ducing 53%. In 2004-05, Petrobangla and IOC produced 73% and 27% gas respectively. So the trend re-veals that IOCs market share is increasing over time as most of the gas fields under Petrobangla are deplet-ing rapidly. This also states the comparatively poor state of management of the gas fields managed by Petro-bangla. Bangladesh Gas Field Company (BGFCL), a concern under Petrobangla, accounts for 37% of current produc-tion. Among the IOCs, Chevron is producing the lion share of the national production (45%). In terms of field-wise production, Bibiyana gas field owned by Chevron is producing 38.4% of the total pro-duction. Second largest producer is Titas gas field with 20.4% of the produced gas. Titas gas field is owned by Bangladesh Gas Field Company Ltd (BGFCL). Consumption: Natural gas is the cheapest energy source in Bangladesh. More than 80% of the national electricity is gas-fired. Being an agriculture-based economy, fertilizer production is very critical from socio-economic per-spective. Domestic fertilizer production is cent percent dependent on gas for energy sourcing. RMG (ready-made garments) is the largest head in our export items. This industry is also primarily dependent on gas for energy. Rapidly growing transportation industry is getting increasingly gas-intensive in the face of environ-mental challenge and oil price volatility in the international market. Consumption pattern of natural gas in Bangladesh is as follows:

It is mentionable that the demand for the gas has been outpacing the supply with a significant margin for last couple of years. Gas shortage always remained a problem in the past, but it was not felt at this extent earlier. Demand is growing sharply due to the in-crease of oil price in the international market and lower price of natural gas relative to alternative sources. Oil is the main alternative energy source to gas in Bangladesh. It is one of the largest import items of the country. To sustain the na-

tional reserve of foreign exchange and improve the balance of payment condition, Bangladesh remained heavily dependent on natural gas. Such dependency was also caused by overestimation of gas reserve in Bangladesh. Rationalizing gas price relative to other energies and speeding up exploration activities are critical to en-sure optimum use of natural gas resources in Bangladesh. We have to move for alternative sources for na-tional energy. For that we have to substitute natural gas through coal, nuclear or renewable energy.

Sector Consumption in FY 2008-09Power 40%Fertilizers 12%Industry 16%Captive 15%Commercial 1%CNG 5%Domestic 11%Source: Petrobangla Annual Report, 2008-09


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CountryCountry

Profile

Per Capita Gas Consumptionin Mln Cubic Feet

Gas Reserve in Tln CF(est. in Jan 2009)

Per Capita Proven Gas Reservein Mln Cubic Feet

Coveragein yrs

Russia BRIC 105963.2 1529.1 10919102.8 103.0United States G6 75546.5 237.7 773742.2 10.2Iran NEXT- 11 63261.9 991.6 14927688.4 236.0United Kingdom G6 55439.5 12.1 198147.0 3.6Italy G6 51569.0 3.3 57201.0 1.1Germany G6 41088.3 6.2 75322.1 1.8Malaysia REGIONAL 36075.7 83.0 3227175.1 89.5Japan G6 28095.3 0.7 5808.0 0.2France G6 27162.2 0.2 3824.3 0.1Mexico NEXT- 11 21237.4 13.2 118348.7 5.6Thailand REGIONAL 19964.0 11.2 169674.9 8.5Turkey NEXT- 11 17095.1 0.3 3905.9 0.2Egypt NEXT- 11 14051.2 58.5 741518.6 52.8Pakistan NEXT- 11 7585.7 31.3 179083.1 23.6Indonesia NEXT- 11 5364.7 106.0 441081.4 82.2Brazil BRIC 4202.4 12.9 64858.1 15.4Bangladesh 1 NEXT- 11 3850.4 12.7 81249.1 21.1Bangladesh 2 NEXT- 11 4050.8 5.0 32040.8 7.9Nigeria NEXT- 11 2906.0 184.2 1234115.6 424.7Vietnam NEXT- 11 2631.4 6.8 76747.8 29.2China BRIC 2129.0 86.9 64898.6 30.5India BRIC 1312.3 38.0 32814.7 25.0Philippines NEXT- 11 1059.7 3.5 35517.7 33.5Afghanistan REGIONAL 37.3 1.7 61623.4 1651.71 Bangladesh Estimates, Petrobangla Annual Report 2008, Proven & Probable Gas Reserve2 Bangladesh Estimates, CIA and EIA estimates 2009, Proven Gas Reserve Only

