Power and Energy Sector Road Map : An Update

June 2011

Finance Division, Ministry of Finance

Government of People’s Republic of Bangladesh

website: www.mof.gov.bd |  email: [email protected]

Contents

Subject                                                                                                                      Page

Preface                                                                                                                         v

1.0          Introduction and Background                                                              1

Power Sector                                                                                                              3-33

2.0          Reducing Power Shortage: Achievements In Last One Year             3

2.1                   Per Capita Electricity Consumption: The Extent of Increase           3

2.2                   Access to Electricity: The Extent of Expansion                               3

2.3                   Enhancement   of   Electricity   Generation Capacity,  Load          3

Shedding and Supply: The Extent of Change

2.4                   Power Sector: Updated Comparative Data                                      4

2.5                   Electricity Production Structure: The Evolution                              4

2.6                   Use of Different Types of Energy:    Energy Diversification         6

and Change in Policy Strategies

3.0          Action Plan (2010-2015): Achievement                                                 7

3.1        Initiatives   Under   Different   Tenure:  Achievements  and         7 Changed Strategy

3.1.1            Immediate: Achievements So Far                                                   8

3.1.2            Short Term: Achievements And Revised Plan                                9

3.1.3            Medium Term: Revised Plan                                                         12

3.1.4            Long-term: Electricity for All                                                         19

3.2        Import  of  Electricity  and  Regional   Co-operation:  Latest         23 Position

3.2.1            Import    of    Electricity     from    India    and    Establishing      23 Joint Venture Power Plant

3.2.2            Import of Electricity from Myanmar                                              24

3.3        Power Tariff: Change in Rate and Policy                                       24

3.4        Transmission and Distribution: Achievement and Workplan         24

3.5        Electricity Conservation Program: Which Way                              27

4.0          Year-wise Probable Electricity Demand and Supply: An Update           27

5.0          Challenges of Power Sector Development                                               31

6.0          Uninterrupted Fuel Supply to Power Stations and Storage of Fuel       31

7.0          Channeling Resources                                                                              32

Energy Sector                                                                                                            34-52

Table

Page

1                      Electricity Produced in Public and Private Sector: A Comparison                       5

2                      Different Fuel Use For Electricity (% share)                                                       6

3                      A Comparative Picture of Electricity Production Plan                                        7

4                      The Implementation Action plan of Various Programmes by 2010                    8

5                      Implementation Plan of Various Programmes by 2011                                       9

6                      Time-bound Plan of Various Programmes to be Implemented By 2012            12

7                      List of Different Projects to be Implemented By 2013                                       16

8                      List of Different Projects to be Implemented By 2014                                       18

9                      List of Different Projects to be Implemented By 2015                                       20

10                     List of Different Projects to be Implemented By 2016                                       21

11                     List of Different Projects to be Implemented By 2017                                       22

12                     List of Different Projects to be Implemented By 2018                                       22

13                     List of Different Projects to be Implemented By 2019                                       22

14                     List of Different Projects to be Implemented By 2020                                       23

15                     Comparative Scenario of Power Transmission and Distribution                         25

16                     Probable Projects for Transmission                                                                   26

17                     Retirement of Power Plant                                                                                 28

18                     Year-wise Projected Power Demand and Supply                                               30

19                     Allocation of Resources in Power Sector (In crore TK.)                                    32

20                     The Current Comparative Scenario of Natural Gas                                            35

21                     Sectorwise Gas Demand Projection                                                                   37

22                     Short Term Plan Completed by December 2010                                               39

23                     Medium Term Plan to be Completed by December 2013                                  40

24                     Long Term Plan to be Completed by December 2015                                       42

25                     2-D & 3-D Seismic Survey Plan at a Glance                                                      43

26                     Proposed Projects for Implementation by GDF                                                 44

27                     Coal Reserves of Five Coal Mines                                                                     46

28                     LPG Production in Public Sector at a Glance (2008-2011)                                48

29                     Targets of Electricity Generation by 2015 from Renewable   Energy Sources  49

and Achievements till Date

30                     Resource Allocation in Energy Sector                                                               51

Figures

Page

1                      Electricity Demand and Production Trend 2001-2011                                       1

2                      Electricity Production in Private and Public sector, April 2011                          5

3                      Electricity Production in Private and Public Sector, April 2010                          5

4                      Projection of Electricity Production in Private and Public Sector in 2016           6

5                      Electricity production from Different Fuel Sources                                            6

6                      Progress in Distribution Line April 2010 to April 2011                                     25

7                      Progress in Non-household Connection April 2010 to April 2011                    25

8                      Progress in Household Connection : April 2010 to April 2011                          25

9                      Statistics of Year-wise Capacity Retirement                                                       29

10                     Probable Power Shortage/Surplus (2011-2016)                                                30

11                     Statistics of Resources Allocation in Power Sector                                             33

12                     Annual Energy Consumption Trend                                                                 34

13                     Sectoral Use of Gas in Percent, 2009                                                                 36

14                     Sectoral Use of Gas in Percent, 2010                                                                 36

15                     Sector- wise Annual Average Growth Rate of Use of Gas in the Country          36

from 2005 to 2010

16                     Projection of Annual Gas Demand (2009-10 to 2015-16)                                37

17                     Resource Allocation in Energy Sector                                                               52

Preface

The present Government placed the ‘Vision 2021’ along with its Election Manifesto before the nation. Inspired by the dreams inherent in the Vision, we began our journey resolutely towards building a happy, prosperous, and caring Bangladesh. To this end, a number of targets, strategies, and priorities geared towards economic and social development have been brought together in the Perspective Plan (2010-2021) and the Sixth Five Year Plan (2010-11 to 2014-15). The main goal of all these efforts is to  achieve 8 percent growth by 2013 and then raising it to 10 percent by 2017 and sustaining it till 2021. However, achieving this high growth requires huge investment. In fact, over the last few years, Investment-GDP ratio remains stagnant at around 25 percent. Underdeveloped infrastructure, in particular, infrastructural deficiencies in power and energy sector, is primarily responsible for this sluggishness.

