Optimising sustainable energy policy
Focus should be placed on onshore and offshore gas exploration, especially on offshore one, for materializing the potential benefits from Blue Economy
Sayeed Ovi
It is obvious that a country needs uninterrupted gas and electricity supply for its industrial production and for our drive to be an industrially developed nation, relentless power supply is required in which we are not doing well. Ensuring sustainable power supply is a major challenge faced by Bangladesh. And this problem seriously has a hammering effect on investment. So, to mind the gap the government of Bangladesh has decided to rely on imported coal and gas without focusing much on exploring our own resources. Bangladesh is gradually shifting from a local gas based mono-energy status to multiple sources in producing electricity. These multiple sources comprise local gas and imported LNG, coal, oil, nuclear energy, cross-border and renewables. Governments plan is to generate 21000 MW of power in 2021, 32000 MW in 2030 and 54000 MW in 2041 (Power Sector Master Plan, 2016) which is ambitious one and if succeeded, this will undoubtedly help our economy to boost to a greater extent. But the question is from where will the inputs come from?
Governments aim is to produce 22000 MW of coal based power in 2041 and for that purpose 66 million tons of coal will be imported annually. At present Bangladesh is importing 500 mmcfd (million cubic feet per day) LNG from Qatar which comprises 18 percent of the total gas supplied in the national grid. This import will increase to 1000 mmcfd from next year to cover the prevailing shortage in gas supply. In Bangladesh, current gas production is 2700 mmcfd but the demand is 3500 mmcfd. This shortfall imposes a great barrier in our power and industrial production which ultimately affects the economy in a negative way. So, from this point of view LNG import is quite appreciable. But the problem is we are going to be heavily dependent on imported LNG as the government has decided to increase the import of LNG to 4000 mmcfd by 2025. According to estimates, Bangladesh will have 90 percent dependence on imported power sources (mainly LNG and coal) by 2030 whereas in 2010, 90 percent of the power generation was done by local gas. Is it really feasible to be dependent on imported sources for producing power?
In recent years it is frequently heard that our gas reserve is depleting quickly and this has actually become a slogan of our government. But have necessary steps been taken by the authority to explore our own gas reserves? The answer is simply a NO. Moreover, Bangladesh has a defined and undisputed maritime boundary which is believed to have a significant amount of gas. But there is seemingly no progress in offshore gas exploration. Myanmar has already found a huge amount of gas reserve in Rakine Basine bordering Bangladesh, a proof to the Geoscientists assumptions. The scenario in onshore exploration is not that much different. It seems like all the necessary measures have been taken to make ourselves dependent on imported sources.
1000 mmcfd LNG will cost $3 billion annually and to cover that cost, the government has to hike the gas price by as much as double. This will lead to overall increase in costs in almost all sectors. According to Petrobangla, the gas jointly supplied by foreign companies (60 percent of total supply) and by national companies (40 percent of total supply) has an average price of
Tk 5.32 per cubic metre gas. On the other hand, the imported LNG has a price of Tk 33.44 per cubic metre gas. Petrobangla would mix the national gas and LNG and the mixed gas will have a price of Tk 12.89 per cubic meter (Public hearing, 24 June 2018, Energy Regulatory Commission). So, clearly the addition of LNG to the national grid will double the price of gas. This will surely increase the price of produced power and goods. The cost of living will be much higher. Will it be acceptable to the people? Does our economy really have the capacity to bear the burden?
LNG is available plentifully in the international market but it is very expensive and its uses are vividly seen in developed economies like Japan, South Korea as they dont have much resources like gas, oil and coal. But in a developing country like Bangladesh which has an untapped gas and coal reserves, it seems irrational to be greatly dependent on import rather than exploring our own resources. And also there is an upward trend in oil price which will surely have an impact on the LNG price. So, the burden is expected to get heavier.
In light to the current situation, a short term and limited import of LNG is viable for our economy, but it should not be taken as a large-scale and long term solution for mitigating the prevailing gas crisis. Rather much focus should be placed on onshore and offshore gas exploration, especially on offshore as to materialize the potential benefits from Blue Economy.
The writer is a freelancer