Gas Price: In Bangladesh, gas is priced at significantly lower level than most of the comparable countries in South Asia. Power sector consumes most of the gas as single consumer group demanding 40% of the produced gas. For power generating consumer, gas is priced in Bangladesh at 250% discount to the regional average. Irrespec-tive of the consumer group, gas is significantly undervalued in Bangladesh relative to the peer markets as revealed by the chart below:

Relative Gas Scenario: Currently per capita gas consumption of Bangladesh is double the per capita consumption of China or India. But per capita reserve is depleting rapidly due to relative over-dependency on this energy source without any fresh discovery in recent years. Currently per capita gas consumption is around 4 BCF per annum in Bangladesh. In India, China and Paki-stan the numbers are 1.3 BCF, 2.1 BCF & 7.6 BCF respectively. At zero growth demand level, Bangladesh has 5 years’ P1 gas reserve while India and China have 25 years’ and 30 years’ P1 gas reserve respectively. In terms of p2 gas reserve Bangladesh can meet 21 years’ gas de-mand as shown in the table below:

Consumer Group Bangladesh India Pakistan Thailand MalaysiaAvg. ExceptBangladesh

Regional Avg. in BDT

Power 74 385 274 264 111 259 3.5 Xfertiliser 63 385 206 0 0 148 2.3 XIndustry 148 364 206 330 241 285 1.9 XCommercial 233 545 232 330 241 337 1.4 XDomestic (meter) 130 393 262 548 361 391 3.0 X

Prices in BDT/MCF


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Govt. Plan & Our Perception: • Offshore exploration: Govt. has signed Production Sharing Contracts with Tallow and Conoco Philips to

head-start off-shore gas exploration in the Bay of Bengal. Determining maritime boundary with India and Myanmar is the pre-requisite for such exploration. Recent negotiation with Myanmar to settle the issue based on “equal distance” & “fairness” and Govt.’s liaison with India to ensure win-win situation likely to result in kick-off of gas exploration in the Bay of Bengal soon.

• Tariff review & Demand Side Management: To optimize use of natural gas as a non-renewable depleting resource, tariff structure has to be adjusted upward significantly to reflect its true economic value. Ra-tionale pricing will reduce wastage and induce investment in this sector. In the longer term we have to import natural gas at international market price. Hence a convergence of domestic price to the interna-tional price is unavoidable.

• Shifting towards coal-based energy policy: Former Energy Advisor to the caretaker govt. Dr. M. Tamim rightly suggested not to construct any more gas-fired power plant after 2005. Bangladesh has to reduce existing over-dependency on natural gas as primary source for national energy since this non-renewable resource is depleting rapidly without significant reserve addition. Coal can be the viable al-ternative to natural gas for national energy security at least up to the intermediate terms. We have al-most 4 billion ton reserve of good quality Coal which is equivalent to 67 trillion cubic feet of natural gas. Long pending Coal Policy has to be finalized immediately to boost coal production and reduce gas-dependency.

• LNG Import: Liquefied Natural Gas may be the most-effective alternative to the piped-gas on long term Built, Own, Operate and Transfer (BOOT) basis. Through importing LNG, trillions Cft of gas can be traded economically. India and China imported 358 BCF and 139 BCF LNG respectively in 2007. Geo-graphical proximity to the major exporting countries and competitive price in the international market may well-justify the move to LNG import. The government is currently looking for an investment of $1 billion from international companies and financial institutions for installation of an LNG terminal in Chittagong to import liquefied gas. LNG is brought by tankers in liquid form and is transformed into gas at the terminal before being supplied to the gas transmission network

• Promote LPG for cooking and domestic usage. • Reducing gas-leakage, Investing in energy –efficient technology.