I presented a roadmap towards revamping power and energy sector in the last annual budget session to apprise the nation of restructuring and development plan for the power and energy sector. In the road-map, immediate, short, medium, and long-term plans on reinvigorating the power and energy sector were outlined. In the meanwhile, the private sector has stepped into electricity generation in a significant way. Hence, the government has also changed its strategy and the targets of electricity generation. A number of innovative steps have also been taken in the energy sector. In this context, I am again presenting the current status of ‘the roadmap of power and energy sector development’ to update the nation about the achievement in the power and energy sector, its revised plan, and the new initiatives.

After assuming office, we adopted a wide range of plans and activities for generating 20,000 MW power in line with the ‘Vision 2021’. By declaring power and energy as a vital sector, we enacted ‘Power and Energy Fast Supply Enhancement (Special Provision) Act 2010’to ease and simplify the approval process of power projects with a view to bringing generated electricity quickly to the national grid.

A wide range of activities are being undertaken in the power sector to generate 17,649 MW by 2016. Strategies have been adopted to facilitate private sector lead in electricity generation. Besides, plans are there to keep the existing power plants operational to ensure uninterrupted power supply. Vigorous efforts are also at hand to augment electricity generation from fossil and renewable energy sources, e.g., solar energy, bio- gas etc. with a view to reducing over-dependence on natural gas.

In the last two years, about 1556 MW have been added to the national grid by implementing a number of initiatives of the present government. When the present government assumed office, the country was reeling from acute shortage of power and energy. To quickly recover from the crisis, we agreed to generate electricity on a rental basis. However, in view of its high-cost involvement, government considers setting up strategic power plants in the private sector as the best and effective option. I don’t have any hesitation in admitting that not all action plans outlined in the previous roadmap were implemented. Therefore, several action plans have been revised and are now being considered for implementation in future.

Power generation is a capital intensive process and a major share of capital investment involves import of capital machinery. Providing electricity at a lower cost while buying at a higher rate from private producers entails huge subsidy and subsequent pressure on the national budget. On the other hand, huge imports exert downward pressure on the balance of payments. Despite all these, we have to proceed maintaining an effective balance.

There is no denying the fact that our power and energy sector still lags behind other least- developed countries. We have a number of limitations: some are natural and others human-made. We also have dearth of natural gas, an important input to electricity generation. We have seen an episode of inefficiency, mismanagement, and disgraceful corruption in the power and energy sector in some years of the last decade. I hope that the strong determination of the present government to develop and revamp this sector will wipe out all the past and lead the nation from darkness to light. This will establish a ‘Golden Bengal’ as dreamed by the ‘Father of the Nation’.

I take the opportunity to extend my sincere thanks to the Ministry of Power, Energy, and Mineral Resources, Power Development Board, and the officers of Finance Division who made substantial contribution in bringing out this booklet. I would like to express my deep gratitude to the Hon’ble Advisor for Power and Energy Dr. Toufique-E-Elahi Chowdhury, Bir Bikram and the Hon’ble State Minister for Power, Energy, and Mineral Resources Brigadier Enamul Huq for their cooperation.

(Abul Maal Abdul Muhith) Minister

Ministry of Finance

Power and Energy Sector Road Map: An Update

1.0       Introduction and Background

1.1     In the previous year’s budget session, a booklet on ‘Towards Revamping Power and Energy Sector: A Road Map’ was presented. The main objective of publishing the booklet was to inform the nation of Government’s wide ranging initiatives, plans, and pledges to develop and restructure the power and energy sector. It was pledged to generate additional 9,426 MW power by 2015 under immediate, short, medium, and long-term plans. During the last few years, the contribution of investment to  GDP became stagnant. The shortage of power and energy supply with respect to its growing demand was the prime cause of the investment-stagnancy, which impeded industrialisation and offered limited opportunity to create new employment. Realising this, the present Government has undertaken extensive measures to develop and revamp the power and energy sector. The Government has been working on a war footing to remove existing bottlenecks. Declaring power and energy as the emergency sector, the Government framed a new law titled ‘Quick Enhancement of Electricty and Energy Supply (Special Provision) Act 2010’ to expedite electricity production and bring electricity quickly to the door steps of the general masses.

1.2      The demand for electricity has been on the rise due to growing population and increasing economic activities. Even though the derated electricity generation capacity stands at 6,208 MW in 2011, there is a short-fall against the demand of 6,500 MW. This shortage was more acute in the past. The following figure shows the demand for electricity, derated capacity, and generation capacity during 2001 and 2011.

Figure 1: Electricity Demand and Production Trend 2001-2011

Source: Power Division

1.3     In 2003, nearly a total of 2,428 MW power was supplied against the demand of 3,944 MW. The slow progress of building power infrastructure between 2001 and 2008 has actually given rise to the current power deficit. In 2001, the capacity of electricity generation was 4,005 MW which was raised only to 5,262 MW in 2008. In other words, only 1,257 MW power was added to the national grid during 2001-08. Starting from a poor base, the present Government has undertaken a range of initiatives to generate 20,000 MW by 2020 in line with the pledges made in the ‘Vision 2021’.

1.4     The development of any sector is a continuous, dynamic and multi-dimensional process. It is necessary to change required plans and strategies to adjust with this process. Therefore, a number of addition, revision, and extension have been made in the roadmap outlined last year. Moreover, a range of new initiatives to generate power  have been taken up. As many new independent power producers have shown their interest in electricity production, a revised target of additional 12,473 MW (instead of 9,426 MW) by 2015 has been fixed together with adoption of different new programme. Installation of quick rental power plants, repairing and restructuring existing power plants and improvement of electricity demand management aimed at rapid enhancement of electricity generation capacity were several initiatives to add 1,556 MW to the national grid in the meantime (Appendix 1). To reduce production cost and ensure sustainable electricity production, the Government has adopted a policy-strategy of discontinuing the expansion of quick rental power plants and opted for installation of long-term power plants by the private sector. Due to the shortage of natural gas supply, expected electricity production is being hampered. In order to increase the supply of natural gas, steps have been taken under medium and long term plans to increase additional 2600 MMCFD (million cube feet per day) of gas by 2015 through national and international gas companies. In the last one year, additional 114 MMCFD of gas has been added to the national grid. The Government has also undertaken measures to import liquefied petroleum gas (LPG) and liquid natural gas (LNG) to reduce dependence on natural gas for electricity production and to increase diversity in the fuel mix. It has also been planned to generate 500 MW electricity by 2015 using renewable, in particular, solar energy source. Meanwhile, about 55 MW electricity is being produced from renewable energy sources. In order to inform the nation of the achievements, revised plans and policy strategies, this update of the roadmap outlined in the previous year’s budget, has been prepared.