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Electricity: Bangladesh currently generates 3800-4000 MW electricity while the demand is 5500-6000 MW. More than 75 million people (53% of the population) do not have access to electricity. Peak load shedding hits to 1500-1800 MW during the summer, hence the covered population do not get reliable electricity. Such shortage and unreliable power supply has constrained economic growth of the country. Ruling Govt. has been considering power sector development as one of their primary concerns. Several power projects have already been approved by the govt. Through investors’ presentation and roadshow govt. is trying to draw US$ 7.1 billion investment to increase the capacity by 5385 MW within next five years. We need agile move by the policy maker and efficiency improvement at the implementation level to overcome prevailing power-crisis as quickly as possible. Industry Structure: Current Demand & Supply Condition: Electricity demand is growing at around 8-10% per annum since 1990. In 2009, 88% of the generated elec-tricity was gas-dependent. In current gas-shortage scenario, electricity generation could not be optimized in spite of having installed generation capacity. Though we have 5893 MW installed capacity, maximum gen-eration in 2008-09 was 4162 MW as some plants were out of operation for maintenance, rehabilitation and overhauling, some plants were derated due to aging and gas supply to power plant reduced significantly. In 2008-09, net electricity generation by all plants numbered at 25622 GWh up by 5.39% from that of last year. Contrast to the demand growth of 10%, such supply increment is inadequate to lessen the gap between de-mand and supply.

Year Installed capacity (MW)<1 capability Generation (MW)<2 Demand Forecast (MW)<3 Demand served (MW)<4 Load Shedding (MW)<5 2000-01 4,005.00 3,033.00 3,394.00 3,033.00 663-15 2001-02 4,230.00 3,217.50 3,659.00 3,217.50 367-5 2002-03 4,680.00 3,428.00 3,947.00 3,428.00 468-5 2003-04 4,680.00 3,592.10 4,259.00 3,592.10 694-2 2004-05 4,995.00 3,720.80 4,597.00 3,720.80 770-7 2005-06 5,245.00 3,782.10 4,693.00 3,782.10 1312-15 2006-07 5,202.00 3,717.80 5,112.00 3,717.80 1345-40 2007-08 5,201.00 4,130.00 5,569.00 4,130.00 1049-20 2008-09 5,719.00 5,166.00 6,066.00 4,162.10 1269-19

Source: BPDB Annual Report, 2008-09

INSTALLED CAPACITY, GENERATION CAPABILITY, DEMAND FORECAST, DEMAND SERVED AND LOAD SHEDDING

<1 Installed capacity as of June of the year, <2 Generation capability is the Maximum available generation capacity aftermaintanance outage in the year, <3 Demand forecast is the Base Forecast of PSMP-2005. <4 The dates of maximum demand served and maximum available generation capacity may not be the same. <5 Load shedding is the range of maximum and minimum throughout the year.

Power Division

Generation

BPDB

APSC

EGCB

RPCL

Transmission

Powergrid

Distribution

DESCO

DPDCREB

BPDBWZPDC

Others

Power Cell

Energy Monitoring Unit

Office of EA & CEI

ERCERC: Energy Regulatory Commission APSC: Ashuganj Power Supply Company BPDB: Bangladesh Power Development Company RPCL: Rural Power Co Ltd. EGCB: Electricity Generation CO. Ltd. DESCO: Dhaka Electricity Supply Co. Ltd. REB: Rural Electrification Board. WZPDC: West Zone Power Distri. Co. Ltd. DPDC: Dhaka Power Distri. Co. Ltd.


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Supply-side Dynamics:

In terms of installed capacity, public sector generators have 66% market share. Private sector’s contribution in the sector is a relatively recent develop-ment and achieved one-third market share within a short period of time. Bangladesh Power Development Board (BPDB) accounts for 50% of the na-tional installed capacity as at the end of December, 2009. Independent power producers (IPPs) have 23% market share.

83% of the installed capacity is gas dependent in Bangladesh. In 2009, 88% of actual production was gas-fired. Coal is second to natural gas, as fuel-source for electricity generation, with 4% share. 48% of our power plants are steam turbine-based. Combined cycle plants provide the flexibility to alter fuel-type and such plants represent 25% while gas turbine is 18% of the installed capacity.

Power production infrastructure in Bangladesh is segmented zone-wise across the country. East Zone pro-duced 83% of the national electricity while consumed 73% of the total consumption in 2008-09. Average fuel cost is minimum in this region due to geographical advantageous position to lower overhead and trans-portation costs. Per unit fuel cost amounted BDT 0.83 compared to West Zone’s average fuel cost per unit of BDT 3.69. So East Zone is the dominant contributor to the national power with significant cost advantage. Evolution of private sector power generating sub-sector was significant over last couple of years. They rep-resented 38% market share in 2009.

MW SharePublic Sector 3812 66%

BPDB 2878APSCL 724EGCB 210

Private Sector 1991 34%IPPs 1330SIPPs (BPDB) 99SIPPs (REB) 22615 yr rental 1653 yr rental 171

Total 5803 100%

% of Total Capacity (MW) % of Total Generation (GWh)Gas 82.69% 4542 88.44% 22661Furnace Oil 5.10% 280 3.89% 996Coal 4.55% 250 4.02% 1031Hydro 4.19% 230 1.61% 414Diesel 3.48% 191 2.03% 521Total 100.00% 5493 100.00% 25622Fuel source wise Capacity & Generation 2008-09, Annual Report, BPDB.

Generation 2008-09Installed CapacityFuel Source

Type of Plant Capacity (MW) % of TotalHydro 230 4%Steam Turbine 2638 48%Gas Turbine 997 18%Combined Cycle 1359 25%Diesel 269 5%Total 5493 100%Installed Capacity by Plant Type, Annual Report 2008-09, BPDB.

Zone-wise Supply Information East Zone West Zone Pvt GenerationAvg Overall Fuel Cost Per Unit Of Thermal Generation 0.826 3.685Generated Electricity volume in 2008-09 (GWh) 13627.36 2803.28 10173.31Generated Electricity Market Share in 2008-09 83% 17% 38%Electricity Sales in 2008-09 (GWh) 17487.04 6449.74Electricity Sales Market Share 2008-09 73% 27%Maximum Demand Served in MW 3589 573.1


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Demand-side:

Bulk consumers namely Rural Electrification Board (REB), Dhaka Power Distribution Company (DPDC), Dhaka Electricity Supply Company (DESCO) and West Zone Power Distribution Company Limited (WZPDCL) are purchasing 78% of the total electricity from different generators to distribute end mile re-tail customers across different segments. Industrial and do-mestic customers demanded 11.29% and 9.4% of the total electricity in 2009.

Tariffs:

Energy Regulatory Commission (ERC) is responsible for elec-tricity pricing in Bangladesh. Historical tariff structure of Bangladesh was lower than that of India or other regional peer countries as the cheapest fuel type-natural gas was the main fuel for electricity generation in the country. Electricity price tracked general inflation level with time lag as revealed by the movement of average billing rate of BPDB. Relative under-pricing of electricity caused underinvestment in this sector.

Recently ERC has re-fixed prices for bulk customers who consumes more than 75% of the generated elec-tricity. The domestic power tariff of four distribution companies—PDB, DPDC, DESCO and WZPDC—has been increased by 6.03, 6.99, 6.29 and 5.98 per cent respectively, effective from March 1, 2010. System-loss Scenario:

Bangladesh did well recently with respect to efficiency improvement as measured by Distribution System Loss trend. Over the last decade system loss as % of import was reduced by 50% to 13.6% in 2008-09. Yet system loss has to be brought down around 5% to ensure reliable electricity supply to customers.

Consumption Pattern of the country % TotalREB 37.73%DPDC 22.76%DESCO 11.46%WZPDCL 6.23%Domestic 9.38%Ind & Comm 11.29%Agri 0.58%Others 0.58%

FY Avg Billing Rate (BDT/ KWh) Growth 2000-01 2.25 2.27% 2001-02 2.31 2.67% 2002-03 2.45 6.06% 2003-04 2.40 -2.04% 2004-05 2.27 -5.42% 2005-06 2.19 -3.52% 2006-07 2.26 3.20% 2007-08 2.36 4.42% 2008-09 2.56 8.47%

Year Trans & Dist Loss/ Net Generation Dist loss as % of Import 1

2000-01 13.9% 26.1% 2001-02 12.6% 24.5% 2002-03 11.4% 22.4% 2003-04 10.2% 21.3% 2004-05 9.3% 20.0% 2005-06 7.9% 19.1% 2006-07 7.0% 16.6% 2007-08 6.9% 14.4% 2008-09 6.6% 13.6%1 Excluding REB


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Cross-country Comparison of Electricity Condition:

One of the major reasons behind the increasing gap between actual and potential GDP is the underde-velopment of infrastructure and power sector. Per capita electricity consumption is only around 140 KWh in Bangladesh which is much lower than com-parable economies such as Next-11 and BRIC as shown in the table beside. Only 47% of the population is covered through the existing power grid. Thus the lion-share of the population, specially, rural population remained out of electricity coverage. Hence to unlock perceived economic potential and to ensure pro-poor growth, electricity generation has to be increased signifi-cantly so that per capita consumption can be reached to around 600 KWh level, at least.