Power Sector

2.1                        Reducing Power Shortage: Achievements in Last One Year

The Government has taken up immediate, short, medium, and long term plans for overall and balanced development of the power sector and increased electricity production. The implementation period of the immediate plan was over in December 2010. It has been gained significant progress in the power sector as an outcome of this planned intervention (a summary is enclosed in Appendix 2). The progress made in the power sector as well as the issues of bringing related services to the doorsteps of people can be explained in three ways. They are: per capita electricity consumption, electricity coverage, and enhancement of electricity production capacity and the reduction in load-shedding. In addition, higher level of electricity supply in manufacturing and agriculture sectors also indicates the progress in the power sector.

2.2                        Per Capita Electricity Consumption: The Extent of Increase

The progress in per capita electricity consumption cannot be significant if population grows faster. The per capita electricity use was 220 KWH in April 2010, which has been raised up to 236 KWH (7.2 percent growth) by now as the present Government took a number of immediate measures.

2.3                        Access to Electricity: The Extent of Expansion

The Government has taken up a number of programmes to bring the whole population under electricity coverage by 2021. By implementing various development programmes 49 percent of the total population has been brought under electricity coverage by April 2011. It was 47 percent in April 2010. Electricity production under solar energy and bio-mass has been enhanced by means of individual and collective efforts in rural and sub-urban areas. Thus, overall electricity supply in the rural areas has increased, with the combination of supply from the national grid and the renewable energy sources.

2.4                        Enhancement of Electricity Generation Capacity, Load Shedding and Supply: The Extent of Change

The derated production capacity in April 2010 was 5376 MW. During April 2010- April 2011, new power plants of 912 MW capacity have been set up. Of late, the derated generation capacity has reached 6,208 MW as the generation capacity of a few old power plants have declined. As a result, the amount of load-shedding has also been reduced. Average daily load shedding of 1200-1500 MW in April 2010 has been reduced to 1000-1200 MW. Besides, the number of electricity connections for manufacturing units and irrigation were 129,218 and 149,581 respectively in April 2010, which has been increased to 133,000 and 2,41,000 respectively in April 2011.

2.5                        Power Sector: Updated Comparative Data

Source: Power Division

As many power plants are old and retiring, increased electricity production has become challenging. However, electricity production capacity has turned out to be more than the demand created during April 2010-April 2011. Accordingly, the amount of load shedding also decreased. In 2010, daily electric production was 500-800 MW less than  the capacity due to shortage of gas supply, which has now come down to 400-800MW. Apart from this, on account of repairs and maintenance another 800-1200MW cannot be produced. However, the process for recruitment of consultants is underway to carry out required maintenance work. Meanwhile, the maintenance work of the projects (4 and 5 unit of Karnafuli Water Development Plant, Khulna 60 MW Thermal Power Plant, Bheramara Power Plant Unit-1, Shahjibajar 20 MW Unit 5 & 6) have been completed.

2.6            Electricity Production Structure: The Evolution

Government power plants used to monopolise electricity production in Bangladesh. In April 2010, about 60 percent of total electricity production used to be generated by the government power plants; of which, BPDB’s share was 76 percent. A competitive market environment has been created in electricity generation by reducing dependence on public sector power plants as well as BPDB. Of late, nearly 56 percent of total  electricity  production  originates  from  public  sector  power  plants,  whereas   the private sector provides the rest 44 percent. By 2016, the private sector is expected to take the lead and generate nearly 58 percent of the total electricity produced. The statistics on electricity production under private and public sector are given in Table 1 and shown in Figures 2, 3, and 4.

Table 1: Electricity Produced in Public and Private Sector: A Comparison

Source: Power Division

Figure 2: Electricity Production in Private and Public sector, April 2011

Figure 3: Electricity Production

in     Private      and     Public Sector, April 2010

1  Bangladesh Power Development Board;

2  Ashuganj Power Station Company Limited

3  Electricity Generation Company of Bangladesh

4  Independent Power Producer

5  Rural Electrification Board

Figure 4: Projection of Electricity Production in Private and Public Sector in 2016

2.7             Use of Different Types of Energy: Energy Diversification and Change in Policy Strategies

In 2010, due to shortage of gas supply approximately 500-800 MW electricity could not be produced. In this context, it has been planned to reduce over-dependence on natural gas and to increase use of diesel, furnace oil and coal for electricity generation. Besides, importance is also given to generate electricity from renewable energy. Meanwhile, the Government has planned to generate electricity using nuclear energy and increase electricity supply through greater regional cooperation. While 89 percent of total electricity used to be generated by natural gas in 2010, it now stands at 83 percent.

Table2:   Different    Fuel    Use    for Electricity (% share)

Figure 5: Electricity production from Different Fuel Sources

Source: Power Division

3.1            Action Plan (2010-2015): Achievement

Plan for power sector for the period from 2010 to 2015 were outlined in the previous roadmap on revamping the power and energy sector. It was planned that additional 9426 MW will be added to the national grid of which 1800-2000 MW will be added in 2010 and 920 MW in 2011. In the meantime, considering the progress of the programme undertaken and their achievements, the Government has decided to amend  the previous plans. Besides, positive response from the private sector also bolsters the rationale for change. According to new plan, targets for additional 12473 MW by 2015 and 15273 MW by 2016 have been set up, of which 775 MW was to be added in 2010, while 2194 MW in 2011. Under this plan, imported 500 MW electricity will be added to the national grid by 2013. The comparative scenario of the stated plan is presented in the following table:

Table 3: A Comparative Picture of Electricity Production Plan

Source: Power Division

3.2                        Initiatives Under Different Tenure: Achievements and Changed Strategy

In consideration of the financing mode, demand for electricity and energy-mix,  the Government has undertaken immediate, short, medium, and long term plans for  power sector development. The response from the private sector, dearth in energy supply, the changed scenario in domestic and international energy market and, achievements already made have compelled us to revise and refine previous plans. Achievements made so far and implementation progresses are outlined as follows:

7

3.2.1                 Immediate: Achievements So Far

In order meet the shortage of electricity within 6 to 12 months an action plan was worked out to set rental and quick rental power plants. An additional 1800 MW  electricity was planned to be added to the national grid between March 2010 to March 2011. Some of the power plants were scheduled to come into generation in 2010. However, because of the realities at hand, the generation programmes of these plants  have been shifted to 2011. According to plans an additional 775 MW electricity has been added to the national grid by April 2010 to December 2010. The details are in the following table:

Table 4: The Implementation Action plan of Various programmes by 2010

Source: Power Division

8

3.2.2                 Short Term: Achievements and Revised Plan

During January 2011-December 2011, a total of 920MW power was planned to add to the national grid under the short term plan. Revising the plan, by December 2011 nearly 2194 MW additional electricity is planned to be added by installing 11 public power plants and 16 private power plants. Out of this, 425 MW electricity has been added to the national grid by April, 2011. The plan for power supply and implementation status by December 2011 is outlined in the following table.

Table 5: Implementation Plan of Various Programmes by 2011

3⎯                                                                 9

6  Rural Power Company Limited

Source: Power Division

3.2.3                 Medium Term: Revised Plan

In the medium term, it was planned to set up power plants generating 2269 MW  in 2012, 1675 MW in 2013, 1170 MW in 2014, in total 5114 MW. The revised plan is targeted to generate 2157 MW in 2012, 2674 MW in 2013 (500MW electricity import), 2323 MW in 2014, in totaling 7154 MW. The medium term plan with implementation progress is given in the following table.

Table 6: Time-bound Plan of Various Programmes to be Implemented By 2012

7 North West Power Generation Company

8 Preliminary Development Project Proposal

9  Independent Power Producer

10 Pre-qualification

11  Request for Proposal

Source: Bangladesh Power Development Board

Table 7: List of Different Projects to be Implemented By 2013

Source: Bangladesh Power Development Board

12  Letter of Intent

4⎯                                                                17

Table 8: List of Different Projects to be Implemented By 2014

Source: Bangladesh Power Development Board

3.2.4                 Long-term: Electricity for All

The Government has taken steps to install new power plants having generation capacities of 2350 MW in 2015, 2800 MW in 2016 and 12450 MW between 2015 and 2020 to ensure electricity for all by 2021. Tables 9 to 14 depict the long term plans that have been taken by the Government:

Table 9: List of Different Projects to be Implemented By 2015

Source: Bangladesh Power Development Board

Table 10: List of Different Projects to be Implemented By 2016

Source: Bangladesh Power Development Board

Table 11: List of Different Projects to be Implemented By 2017

Source: Bangladesh Power Development Board

Table 12: List of Different Projects to be Implemented By 2018

Source: Bangladesh Power Development Board

Table 13: List of Different Projects to be Implemented By 2019

Source: Bangladesh Power Development Board

Table 14: List of Different Projects to be Implemented By 2020

Source: Bangladesh Power Development Board

3.3                        Import of Electricity and Regional Co-operation: Latest Position

According to the bilateral decisions taken at the Prime Ministers’ level meeting between India and Bangladesh, the Government has begun implementation of ‘Regional Grid Interconnection’ by installing 400 KV transmission line and HVDC (High Voltage Direct Current) Power sub-station to import 500 MW of electricity from India. In the meantime, the Indian Government has made a commitment to supply 250 MW of low- priced electricity from their ‘Unallocated Resource’ and informed that Bangladesh can import extra 250 MW of electricity from Indian’s ‘Power Pool’. Besides, steps have been taken to import hydro-electricity from Myanmar, Nepal, Bhutan and North-East India.

3.3.1           Import of Electricity from India and Establishing Joint-Venture Power Plant

Bangladesh and India has signed a Memorandum of Understanding (MoU) on January 11, 2010 to enhance cooperation in power sector. The areas emphasised in the MoU are electricity generation, transmission, increase in energy efficiency, development of different sources of renewable energy, installation of regional gridline, delivery of consultant services, human resources development, exchange of electricity and joint venture in power sector. Under this one, another MoU has been signed on August 30, 2010 between Bangladesh Power Development Board (BPDB) and Indian National Thermal Power Company (NTPC) to install power station. An initiative has been taken to install an imported coal-based power station with installation capacity of 1320 MW electricity jointly by BPDB and NTPC. For this purpose, 2300 acres of land are being acquired close to the Mongla Sea Port and a feasibility study has been underway. A ‘Joint Venture Agreement’ is to be finalized to confirm the installation of the proposed power station jointly by BPDB and NTPC. The agreement is expected to be signed soon. The proposed power station will be equally owned by both the BPDB and NTPC. It is expected that this power station would be able to supply electricity to the National Grid by 2013.

23

3.3.2                 Import of Electricity from Myanmar

There is a plan to import 500 MW of hydro-electricity from a hydro power plant located at Lemro river of Rakhain state, Myanmar. For this purpose, a MoU has been signed between the governments of Bangladesh and Myanmar. It is expected that by  2018 the proposed 500MW of electricity would be imported through successful regional cooperation.

3.4                        Power Tariff: Change in Rate and Policy

3.3.1    BPDB incurs its own cost of production for electricity. It also purchases  electricity as a single buyer from IPPs, RPCL, Rental Power Plants, EGCB and Ashugonj Power Station Company Limited. BPDB is selling electricity to the bulk consumers (DPDC, DESCO, OJOPADICO and REB) and retail consumers under it’s distribution area at the tariff rate fixed by the Government. Due to the increasing demand for electricity, BPDB has taken steps to install new power plants and to purchase electricity from Rental and IPP to meet up emergency demand. BPDB’s per unit cost of purchasing electricity during 2009-10 was TK. 2.62, which increased to TK.4.05 in 2010-11.

3.3.2    As the selling price of electricity has not increased over the year compared to the supply cost, the government has provided BPDB with loans of TK.100 crores in every two months during 2006-07, TK. 600 crore in each year during 2007-09 and TK. 394 crore during 2009-10 to purchase rental electricity. Considering the supply cost of electricity based on estimated cost of electricity supply in 2010, a proposal for increasing the rate of bulk tariff has been sent to the Bangladesh Energy Regulatory Commission to reduce the losses of BPDB.