Country GroupPer Capita ElectricityProduction (kWh)

Per Capita ElectricityConsumption (kWh)

United States G6 12606.9 13378.4

China BRIC 2568.3 2578.0

Russia BRIC 7305.0 7426.4

Japan G6 7282.9 7537.8

India BRIC 491.0 625.6

Germany G6 6647.7 7207.6

France G6 6981.2 8362.8

Brazil BRIC 2034.3 2207.9

United Kingdom G6 5658.4 6031.4

Italy G6 5419.2 4984.0

Mexico NEXT- 11 1806.5 2203.0

Turkey NEXT- 11 2579.2 2583.1

Iran NEXT- 11 2315.2 2899.3

Thailand REGIONAL 2036.4 2245.5

Indonesia NEXT- 11 496.5 559.4

Egypt NEXT- 11 1319.9 1501.3

Malaysia REGIONAL 3859.5 4013.1

Vietnam NEXT- 11 841.1 981.1

Pakistan NEXT- 11 413.6 520.1

Philippines NEXT- 11 499.7 577.4

Bangladesh 1 NEXT- 11 137.0 147.3

Bangladesh 2 NEXT- 11 191.9 158.2

Nigeria NEXT- 11 128.7 146.9

Afghanistan REGIONAL 8.1 10.1

1 CIA Intelligence Factbook, 2010.2 Annual Report, Bangladesh Power Development Board (BPDB), 2008-09.


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Govt. Plan: • Accelerating Generation: Govt. has declared its mission to eliminate load-shedding by the end of 2014

through rapidly increasing installed capacity. Besides the existing expansion plan under Power Sector Master Plan-2005, Govt. has initiated fresh power projects to keep pace with rapidly growing demand. Since January 2008, fourteen power plants with aggregate capacity of 378.85 MW have started genera-tion and the other six power plants with total capacity of 485 MW are going to start generation with in June 2010. Govt. has already approved 13 other power projects in its Purchase Committee. These pro-jects will have aggregate capacity of 920 MW. During January 2010, Bangladesh Govt. arranged road shows in Singapore, London and New York to seek financing for these projects. Dependable Capacity in future gas crisis scenario will be 10354 MW in FY 2015, if these projects are timely implemented. Under such plan, demand supply gap will be negative from FY 2013 onwards as revealed by the table. Imple-

mentation of this plan needs US$ 7.1 Billion investment. Govt. has already awarded some of the projects to the leading bidders while others are in the process. Investment requirement for different projects are as follows:

Fuel type used in the planned projects is critical for the continuous production of power without disrup-tion due to scarcity of primary fuel. As Bangladesh is suffering due to limited gas production, any elec-tricity generation project depending on natural gas will enhance the increase present crisis. Term wise power generation enhancement plan depending on various source of fuel is as follows:

Particulars June,09 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015Max.Demand as per PSMP (12 % Growth from 2013) 6066 6608 7148 7732 8659 9699 10862Max.Demand considering DSM 5566 5808 6298 6832 7709 8699 9812New Generation addition( Existing Plan) 752 150 750 1175 720New Generation addition( New Innitiative) - 530 820 200 1125 1300 1300Capacity Retired - 10 38 0 548 378Installed Capacity 5719 6991 7923 8873 10625 12267 13567Dependable Capacity(without fuel constraints) 4289 5313 6101 6921 8394 9814 10854Max.Demand -Supply Gap (without fuel constraints) 1277 495 197 -89 -685 -1115 -1042Depandable Capacity( with gas crises) 3789 4813 5601 6421 7894 9314 10354Max.Demand -Supply Gap (with gas crisis) 1777 995 697 411 -185 -615 -542

Description

EnterpriseType

Investment RequirementUS$ Million

New Initiative: 530 MW Rental Projects Private Sector 424New Initiative: 820 MW Peaking Plant Public Sector 1000Combined Cycle and Peaking plants: 1325 MW (IPP) Private Sector 1500Solar and Wind Projects: 110 MW Private Sector 2002600 MW Coal Project Pvt Public Partnership 4000Total 7124

Implementation Terms Capacity (MW) Fuel TypeIntermediate: 6-12 Months 500 Liquid FuelShort Term: 18-24 Months 800 Liquid FuelMedium Term: 3-5 Years 3900

Combined Cycle 1100 Combined Cycle

Peaking Plants 200 Vas/ Dual FuelCoal Plant 2600 CoalTotal 5200


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• Increasing Private Sector Investment: Govt. is encouraging private sector investment in power sector

through providing tax advantage, guaranteed tariff/ profit, subsidized fuel. Govt. is also trying to attract FDI to this sector. In the recent road-show six different projects are presented to be undertaken by the private sector having aggregate installed capacity of around 4000 MW. Another 530 MW is planned to be added through rental power purchase which will be implemented by the private sector participants.

• Thinking “Alternatives”: Alternative power generation technologies may become major contributor to power generation industry in the near future. Large scale power plant basing on nuclear technology and retail solar-based power generation model may greatly contribute to the sustainability of power sector. Govt. has signed MOU with Russia, Korea and China. Current prime minister is expected to visit Russia in the middle of the 2010 to sign a contract to build a nuclear power plant at Ruppur with a capacity of 1000 MW. Nuclear power plant may effectively address instable supply of primary fuel for electricity generation. A wind-based power project is planned at Anowara in Chittagong with a capacity of 100-200 MW. Private sector participants such as IDCOL and Grameen Shokti are striving for the development of the solar-based small scale electricity generation market in the urban and sub-urban area.

• Demand Side Management: To lessen the demand supply gap, Govt. has implemented several projects to manage demand side to ensure optimum usage of electricity. Using energy efficient electronics and home appliances is encouraged through providing subsidiary at the retail level. To better cope with cur-rent crisis situation, Govt. is rationing electricity to different priority sector such as agriculture and fer-tilizer.


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Coal: Coal is the most important long term energy source in Bangladesh. With rapidly depleting gas reserve and little reserve for other non-renewable energies, coal can ensure 20-30 years energy security if properly mined and utilized. We cannot produce coal at the optimized level due to lack of having a coal policy in place. Methodology of mining is to be decided prior to devising the coal policy and this is a debatable issue with potential political consequences. Increasing coal production significantly with in 3-5 years is critical to overall success to address prevailing power crisis. Reserve: Total coal reserve in 5 different coal mines is estimated to be around 3000million tons. Such reserves has energy equivalence to 67 TCF of natural gas. Energy content of mineable coal from three shallow depth mines of the five discovered mines is equivalent to 30 TCF of gas.

Production:

In 2008, monthly average coal production was 70,000 Tons equivalent to 1620 million cubic feet of natural gas. During the 4th quarter of 2008, coal production increased by 277% from the same period of 2007. Barapukuria Coal Mine is the largest producer. It has a reserve of 390 Million Tons with recoverable deposit of 64 million tons. Cumulative production as at the end of 2008 was 1.73 million

tones which is less than 1% of the initial proven reserve. Hence proven recoverable coal reserve is sizable to provide ever growing energy need in Bangladesh. Consumption: All the coal produced by Barapukuria Coal Mine was used for generating electricity in a nearby 250 MW thermal power plant. Thus major portion of the coal is used for electricity generation. Govt. Plan: Sooner or later we have to go for coal-based electricity. Among the recently undertaken power projects, four larger scale plants with capacity of 500-700MW each is planned to be set up at Meghnaghat, Zajra, Khulna and Chittagong. With aggregate capacity of 2000-2600 MW, these coal based plants will require US$ 4 billion investment and around 6 million tones coal annually.

YearProduction

Mln M. TonsCumulative Production

Mln M. Tons2006 0.451 0.5282007 0.361 0.8892008 0.840 1.728Source: Petrobangla

No. Place/Field (Discovery) Depth (Meter) Area (Sq. Km) Proven Reserve (Million Ton)1 Barapukuria, Dinajpur(1985) 119-506 6.68 390

143685

3 Phulbari, Dinajpur(1997) 150-240 30.00 5724 Jamalganj, Jaipur(1965) 900-1000 16.00 1,0505 Dighirpar, Dinajpur(1995) 1 327 Yet to be known 200

Total 2897Energy Equivalence 67 TCF of Natural Gas

1 Partial EvaluationSource: M Tamim, www.biiss.org/epls_presentation.pdf

2 Khalaspir, Rangpur(1995) 257-483 12.00


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