3.3.3    At the moment, electricity deficit is the main obstacle to development in Bangladesh. Though it is expensive, Government is trying to reduce electricity shortage by installing rental power stations. The Government’s subsidy in this sector is increasing with increasing generation of electricity. Government is planning to introduce an acceptable tariff rate by 2015 to bring down subsidy to a reasonable level. In the mean time, the bulk price of per unit electricity has been increased from TK. 2.37 to TK. 2.61 on February 2011.

3.4                        Transmission and Distribution:  Achievement and Workplan

3.4.1    A huge development plan has been taken up to ensure quality and uninterrupted power supply with production increases to resolve the problems of electricity. At the moment, there is 2,647.3 circuit km 230 KV line and 5,833 circuit km 130KB line in the country. Besides, from April 2010 to April 2011, distribution line has been expanded  from 2,66,460 km to 2,70,000 km.

24

Table 15: Comparative Scenario of Power Transmission and Distribution

Source: Power Division

Figure 6: Progress in Distribution Line April 2010 to April 2011

Figure 7: Progress in Non-household Connection April 2010 to April 2011

Figure 8: Progress in Household Connection : April 2010 to April 2011

5⎯                                                                25

3.4.2    In order to implement the time-based workplan for electricity generation the Government has taken steps to install PGCB transmission lines and substations so that generated electricity can transmit from the power station to the load centres at different voltage level. Some of important transmission projects are presented below:

Table 16: Probable Projects for Transmission

Source: Bangladesh Power Development Board

13 Expression of Interest

14 Mega-Volt Ampere

3.5                        Electricity Conservation Programme: Which Way

Increasing electricity supply is not the only solution to the electricity problem. It is also important to put emphasise on electricity demand management in reducing electricity supply cost, protecting environment and controlling unnecessary use of electricity. Incompetitive electricity price increases subsidy and also fail to motivate users to make the optimum utilization of electricity. Considering this, Government has taken power saving initiatives through electricity demand management including electricity production. At the same time, electricity audit is being emphasised to ensure efficient use of electricity. Under load management the following initiatives are taken to conserve electricity and ensure its efficient use:

4.0       Year-wise Probable Electricity Demand and Supply: An Update

4.1    With the pace of economic development, the use of electricity increases in industrial, agricultural and other sectors. Similarly, with an increase in purchasing-power, the domestic demand for electricity and consumption of electricity also increases. The population growth is also an important factor for increasing electricity consumption. In other words, increase in demand for electricity and consumption of electricity are the indication of continuous development. However, it is important to control electricity misuse to ensure electricity savings, efficient use of electricity and effective use of resources that are allocated to the power sector. Unplanned urbanisation and rural  housing increase the demand for electricity and reduce the effectiveness of electrification as well.

4.2    In the absence of proper and timely repair and over-hauling, the productivity of old power plants is diminishing quickly. As well as, like other machinery, all the power plants depreciate over time. Besides, after a certain time-period some of the power plants are put on retirement which reduces the power generation capacity. Therefore, increased power generation would call for addressing the challenge of decreasing production capacity. The following list endorses all the power stations that will retire between 2011 and 2015:

Table 17: Retirement of Power Plant

Source: Bangladesh Power Development Board

Graph 9: Statistics of Year-wise Capacity Retirement

4.3    In the wake of economic development, the demand for electricity is increasing at  a high rate. A 12 percent annual increase of demand for electricity has also been  projected in the Power Sector Master Plan. Accordingly, the demand for electricity has been estimated (in terms of demand management) to be 6500 megawatt by 2011. While the demand for electricity is increasing, the production capacity of existing power  stations is falling. In spite of the existing gap between the demand for and the supply of electricity, it is projected that Bangladesh will be a power surplus country by 2012. The potential deficit/surplus of electricity during 2011 to 2016 is shown below:

Graph 10: Probable Power Shortage/Surplus (2011-2016)

Source: Power Division

Table 18: Year-wise Projected Power Demand and Supply

Source: Power Division

5.0 Challenges of Power Sector Development

According to plan, in order to implement different projects in power sector, multifaceted challenges are being met. To face these challenges, lots of changes have been brought in the existing policies and strategies including enacting new laws and amending existing ones. Despite these steps, to face the remaining challenges,  appropriate and transparent steps will have to be taken quickly. Major challenges are mentioned below:

6.0       Uninterrupted Fuel Supply to Power Stations and Storage of Fuel

6.1     It is planned that Bangladesh Petroleum Corporation (BPC) will take necessary steps to refill the fuel of Peeking Power Stations in the government sector in due time on the basis of their storage capacity. Where railway communication is available, BPC will ensure fuel supply through railway. Moreover, where railway communication is not available, Bangladesh Petroleum Corporation (BPC) will supply fuel to the power  stations by tankers plying through the rivers under its own arrangement.

6.2     Moreover, it is worth mentioning that plans have already been made that some of IPP power plants can import necessary furnace oil and diesel directly from the overseas markets under own arrangement to produce electricity. Furthermore, in order to ensure

supply of fuel to the diesel and furnace oil based power stations to be installed in future, formation of a joint venture company under Public Private Partnership (PPP) to import fuel is under way.

6.3     Petro-bangla and its subsidiaries will take necessary steps to ensure supply of required quantity of domestic gas and coal to produce electricity both in public and private sectors.

7.0       Channeling Resources

7.1                        The Government has increased overtime the budget allocation to the power sector by identifying it as the most prioritised sector. With enhancement of budget allocation in this sector, the amount of subsidy has increased as well. Besides budget allocation, the Government has extended all kinds of supports to draw private investment and foreign  aid in this sector.

7.2                        In the FY 2011-12, the allocation (Tk.7152 crore) for the development of power sector is approximately 209 percent higher than that (Tk.2308 crore) of the FY 2008-09. On the other hand, the amount of subsidy (Tk. 5200 crore) in power sector during FY 2011-12 is 423 percent higher than that (Tk. 994 crore) of FY 2009-10. From FY 2009-2010 to FY 2011-12, the amount of government allocation in this sector has increased at a higher rate as percentage of GDP, total budget and total development budget.

Table 19 : Allocation of Resources in Power Sector (In crore TK.)

Source: Finance Division

Graph 11: Statistics of Resources Allocation in Power Sector

7.3                        A major share of the total allocation for power sector is spent for importing materials from abroad. It affects foreign exchange reserve adversely. Along with the enhancement of efficiency and effectiveness of power sector, more emphasis should be given on rational price determination of electricity to control rising trend of government subsidy. It will require a total investment of US$17,000 million to install all the planned power stations by 2016. It has been estimated that at least 59 percent of the required investment or US$ 10,000 million will come from the private sector. On the other hand,  to implement the plan successfully, it is projected that a total investment of US$ 23000 million will be required in this sector by 2020.

Energy Sector

8.0  The 6th  five year plan is targeting for high economic development. The energy   sector will have a key role in attaining this target. However, our existing energy infrastructure is far from sufficient to meet the increasing demand for power generation. This in turn adversely affects employment generation by impeding development activities. Realising the necessity of meetings the energy demand, the  present Government has declared energy as an emergency sector.

9.1                        Current Status of Energy Sector: The Evolution

At present, Bangladesh receives energy supply both from renewable and non-renewable sources. In 2009, natural gas accounted for 50 percent of total energy supply, which declined to 46 percent in 2010. Contribution of bio-mass to total energy supply increased from 33.3 percent to 34.6 percent during this period. It may be mentioned that, use of oil as energy has increased significantly during this time. In 2009, oil represented 11.1 percent of total energy supply, which increased to 18.3 percent in 2010. The trend of annual energy consumption is presented below:

Figure 12: Annual Energy Consumption Trend

Source: Ministry of Power, Energy and Mineral Resources

9.2                        Non-Renewable Energy: Revised Policy-Strategy

The proven reserve of natural gas which is the principal source of non-renewable energy of the country is gradually depleting. The supply of natural gas as a primary source of energy will be dried out soon if appropriate steps are not taken for exploration of new gas fields and their development. Considering this, the Government has taken steps to increase the diversification of non-renewable energy sources. As availability of gas is not directly related to the initiatives taken in this field, the Government has taken a range of steps to diversify energy sources. As part of this, the Government has given importance  to import of LNG (Liquid Natural Gas) alongside gas, oil, coal, CNG (Compressed Natural Gas) and LPG (Liquefied Petroleum Gas).

34

9.3                        Renewable Energy: Recent Progress on Policy

Bangladesh is considered as a country at high risk from the negative impacts of global warming. In order to reduce dependence on fossil fuel and to explore renewable energy sources in addition to generating power from commercial sources, the Government has formulated ‘Renewable Energy Policy 2010’ for the generation of environment-friendly power from renewable energy sources. A plan has been adopted to generate 500 MW power from renewable energy sources by 2015. The main sources of renewable energy in Bangladesh are solar PV (photovoltaic), wind power and biogas.

10.                        Natural Gas: Achievement in Last One Year

The major source of our primary energy is natural gas. Almost three-fourths of the total commercial energy demand is met from natural gas. It is, therefore, considered as one of the driving forces of the economy. As many as 23 gas fields have been discovered since 1955 when the first gas field was found in Sylhet.

10.1                   Existing Reserve and Production Levels of Natural Gas: A Comparative Scenario

The daily production of gas was 1750 MMCF at the time of assumption of office by the present Government. Now, the production has increased to 2035 MMCF. The updated comparative scenario of natural gas during 2010 and 2011 is presented in the following table:

Table 20: The Current Comparative Scenario of Natural Gas

Source: Energy and Mineral Resources Division

10.2                   Consumption and Demand of Natural Gas: An Update

10.2.1 The supply of gas has been scaled up in the generation of electricity. In 2009, 55 percent of total extracted gas used to be consumed for electricity generation, now that has increased to 56 percent. The volume  of gas that was supplied to the power sector in  2009, has been increased by 10 percent in 2010. At the same time, the use of gas has increased by 1 percent in each of the industry, CNG and household sector separately, even though it has declined by 3 percent in the fertilizer industry.

Figure 13: Sectoral Use of Gas in

Percent, 2009

Figure 14: Sectoral Use of Gas in

Percent, 2010

Source: Energy and Mineral Resources Division         Source: Energy and Mineral Resources Division

10.2.2 In the last six years, the gas use rate has been the highest in the CNG sector. However, over the last two years, it has been increasing at a lower rate. In the power sector, it increased at a higher rate during 2008 to 2010. In recent years, though gas use was increasing at a decelerated rate in the captive electricity generation , the rate is higher than that of the power sector. Sector-wise annual average growth of gas use is shown in the figure below:

Figure 15: Sector- wise Annual Average Growth Rate of Use of Gas in the Country from 2005 to 2010

Source: Ministry of Power, Energy and Mineral Resources

10.2.3. Considering the average rate of consumption of gas in the country for the last 6 years and implementation of the target of producing 17,649 MW new electricity by 2016 in line with the Vision 2021, a projection has been made on the sectorwise annual  demand of gas from 2010 to 2016. It may be noted that this projection is identical to the projection included in the booklet which was presented along with the previous year’s budget under the title “Towards Revamping Power and Energy Sector: A Road Map”. The projection for probable demand of gas up to 2016 is shown in the table below:

Table 21:  Sectorwise Gas Demand Projection

(Billion Cubic Feet)

Source: Energy and Mineral Resources Division

* Information of 2015-16 has been estimated on the basis of average growth during 2010-15

Figure 16: Projection of Annual Gas Demand (2009-10 to 2015-16)

Source: Energy and Mineral Resources Division

10.3                   Supply and Shortage of Gas:  Overall Situation

Against an average annual demand for 872 BCF of gas, currently, only 742 BCF is being supplied from 79 wells of the existing 17 gas fields. As a result, there exists a shortage of 130 BCF of gas annually. According to the projections shown in the table, the total annual demand for gas will stand at 1453 BCF in 2016. On the basis of existing reserves, if the daily supply of 2.034 BCF remains unchanged, there may arise a shortage of 1.946 BCF of gas in 2016. Therefore, importance must be given to diversify the sources of fuels in lieu of depending on the existing reserves to meet the projected demand for gas.

10.4                   Development Plan for Natural Gas Sector: Achievements and Revised Plan

By settling the existing critical situation prevailing in gas sector, the Government has identified the power and energy sector as the top priority sector in order to ensure the long term energy security and make the supply of natural gas easily available. The salient features of the planned policy strategy of government in overcoming the energy shortage are as follows:

10.5          Achievements in the Gas Sector in Last Year

After assumption of power, the present Government, emphasizing the exploration of new gas fields and extraction and distribution of gas, has drawn up short, medium and long term plans. Under the short term plan, production of 158 MMCFD gas was  targeted

by December 2010 from 9 gas fields but 63 MMCFD gas from the Sylhet-7, Habiganj-11, Titas-12 and Meghna-1 was produced and supplied to the nationa1grid. Additional 51 MMCFD gas from some other wells, not under this plan, was supplied to the national grid. A total of 114 MMCFD gas was added to the national grid by December 2010. The description of completed programmes up to December 2010 is given in the table below:

Table 22:  Short Term Plan Completed by December 2010

Source: Energy and Mineral Resources Division

11.0     Medium Term Plan (to be Completed by June 2013): Revised picture

An addition of 1085 MMCFD gas to the national grid under medium term plan was declared in the last year booklet. Out of nine, under short term plan, four projects were implemented within the stipulated time (Table 22). The remaining projects have been planned to implement in the medium term. In last year’s roadmap, it was decided that under medium term additional 300 MMCFD of gas would be supplied to the national grid by the international oil companies. In the medium term, supply of additional 1000 MMCFD of gas to the national grid by the international oil companies has been targeted in the revised plan. It is worth-mentioning that enhancing the production capacity of the national gas companies under Fast Track Programme and increasing gas by importing supply LNG have remained unchanged. Under the revised medium term plan, an addition of 1920 MMCF gas to the national grid is possible as shown in Table 23 below:

15 Million Cubic Feet Per Day 16 Sylhet Gas Field Limited

17 Bangladesh Gas Field Company Limited

Table: 23 Medium Term Plan to be Completed by June 2013

Source: Energy and Mineral Resources Division

11.1                   Actions taken

11.1.1            National Gas Companies

Actions have been taken to supply 190 MMCFD of gas to the national grid by drilling 10 development/workover wells at Semutang, Fenchugonj, Salda, Shabazpur, Titas, and Bakhrabad gas fields. Sites have been selected for drilling exploration wells by seismic survey and data analysis at Sundalpur, Srikail, Kapasia, Sunetra and Mobarakpur. Exploring 95 MMCF gas daily from these wells has been targeted. Considering the increasing demand for gas, a Fast Track Programme has been initiated on an emergency basis to augment gas production. Under this programme, actions have been taken to drill four development wells in Titas and one in Rashidpur Gas fields and workover of one existing well to add 135 MMCF gas to the national grid. Under the same programme,

identification of drilling sites has been initiated for collection, processing and analyzing  of data by 2-D18 seismic survey of PSC-excluded 3100 line kilometer. If successful, these programmes are expected to increase gas reserves and augment the production of gas as well.

11.1.2         International Oil Companies

Target has been set to supply 1000 MMCFD of gas to the national grid by Chevron under PSC through drilling of 9 development wells in Moulvibazar, 3 in Jalalabad and 6 in Bibiyana gas field.

12.0 Long Term Plan (to be completed by December 2015): Changes So Far

According to the long term plan as envisaged in the document titled “Towards Revamping Power and Energy Sector: A Road Map”, it was planned to add 1080 MMCFD of gas to the national grid. Of which, additional 180 MMCFD was to be produced by national companies through drilling and development of exploration wells and another 900 MMCFD to be added by international oil companies by December 2015. However, under the revised long term plan, through drilling and development of exploration wells additional 180 MMCFD of gas is planned to be produced by national companies and 500 MMCFD by international oil companies totaling 680 MMCFD which will be added to the national grid by December 2015. It may be mentioned here that the two Bibiyana and Jalalabad gas development programs included in the last year’s road map being implemented by the international companies have been shifted to the medium term plan. Details of the changed long term plan are furnished below:

18 Two Dimensional

7⎯                                                                 41

Table 24: Long Term Plan to be Completed by December 2015

Source: Energy and Mineral Resources Division

12.1                   Actions Taken

12.1.1                  National Gas Company

Steps have been taken to supply 180 MMCFD of gas to the national grid through drilling of 9 development wells of which 5 are in Sylhet, Kailashtila and Rashidpur gas fields, and the rest 4 are in Titas gas field.

13.1                   New Initiatives in Gas Sector in Last One Year

The Government has taken several key steps towards development of gas sector, which are as follows:

•       Installation of Compressor :

In order to ensure necessary supply of gas as well as stabilize the high pressures in the gas pipes, steps have been taken to install three compressor stations at Muchai, Ashuganj and Elenga. Installation of compressor at Muchai will be completed by November, 2011. Installation of other two compressors will be completed by December, 2012.

•       International  Cooperation :

In a bid to install two compressor stations at two places of Bangladesh and for the sustainable development of gas sector with a view to increase gas supply of the country, a Memorandum of Understanding (MOU) with Russia will be signed soon.

•       2-D and 3-D Seismic Survey:

Programmes have been undertaken to assess and re-evaluate gas reserve in prospective/potential areas of the country through 2-D and 3-D seismic surveys.

a)  3-D Seismic Survey:

3-D seismic survey of 3 (three) gas fields i.e, Rashidpur, Kailashtilla and Sylhet gas field covering an area of 705 sq.km has already been completed. On the other hand, 3-D seismic survey in Bakhrabad and Titas gas field covering 545 sq.km area will be completed by June 2012.

b)  2-D Seismic Survey:

2-D seismic survey has already been completed in the prospective areas of  Sunetra and Rupganj covering 542 Line kilometers. On the other hand, 210 Line Kilometers of 2-D seismic survey will be completed in Bajitpur. Further, about 80 Line Kilometers of 2-D seismic survey in Modon and Salda will be completed by 2015.

Table 25: 2-D & 3-D Seismic Survey Plan at a Glance

Source: Energy and Mineral Resources Division

•       Exploring New Gas Structure:

In recent months, BAPEX has identified a potential gas structure at Sunetra region spreading over Sunamganj and Netrokona districts by conducting 2-D seismic survey. The data indicates evidence of significant gas reserve in the said structure. In order to start exploration activities by October 2011, BAPEX is carrying out land acquisition, development of infrastructure and other relevant activities.

•       Gas Development Fund

The Government has formed a Gas Development Fund (GDF) to finance the development projects of gas sector. The aim of forming this fund is to minimize foreign investment in gas sector and to maximize the financial capacity of domestic gas companies. So far, Finance Division has allocated an amount of Tk.255 crore to this fund.

Table 26: Proposed Projects for Implementation by GDF

Source: Energy and Mineral Resources Division

•       Installation of Pre-paid Meter

In order to rationalize the use of gas in the domestic sector, installation of Pre-paid Metering System has been completed at the cost of Tk. 6.71 crore by Titas Gas Transmission and Distribution Company. The production and installation of those  prepaid meters are being completed under the technical assistance of BUET.

14.0      Necessary Steps ot be Taken to Increase Gas Supply

Though by implementing the above mentioned plans, projected additional gas could be added to the national grid it would by no means meet the full demand for gas. In this context, apart from implementing short, medium and long term plans taken by the Government, the following steps need to be taken to increase gas supply:

15.1                   Import of Liquefied Natural Gas: A New Endeavour

15.2                   To reduce the intensity of gas crisis as well as to meet the increasing energy demand, the Government has taken steps to import 500 MMCFD LNG. An MOU has already been signed with Qatar to Import LNG. A site has been selected for installation of a floating LNG storage station at Moheshkhali of Cox’s Bazar. The recruitment of consultant is underway.

15.3                   The construction of about 95 km long pipeline from Moheshkhali to Anwara for LNG transmission is under way. The process of land acquisition for the proposed pipeline is duly progressing. Both the LNG terminal and pipeline are expected to be completed by March 2013. Following actions will be taken to mitigate the intensity of gas shortage by LNG import:

16.1                   Coal: Trend of Progress

Our coal resource has unlimited potential for the diversification of energy sources in the country. The proper utilization of extracted coal can be ensured by establishing coal-based power plants as well as using coal as a source of energy in the manufacturing industries. It should be noted here that the coal available in Bangladesh is considered to be of high quality for its high level heat generation capacity.

16.2                   Coal: Reserve and Consumption

16.2.1   High quality bituminous coal mines have been discovered at Khalashpir of Rangpur, Boropukuria, Fhulbari and Jamalganj of Joypurhat in the north-western zone of the country. The total reserve is around 2797 million tonnes and the heat generation capacity is equivalent to about 37 TCF of gas. There is ample scope of discovering additional coal mines if extensive exploration initiatives are undertaken all over the country. The existing coal reserves of the 5 coal mines of the country are shown below:

Table 27: Coal Reserves of Five Coal Mines

Source: Energy and Mineral Resources Division

16.2.2   Of the 5 coal mines, Boropukuria in Dinajpur has begun commercial production from September, 2005 by using underground mining method with an annual extraction target of 10 lakh metric tones. A 250 MW power plant operates by using the coal of Boropukuria and produces electricity which is supplied to the National Grid. This plant utilizes 2500 metric tonnes of coal per day extracted from Boropukuria coal mine.

19  Geological Survey of Bangladesh

16.3                   Steps To Be Taken To Tackle The Problems of The Coal Sector

16.3.1   Although Bangladesh has substantial deposit of quality coal, there is a concern about the method of extraction as well as the technological security. Experts recommend that the quick resolution of energy problems lies on coal import. In order to solve the problems, the Government needs to do the following:

16.2.2 The plan outlined in the last year’s Roadmap still remains unchanged. Substantial progress could not be made in the formulation of coal import policy and coal policy. However, the formulation of coal policy is at final stage now.

17.0 Liquefied Petroleum Gas (LPG): Trends of Import

Currently, the Government- owned companies are importing about 17,000 MT of LPG per year while the private companies are importing about 60,000 MT against the demand for about 3,00,000 MT of LPG. Demand for LPG is on the rise. The Government is also pledge-bound to promote the use of LPG in view of the deposit of natural gas and the inadequacy of gas supply for domestic use. It is important to meet the demand for fuel wood and kerosene oil by using LPG. The Government has therefore, taken a range of steps to reduce the price of LPG cylinder, and planned to establish 2 LPG bottling  plants

- one at Mongla, Bagerhat and the other at Kumira, Chittagong under public- private partnership. Each plant will produce about 1,00,000 MT of LPG per annum. Steps are being taken to reduce customs duties, VAT, etc on LPG Cylinder and accessories. Side  by side, there is an initiative to formulate a policy for fixing price of LPG.

Table 28: LPG Production in Public Sector at a Glance (2008-2011)

Source: Energy and Mineral Resources Division

18.1        Nuclear Energy

Attaching highest priority to the development of energy and power sector, the Government has taken an initiative to implement the Rooppur Nuclear Power Project, as  a project of national importance. At present, actions are underway on assessing the design parameter of nuclear power plant site and carrying out geophysical, geological, geotechnical and morphological study to install nuclear establishments under the project titled ‘Accomplishment of Essential Activities to Implement Rooppur Nuclear Power Plant’.

18.2  Challenges of Nuclear Energy Sector

There are several challenges in addressing the issues of meeting energy deficit  and ensuring energy security in the country which include interalia, the following:

19.1                   Production, Usage and Promotion of Renewable Energy and Energy Saving Actions

In order to scale down the level of reliance on natural gas and import-dependent oil, the Government has taken a number of steps to increase and develop environment- friendly renewable energy. Prioritized actions to be carried out to implement energy saving activities are as follows:

It is necessary to encourage the production and use of such energy from a source which is not harmful to environment.

19.2       Renewable Energy: Plans and Achievements

A target has been fixed in the Government declared energy policy to produce 500 MW electricity from renewable energy by 2015. Targets of power generation from renewable energy sources as fixed by the Government are presented in the table below:

Table 29: Targets of Electricity Generation by 2015 from Renewable Energy Sources and Achievements till Date

Source: Ministry of Power, Energy and Mineral Resources

19.3                      Government Initiatives:  IDCOL (Infrastructure Development Company Limited)

In order to encourage people to use renewable energy, IDCOL has taken a number of remarkable steps that includes: