Towards Revamping Power and Energy Sector: A Road Map

Finance Division Ministry of Finance

Government of the People's Republic of Bangladesh

Website: www.mof.gov.bd

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Index

Preface                                                                                                                        iv

1.0       Introduction and Background                                                                    1

Power Sector                                                                                                              3

2.0       Shortage of electricity                                                                                   3

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Energy Sector                                                                                                            21

9.0       Current Position of Energy Sector                                                              21

9.2       Non-renewable energy                                                                        22

9.4       Renewable Energy                                                                              22

10.0     Natural Gas                                                                                                   22

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List of Tables

1                               Per Capita Electricity Consumption 2009 (Kwh)                                            4

2                               Statistics of electricity produced by government and private sectors (2010) 5

3                               Rate of Use of different types of Energy in producing electricity                    7

4                               List of projects that will be implemented in 2010                                            10

5                               List of projects that will be implemented in 2011                                            11

6                               List of projects that will be implemented in 2012                                            12

7                               List of projects that will be implemented in 2013                                            13

8                               List of projects that will be implemented in 2014                                            14

9                               List of projects that will be implemented in 2015                                            14

10                          Possible important transmission projects                                                        17

11            Year wise power generation statistics                                                             17

12                          Year-wise Possible Power Demand and Supply                                             19

13                          Projected annual demand for Gas for different sectors                                    25

14                          Short Term Plan to be completed by December 2010                                     27

15                          Medium Term Plan to be completed by June 2013                                         28

16                          Long Term Plan to be completed by December 2015                                      30

17                          Coal Reserves of Five Coal Mines                                                                  32

List of Graphs

1                               Per Capita Electricity Consumption                                                                 4

2                               Electricity produced by government and private sectors                                  6

3                               Electricity produced by private producers                                                       6

4                               Electricity produced by the Government                                                         6

5                               Rate of electricity produced from different types of fuel                                 7

6                               Probable Power Shortage/ Surplus (2009-2015)                                            18

7                               Year-wise Possible Power Demand and Supply up to 2015                           19

8                               Annual Energy Consumption (2009)                                                              21

9                               Current Sectoral use of Gas in percent                                                            24

10                          Sector wise annual average growth rate of use of gas in the country              24

from 1991-2007

11                          Projection of Annual Gas Demand (2009-10 to 2014-15)                              25

Preface

"Vision-2021" of the Election Manifesto of the ruling party has inspired the entire nation towards fulfillment of a dream for a prosperous Bangladesh. This Vision consists of a number of innovative initiatives to lead the country towards higher economic growth. A commitment for achieving 8 percent growth in National Income by 2013, then raising it to 10 percent by 2017 and maintaining it there has been expressed. However, insufficient physical infrastructure facilities such as power and energy shortage are creating obstacles to reach this goal.

After assuming office, the present government has taken a number of steps to make the economic development plan more comprehensive, dynamic and pragmatic. Meanwhile, by revising the National Poverty Reduction Strategy-2, policy and strategy for rapid poverty alleviation have been made consistent with the Charter for Change. In addition, the Government is in the process of finalising of a ten-year long (2010-2021) Perspective Plan. And, to implement this plan, formulation of the Sixth Five-Year Plan (2011-2015) has also been taken up. Initiatives have been taken to enhance the period of Medium Term Budget Framework from 3 to 5 years.

In the past years, insufficient supply of power and energy impeded the achievement of higher growth in Bangladesh. Keeping this in view, the Government has identified power and energy sector as one of the five medium term priority sectors in the light of the Perspective Plan.

We assumed office at a time when the country was reeling from acute shortage of power and energy. The supply of power vis-a-vis demand is a disgraceful legacy of inefficiency and corruption of five long years and it is totally unacceptable. Gradual and fast development of this sector is a basic requirement for the economic progress of the nation. In order to improve the prevailing situation the Caretaker Government took some steps which we have continued without interruption. In order to meet the serious crisis of power shortage, from the outset, we have given the highest attention to attracting investment in the power and energy sector and increasing generation and distribution of Power risking substantial subsidy. I am confident that we shall be able to bring down this shortage problem to some tolerable level within a year and half and thus atone for the inherited sin of past inaction and negligence. In order to generate this additional power the Government has also taken various steps to develop the sources of primary energy. The coal fields will be exploited and developed. Import of Liquefied Natural Gas will be arranged. And existing gas fields will be developed and new exploration for Natural Gas will be intensified. Non-traditional sources and renewable energy sources will also be harnessed more.

At present, 47 percent of the entire population has access to power supply. The per capita power consumption is only 220 kwh in the country which is much lower than that of other developing countries of the world. Under the circumstances, Government has taken up plans to set up new power plants having 9364 MW capacity in the period

2011-15. Moreover, actions are being taken by the Government to formulate and implement new policies in order to explore alternative sources such as atomic power, solar energy, biodigestor and mini hydro power. I am hopeful that with the added power generation, we can meet the growing demand of electricity arising out of advancement of agriculture, industry and service sectors.

Energy and power are capital intensive sectors. Involvement of the private sector along with Government in this sector is the need of the hour. For this purpose, the present Government has already arranged several "road-shows" at home and abroad to attract private and foreign investment. An infrastructure investment fund has just been launched with a seed money of Tk.16000 million in order to attract domestic and foreign investors.

This booklet is an effort to make the nation aware of various immediate, medium term and long term steps taken by the Government in power and energy sectors. I am very pleased to place it before this august Parliament as part of budget presentation. I firmly believe that, with the efforts of the Government along with domestic and foreign entrepreneurs of private sector, development-partners and the people at large, development of the power and energy sector will accelerate. We do not want power and energy sector to create any impediment in the march of Bangladesh toward a peaceful, progressive and prosperous country.

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 worked relentlessly to prepare this booklet. I would like to express my deep gratitude to the Honourable Adviser for Power and Energy Dr. Toufique-E-Elahi Chowdhury, Bir Bikram and the Honourable State Minister for Power, Energy and Mineral Resources Mr. Muhammad Enamul Huq.

( Abul Maal A. Muhith ) Honourable Minister Ministry of Finance

Towards Revamping Power and Energy Sector: A Road Map

1.1         Introduction and Background

1.2           The present Government is committed to implement “Vision 2021” for building Bangladesh as a happy, prosperous country of medium income through maintaining macro economic stability and achieving rapid economic growth by 2021. In the outline of Bangladesh Perspective Plan (2010-2021) projections of raising the existing 6 percent growth rate of GDP to 10 percent by 2021 and increasing the per capita income of US$ 690 to around US$ 2000 have been set up. A prerequisite for achieving this growth is the ensuring of adequate investment in National Priority Sectors.

1.3       According to the Perspective Plan of the Government, a preliminary estimate of expected increase in investment in order to reach the projected GDP growth rate requires investment to be 32 percent of GDP by 2015 and 38 percent of GDP by 2021. Analyzing the investment situation of past years, it is observed that the contribution of public investment in the total investment has comparatively declined while the function of private sector has augmented. In the Fiscal year 2008-09, investment in public and private sector was respectively 19.6 and 4.6 percent of GDP. It is projected that this rate will increase to respectively 25.9 and 6.1 percent by 2015. The lion’s share of the mentioned investment will be achieved through Public-Private Partnership, Private Sector investment and Foreign Direct Investment. It need not be over emphasized that a strong infrastructure is necessary to attract private and foreign investment. The energy and power supply deficit in the existing infrastructure has become an impediment to achieve development goals. The Government is firm to create an investment-friendly atmosphere to attract private ventures according to the set target. The Government has given priority to infrastructure development especially in power and energy sector as means of attaining higher growth.

1.4      Currently, the shortage in electricity production is about 1500-1800 MW as per the demand of peak hours. As the concept of applying Energy Mix has not been given due consideration there is an overwhelming dependence on natural gas as primary fuel for power generation. At present, 88 percent of the power plants are run by   natural

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gas. Due to limited gas extraction, these power plants cannot generate enough power. Moreover, around 63 percent of total production comes from public sector while private enterprises contribution is inadequate. In addition, there are also problems relating to management of the growing demand. The Government has already adopted a comprehensive plan to resolve the prevailing difficulties. According to the plan, the shortage of electricity production will be overcome through PPP (Public Private Partnership) and private investment alongside government investment by 2012, and electricity for all will be ensured by 2021. Besides, use of coal and other fuels will be enhanced in order to reduce dependence on natural gas for power generation. The demand for electricity will also be addressed through the use of renewable energy and regional cooperation. Initiatives have been taken to bring qualitative change in demand side management and use of fuels in order to save power and energy. In future, such initiatives will continue and will be well-arrayed.

1.5     When the present Government assumed office, the power generation was 3525 MW which has now been increased to 4020 MW currently. The production capacity will be enhanced to 11,500 MW by 2015 and it requires USD 9.00 billion investment out of which USD 8.00 billion is expected to be provided by private sector. Development and investment in the power and energy sector is different from other sectors due to the sector specific characteristics. Huge primary asset accumulation and procurement are required for investment in the power and energy sector. Strategies have been made to meet this need by involving private sector with Government. Keeping this in view, the importance of external investment is infinite. On the other hand, consumer's economic consideration is given priority over commercial interests in price calculation of electricity, gas and other fuel oil. Efforts are continued to attract private ventures considering the risks in large primary investment and profit. However, estimation and reevaluation of power and other energy is required price is to be made more with commercial consideration in order to involve the private sector.

1.6   The existing problems and solutions in power and energy sector are enumerated in Bangladesh Perspective Plan outline (2010-2021). The total production of power is targeted at 8,500MW by 2013, 11,500MW by 2015 and 20,000MW by 2021. To reach these goals the Government has taken immediate, short, medium and long term work-plans for enhancing power generation in order to ensure overall and balanced development of this sector.

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1.7     A modest effort has been made through this brochure to reveal the adopted plans and their implementations by the persistent efforts of the Government in order to resolve the prevailing situation of power and energy sectors before the Nation through the Parliament. The power shortages in Bangladesh along with reasons for lower per capita electricity consumption compared to other developing countries have been analyzed in this pamphlet. At the same time, in order to overcome the problems of power sector after identifying those, the steps taken so far and steps to be taken are discussed here. Priority has been given to arrange enhanced power generation, renovate and extend the infrastructure facilities for transmission and distribution, attract investors through private sector and PPP initiatives, encourage the use of renewable energy, create multifarious fuels, demand side management etc. to the develop power sector. Besides, plans, targets and possible achievements of the Government concerning regional cooperation have been represented separately in this booklet.

Power Sector

2.1         Shortage of electricity

2.2         Shortage of electricity may be considered in two forms. Firstly, reviewing the scenario of per capita electricity consumption and percentage of population having access to electricity in Bangladesh compared to other countries and; secondly, determining gap between demand and supply of electricity in perspective of country's economic situation and GDP growth.

2.3           Per capita electricity consumption

2.4         While analyzing the cause of electricity shortage it transpires that, at present our per capita electricity production is only 220 kw/hour. From table 1 and chart 1 it is seen that comparing with the per capita electricity consumption of BRICS countries (Brazil, Russia, India, China, and South Africa) as well as SAARC (South Asian Association for Regional Cooperation) countries such as Pakistan, Srilanka the per capita consumption of Bangladesh is very low.

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Table 1: Per Capita Electricity Consumption             Figure 1: Per Capita Electricity2009 (Kwh)                                Consumption

3000.00

2500.00

2000.00

1500.00

1000.00

500.00

0.00

Source: CIA World Factbook, 2009

2.5          Access to Electricity

2.6         Only 47 percent of the total population has access to electricity. Presently (April 2010) the quantity of transmission and distribution line are respectively 8,359 Line Kilometer and 2,66,460 Line Kilometer. Besides the urban areas 53,281 villages have been brought under electricity coverage. In order to bring the total population under electricity coverage emphasis should be provided to produce electricity from renewable sources besides using non-renewable energy.

2.7          Projection of demand for electricity

2.8         One of the aspects to the demand for electricity is the tremendous rise of intensity of electricity use with the pace of economic development. In 1980, there was electricity demand of 30 Gigawatt (GW) per 1000 crore taka of GDP which increased into 80 GW in 2002. With an economic growth of 12 percent on an average the capacity for electricity generation should double every six years. Considering the projection of economic growth the generation of electricity should increase 4 times to 20,000 MW by 2021.

2.9          Power Sector: An update (April 2010)

Source: Power Division

2.10      Demand for electricity is increasing with the improvement of living standard, increase of agricultural production, development of industries as well as overall development of the country; but due to the failure in the last few years to increase electricity generation capacity proportionately to the demand, there exists 1500-1800 Megawatt electricity shortage at present. Especially a huge shortage exists during the evening peak demand. Due to the crisis of gas supply, lack of necessary maintenance and rehabilitation of old power plants, it is not possible to utilize the total installed capacity. The shortage of electricity can be from the load-shedding made during the peak demand (5800 MW) of summer which is about 1800 Megawatt each day.

2.11       Electricity  Generation Structure

2.12      Bangladesh Power Development Board (BPDB), Ashuganj Power Station Company Limited (APSCL), Electricity Generation Company of Bangladesh (EGCB) are producing electricity in the public sector. On the other hand, through IPP (Independent Power Producer) and through Rental electricity is produced in the private sector which is purchased by the Government at a fixed rate. Besides that big industries produce 1200 MW electricity for their own use from which additional 88 MW is supplied to the national grid. At present nearly 63 percent of total electricity production is produced from public entities. BPDB alone produces 46 percent of total electricity production. Statistics related to electricity generation from public and private sector is given in the following table 2 and Graph 2,3,4:

Table 2: Statistics of electricity produced by government and private sectors (2010)

Source: Power Division

1 Bangladesh Power Development Board

2 Ashuganj Power Station Company Limited

3 Electricity Generation Company of Bangladesh

4 Small Independent Power Producer

5 Rural Electrification Board

Figure 2: Electricity produced by government and private sectors 

2.13       Use of different types of energy

2.14       Natural Gas is used as primary energy in most of the existing power plants. 88 per cent of total electricity is produced from gas-based power plants. Besides gas, a small amount of electricity is produced using diesel, furnace oil and coal. In addition, almost 3 percent of total electricity is produced from Karnafuly Hydro Power Plant. Due to the increase of multiple use of gas in fertilizer, industries, factories and other sectors it is not possible to supply adequate quantity gas (extracted from the existing gas fields) to meet the demand of the power plants. Due to insufficiency of gas supply at present approximately 500MW less electricity is produced from existing power plants.

Table 3: Rate of Use of different types               

Figure 5: Rate of electricity producedof Energy in producing electricity from different types of fuel

Coal 4%

Hydro 3%

Diesel 2%

Furnace Oil 3% 

Gas 88%

Source: Power Division

2.15      From the above discussion it is evident that in the power sector the following issues are to be addressed with due importance at the moment:

2.16      The Perspective Plan of the Government and the Work Plan framed in according to the Perspective Plan towards mitigation of the above mentioned problems are discussed in the following chapters.

3.1          Power Sector in Outline Perspective Plan of Bangladesh

3.2          Following Vision for power sector development has been mentioned in the Outline Perspective Plan of Bangladesh (2010-2021):

Source: Outline Perspective Plan of Bangladesh (2010-2021)

3.3    There is a planning of the Government of achieving the following objectives for making the vision a reality:

3.4          The Following issues have been identified to reach the objectives

3.5         To address the issues the following constraints, possibilities and strategies are identified:

4.0      Work Plan (2010-2015)

4.1         Power Generation

4.2         In the Outline of Perspective Plan of Bangladesh, the main driving force for the Power sector would be the Public Private Partnership (PPP) initiative. Power sector is characterized by time consuming nature of raising fund and requirement of large scale initial investments. To address these limitations through PPP initiative, Independent Power Producer (IPP) policy has been formulated in 1996. Private sector has been drawn in to the power generation through IPP, SIPP, Rental, Quick Rental and Joint Venture policies under the PPP framework. In addition, Road-Shows have been organised in London on 15-16 December, 2009 and in Singapore and USA on 25-29 January, 2010. These initiatives have prompted a huge positive response from the foreign investors.

4.3         Under the yearly power generation plan, Government has taken initiatives to produce 792 MW by 2010, 920 MW by 2011, 2269 MW by 2012, 1675 MW by 2013, 1170 MW by 2014 and 2600 MW by 2015; in total 9426 MW of electricity. In addition to these, as large scale production plants requires 3-4 years of installation time, the Government has taken initiatives to set up 1000-1200 MW Quick Rental Power Stations which can produce electricity in the shortest possible time and help to reduce the power crisis in 2010 and 2011 to a tolerable level.

4.4          Time bound Work Plans

4.5         According to the Outline Perspective Plan of Bangladesh, the time bound work plans for power generation are as follows:

4.6          Immediate

4.7         Under the immediate plan, Quick Rental Stations will be established using liquid fuels and capable to produce electricity within 6-12 months. In the first phase, works are underway to set up plants with total capacity of 360 MW in three locations of the country which are expected to go into production by 2010. In addition, work is under way to set up quick rental power stations that can produce 1000-2000 MW in 2010 and by the first half of 2011 and another 432 MW from the private sector.

Table-4: List of projects that will be implemented in 2010

6 HFO: High Sulphur Furnace Oil

7 PDB: Power Development Board

8 EGCB: Electricity Generation Company of Bangladesh

Source: Bangladesh Power Development Board

4.8          Short-Term

4.9         Under the short term plan, power stations that are liquid fuel based and implementable within 12 to 24 months will be established. Works for setting up power stations with a generation capacity of 920 MW under public sector has been started.

Table-5: List of projects that will be implemented by 2011

Source: Bangladesh Power Development Board

9 NOA: Notice of Acceptance

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4.10       Medium Term

4.11      Under the medium term plan, initiatives have been taken to set up power plants with a total generation capacity of 7714 MW that are implementable within 3 to 5 years time of which, 2600 MW will be coal based.

Table-6: List of projects that will be implemented by 2012

10 NWPGC: Northwest Power Generation Company

11 PQ: Pre Qualification

12 REB: Rural Electrification Board

13 SC: Simple Cycle

14 GT: Gas Turbine

15 RFP: Request for Proposal

13                                                  continued

Source: Bangladesh Power Development Board

Table-7: List of projects that will be implemented by 2013

Source: Bangladesh Power Development Board

16 RPCL: Rural Power Company Limited

17 DPA: Development Project Proposal

18 APSCL: Ashuganj Power Station Company Limited

Table-8: List of projects that will be implemented by 2014

Source: Bangladesh Power Development Board

Table-9: List of projects that will be implemented by 2015

Source: Bangladesh Power Development Board

4.12       Long Term

4.13      To achieve the targets mentioned above under the Outline of Perspective Plan of Bangladesh, growth of power generation capacity is estimated to be 10% every year and by the year 2012 the total generation capacity will be 20000 MW with a per capita electricity usage of 600 Kwh.

4.14       Diversification of Energy Sources

4.15      According to the plan, high dependency on gas based power generation has been reduced in the short and medium terms and the plants that will be newly built are designed to be dual-fuel based. In addition, emphasis has been given to various power saving efforts so that the saved power can be transmitted to the other thrust areas. CFL (Compact Fluorescent Lamp) Distribution Program is due to start on June 19, 2010 through which a total of 200-350 MW of electricity can be saved.

4.16      According to the energy source diversification plan, there is a continued effort to produce and buy captive power from renewable and non renewable sources. So far, contracts have been signed to purchase 88 MW of electricity from captive generation sources. Initiatives have been taken to import electricity from the neighboring countries and export (in future) through the sub-regional cooperation. According to a decision at the Prime Minister level with India, works have already been started to build 400 KV transmission line and HVDC (High Voltage Double Circuit) sub stations through Regional Grid Interconnection. India has made the commitment to supply 250 MW of electricity from their “Unallocated Resource”.

4.17      The use of renewable energy has risen considerably in the recent times in developed and developing countries. In Asia, India and China have achieved considerable success in innovating and using the technology of renewable energy. Although the initial installation cost of renewable energy is higher, but it will gradually decline and will come down within the purchasing capacity of the people. As the global reserve of fossil fuel is gradually decreasing, the Government has taken steps to extend and develop the use of renewable energy to ensure the future energy security. Under this plan, targets have been set to produce electricity from renewable sources as 5% of total production by the year 2015 and 10% by 2020. Renewable Energy Policy has also been adopted to attract and encourage the private sector. In addition, the Government is going to set up Sustainable Energy Development Authority (SEDA) has been set up to expand and develop renewable energy, to promote energy saving and energy efficiency and to create awareness among the users of electricity.

4.18       Power Tariff

4.19      The per unit production cost of electricity is expected to rise (20%-30%) in the upcoming 2-3 years due to the installation of high cost liquid fuel based peaking plants which are implementable in 18-24 moths. Accordingly, the Energy Regulatory Commission may increase the tariff of power step by step. However, power tariff will come down after 2014 as the implementation of gas and coal based power plants will be completed.

4.20       Transmission and Distribution

4.21      In addition to power generation, it is very important to develop a dependable and quality power transmission and distribution network to ensure quality and uninterrupted power supply to the consumers. To transmit the newly produced power to the doorsteps of the consumer, it is urgently needed to build new transmission and distribution infrastructure in addition to renovation and preservation of old distribution networks.

4.22      For resolving the electricity crisis, government has some plans for increasing electricity generation and at the same time has undertaken massive development plans for efficient and uninterrupted transmission and distribution system. At present total length of 230 KV electric line has been upgraded at 2644.5 circuit kilo meters and for 132 KV electric lines, the length is 5715 circuit kilometer. For strengthening the electricity transmission system and for meeting up the gradual increasing future demand for electricity, government has set a target of “Providing Electricity in every house by 2021”. As part of achieving this target, government has already undertaken a priority based investment plan (Three year road map for power sector reform) for the year 2007-09 under which massive work plan has been chalk out for building an additional 3000 kilo meter of transmission lines by 2015. In this regard, PGCB has undertaken activities for building concerned transmission lines for supplying electricity through regional cooperation.

4.23      Up to December, 2009, about 117 lakhs customers have been provided with electricity connections through building 2,66,460 kilo meter distribution lines with necessary infrastructure. New projects are being undertaken for expanding the electrification program as well as for the development and capacity enhancement of the existing transmission and distribution system. Through these programs, initiatives have been made for building an additional 60,000 kilo meter distribution lines by 2015.

4.24        Providing electricity in rural areas is an important feature of the distribution system. Up to December, 2009, Rural Electrification Board through their 70 associations has given a total number of 79,55,881 connections in 53,281 villages by building 2,21,749 kilo meter distribution lines. Out of the total connections, 68,75,627 nos are residential, 1,49,581 nos are irrigation, 7,87,844 nos are commercial, 1,29,218 nos are industrial and 13,611 nos are other types of connections. About half of the total power is provided by REB in the country. They mostly obtain this from Power Development Board since their own capacity for production in very little. Compared to the demand, their ability for transmission and distribution is limited. Their efficiency is also not beyond doubt. It is necessary to restructure this institution to turn it into a strong and professional body.

4.25      Government has undertaken time-based work plan for generating electricity. For implementing these work plans, attempts have been undertaken by PGCB for constructing transmission lines and sub stations in order to supply the generated electricity in the load centers at different voltage level. Description of some major transmission projects are as follows:

Table 10: Possible important transmission projects

Source: Bangladesh Power Development Board, Power Division

5.1         Year-wise power generation considering planned implementation

5.2          Year-wise power generation statistics

5.3         Year-wise power generation statistics is shown below on the basis of the plan that will generate around 9426 MW extra power to the national grid by 2015.

Table 11: Year wise power generation statistics

Source: Power Division

19 Mega Volt Ampire

5.4          Year-wise expected Power Demand and Supply

5.5         It will be possible to meet the prevailing power deficit by 2011 through the plan of generating 2800 MW excess electricity into the system within 2011 to resolve the power scarcity problem. Currently there is a shortage of 1250 MW electricity supply as compared to demand. The probable power shortage from the year 2009 to 2010 and the probable power surplus from the year 2011 to 2015 is shown in graph 6:

Graph 6: Probable Power Shortage/ Surplus (2009-2015)

existing old power plants. On an average, the demand for electricity is assumed to enhance by 10.5 percent each year starting from 2009 to 2015. On the contrary, the capacity for power generation will be augmented at 18.5 percent to achieve the ability of producing surplus electricity by 2011. Considering the growth in power demand, an overall scenario of expected power demand and supply after increasing electricity production according to plans has been shown in the following Table-12 and Graph-5 respectively.

Table 12: Year-wise Possible Power Demand and Supply

(Considering sufficient supply of energy according to demand)

Source: Power Division

6.1         Power Saving Activities

6.2         To ensure energy conservation and efficient use of electricity under load management and system supervision, it has been possible to save around 350 MW of electricity by undertaking actions like keeping Shopping –malls and Shopping centers closed after 8 p.m. Establishing Solar Panels in government, semi-government, autonomous bodies and industries have been initiated. The relevant consumers are encouraged to keep the temperature of Air-cooler at 250 Celsius or higher and are

prohibited to use Air-cooler in the evening peak hours. Initiatives have been underway to establish 20.0 lakh pre-paid meters countrywide to facilitate electric bill payment for consumers and to control and determine power load by distributing institution. A number of steps have been taken to control electricity demand on the receiving end by using power saving handy equipments. Steps have been taken to replace around 4 crore ineffective electric lamps by power saving Compact Fluorescent Lamps (CFL) under Efficient Lighting Initiatives for Bangladesh (ELIB) programme. It will be possible to install 1.05 crore power saving CFL bulbs by 2010. this will also ensure Clean Development Mechanism (CDM) facilities.

7.0 In order to overcome the present power deficit situation, targets are fixed up in the outlines of Bangladesh Perspective Plan and on reaching these goals it will be possible to have access to power by all citizens within 2021.A huge investment is required to go towards the preferred level from the prevailing power deficit situation. Initiatives have been on to ensure public as well as government-patronized private investments and Foreign Direct Investments. In this sector investment to amount of taka USD 9.00 billion is required out of which USD 8.00 billion is expected to come from private sector in order to raise power generation to 11,625MW within 2015.Initiatives have been taken in this comprehensive plan to transmit, distribute, adopt demand side management, use renewable fuels, rationalize prices separately at private investment and consumers’ level due to the existing difficulties of transmission, distribution, power supply and sources along with production in power sector .The prevailing power crisis will be reduced in 2012 if this plan is implemented on time and every citizen will have access to power in 2021.

Energy Sector

8.0   In recent times, establishment of important physical infrastructures, setting up of new power plants and the pace of industrialization in the country has slowed down due to energy supply shortage. The sluggish industrialization which has hindered development activities is apprehended to create a negative impact on employment and consequently on the people’s livelihood. This dismal state of energy sector has resulted from lack of initiatives and insufficient investment in the sector during the past years. Realizing the necessity for its improvement, the present government has indicated energy sector as a priority sector.

9.1       Current Position of Energy Sector

9.2         At present, Bangladesh has energy supply from both renewable and non- renewable sources, 38 percent of which comes from biomass. However, 75 percent of commercial energy is provided from natural gas. Currently, gas production per day is 2000 MMCF in our country. Use of imported oil accounts for the lion’s share of the rest of the energy requirement. Our annual requirement of fuel is approximately 3.7 million metric ton. Apart from natural gas and crude oil, coal is mainly used as fuel in the brick-fields and at the Boropukuria Thermal Power Plant. Moreover, power is also being generated by using solar home system in off grid areas. In addition there are some poultry and dairy farms in which bio-gas plants are being set up and with this energy, power can be generated and is also used for cooking. The amount of power generation from such plants is currently about 1 MW. Steps have been taken to generate electricity by Bio-Mass Gasification Method in the country. We also have a bright potential to produce electricity from wind and mini-hydro or wave-energy. Recently, solar power based irrigation pump has been used in a number of areas of the country. Its wide use will lessen the pressure on diesel and electricity.

Figure 8: Annual Energy Consumption (2009)

Source: Energy and Mineral Resources Division

9.3          Non-renewable energy

9.4        

The proven reserve of natural gas which is the principal source of non- renewable energy of the country is gradually depleting. The supply of gas as a primary source of energy will be dried out soon if immediate steps are not taken for exploration of new gas fields and extraction therefrom. In the use of commercial energy, the notable ones include the following:

10.1      Natural Gas

10.2      Major Source of our primary energy is natural gas. It is considered as one of the driving forces of the economy of our country as three-fourths of the total commercial energy is provided by natural gas. As many as 23 gas fields have been discovered since 1955 when the first gas field was found in Sylhet. In the past, in order to export gas, different initiatives were taken by exaggerating the actual reserve of  natural  gas  and  being  over-enthusiastic  about  exploration  of  new  gas fields.

Meanwhile, exploration of new gas fields and extraction activities by the native organization, BAPEX slowed down. At the same time, the propaganda about exaggerated gas reserve created a delusion among the people and ultimately hindered economic use and conservation of the valuable resource.

10.3       Present Reserve and Production Levels of Natural Gas

10.4      The existing natural gas is mainly used in electricity, fertilizer, industry, transport and housing sectors. The reserve and production situation of gas up to 2010

10.5 Per capita consumption of energy in Bangladesh is on an average 160 kgoe (Kilogram Oil Equivalent) while it is 530 kgoe in India, 510 kgoe in Pakistan, 340 kgoe in Nepal and 470 kgoe in Sri Lanka. The average consumption in Asia is 640 kgoe. It is evident that per capita average consumption of energy in Bangladesh is significantly lower than the average of Asia. Even it is lower than those of South Asian countries. In recent times per capita energy consumption has been used as an indicator to determine the living standard and stage of development of a country. 

Figure 9: Current Sectoral use of Gas in percent

Source: Energy and Mineral Resources Division

10.7      Considering the average rate of consumption of gas in the country of the last 17 years and in line with Vision 2021, to implement the target of producing 11500 MW new electricity by 2015, a projection has been done according to the sector wise annual demand of gas from 2009 to 2015. Projection for probable demand of gas up to 2015 is shown in the table below:

Table 13: A Conservative Estimates of Sectorwise Allocation of Gas

(In Billion cubic feet)

Source: Energy and Mineral Resources Division

10.8       Supply of Gas and its shortage

10.9      At present, from 79 wells of the existing 17 gas fields, only 730 BCF (Billion Cubic Feet) gas is being supplied against the average annual demand of 912 BCF. As a result, there exists a shortage of 182 BCF of gas annually. According to the projections mentioned in the table, in 2014-15, total annual demand for gas will stand at 1335.0 BCF. If the present supply of 2.0 BCF per day remains unchanged then daily shortage may stand at 1.66 BCF on the basis of the projected demand. Hence, it is not possible to meet this shortage with the existing reserves. If the reserve capacity does not enhance according to the estimation of the Gas Sector Master Plan, then after 2011 there would be huge difference between demand and supply and the present reserve may decrease to a greater extent by 2015.

10.10    Investment in Gas Sector

10.11   For overcoming the existing as well as projected shortage of gas supply for the later years, discovering new gas fields and enhance gas reserve by re-assessing the present reserve of the existing gas fields is the best approach. In addition to these, attempts should be taken for increasing the supply by drilling good number of wells. However, implementing these initiatives needs huge investment and a high level of technical, technological and professional expertise. Exploring and discovering oil and gas is a capital intensive and risky investment. It can be seen from various reports that for discovering a gas field, it needs an investment of about Taka 700 crore, whereas the rate of success is only 20-25 percent. So, although gas fields may exist in developing countries, it is not possible for them to invest such a huge amount for exploring and discovering those gas fields. An alternative to this may be involving the private sector especially the International Oil Companies (IOC) which are financially, technically and technologically very sound. In this case, national interests should be ensured while production sharing agreements are signed for the development of energy sector including gas.

10.12    Action Plan for the Development of Natural Gas Sector

10.13  

Government has identified the Power and energy sector as the top priority sector with the aim of ensuring long term energy security of the country. In this regard, Government is determined to overcome the critical situation prevailing in the gas sector to ensure the availability of energy. Salient features of the planned policy strategy of government in overcoming the energy shortage are as follows:

10.14  Action plan for exploration and increased generation of Natural Gas

10.15   Present government assuming power has taken time befitting plan to explore, discover and improve new gas field and also for gas extraction and supply. The salient features of implementable and on going programs under short, medium and long-term plans are as follows:

10.16    Short Term Plan (to be completed by December 2010)

10.17   In order to increase gas exploration the following actions have been taken and are continuing according to plan. As a result it is expected that an additional 158 MMCF gas will be supplied to the national grid by December 2010. The gas field wise detailed description is given below:

Table 14: Short Term Plan to be completed by December 2010

Source: Energy and Mineral Resources Division

10.18    Actions taken

10.19   Actions have been taken to increase 78 million cubic feet gas in total by rehabilitation (work over) of five wells and 35 million cubic feet by digging two evaluation/development wells at Shalda River and Fenchuganj gas fields. Moreover actions have been taken to explore 15 million cubic feet gas daily from one exploration well at Sundalpur in Noakhali District. In addition to that, 30 MMCFD gas may be produced from exploration/ development well in southern part of Sangu gas field.

20 Million Cubic Feet Per Day

21 Sylhet Gas Field Limited

22 Bangladesh Gas Field Company Limited

23 Bangladesh Petroleum Exploration Company

10.20    Medium Term Plan (to be completed by June 2013)

10.21   Necessary actions have been taken to import LNG and supply it to the national grid by converting into gas. Actions have been taken to dig 17 exploration and development wells under the medium term plan. By implementing this programme, it will be possible to supply an additional 585 MMCF gas daily to the national grid by 2013.

10.22   Due to the shortage of gas, supply of gas to some power plants and fertilizer factories had to be temporarily stopped. As a result the production of electricity and fertilizer was interrupted severely. Consequently the pace of economic growth became slower. To combat the issue LNG import can be a viable option. A plan has been taken to supply at least 500 million cubic feet additional gas to the national grid by 2012. In this process it will be possible to supply 1085 million cubic feet gas to the national grid by 2013. The detailed description is given bellow:

Table 15: Medium Term Plan to be completed by June 2013

24 Million Cubic Feet Per Day

25 Bangladesh Petroleum Exploration Company

26 Bangladesh Gas Field Company Limited

29                                                   continued

Source: Energy and Mineral Resources Division

10.23    Actions taken

10.24    National Gas Company

10.25   Actions have been taken to supply 105 MMCF gas to the national grid by drilling 5 appraisal/development wells at Shalda River, Titas, Fenchugonj and Bakhrabad gas fields. The sites have been selected for drilling exploration wells by seismic survey and data analysis at Kapasia, Srikail and Mobarakpur. The target has been fixed up to explore 45 MMCF gas daily from these three exploration wells. More over considering the increasing demand of gas, Fast Track Programme has been taken to explore gas on emergency basis. Under the programme target has been fixed up to supply 135 MMCF gas daily to the national grid by drilling one development well in Titas and Rashidpur Gas fields respectively and drilling one appraisal well in Rashidpur gas field. Under the same programme actions have been taken to identify the site for digging new development wells by data collection, processing and analysis by 2-D seismic survey of 3100 line kilo metre. If the exploration programme becomes successful it is expected that the reserve of gas will be increased in one hand, and by drilling new wells the production of gas will be increased in future on the other.

27 Million Cubic Feet Per Day

28 Bangladesh Gas Field Company Limited

29 Sylhet Gas Field Limited

30

10.26 International Oil Company

10.27   Target has been set to supply 100 MMCF of gas to the national grid daily through drilling of 3 development wells by Chevron in Moulvibazar gas field (Block

14) under PSC. Besides, initiatives have been undertaken for drilling of exploratory wells by Cairn at Magnama is Block 16 and by Chevron at Kajol in Block-7 under shallow sea areas. More gas will be produced if the initiative of drilling of exploratory wells becomes successful.

10.28    Long Term Plan (to be completed by December 2015)

10.29   In the long term plan, through drilling and development of exploratory wells an additional gas production of 180 MMCFD by local companies and 900 MMCFD by international oil companies (total 1080 MMCFD) will be added to the national grid by December 2015.

Table 16: Long Term Plan to be completed by December 2015

Source: Energy and Mineral Resouces Division

30 Million Cubic Feet Per Day

31 Bangladesh Gas Field Company Limited

32 Sylhet Gas Field Limited

31

10.30    Actions taken

10.31    National Gas Company

10.32   Initiatives have been undertaken to supply 180 MMCFD gas to the national grid through drilling of 9 development wells of which 5 are in Sylhet, Kailastilla and Rashidpur gas field, and 4 in Titas gas field.

10.33 International Oil Company

10.34  

Target has been set to supply 700 MMCF gas to the national grid daily through drilling of 12 development wells in Bibiyana, Jalalabad and Moulvibazar gas fields in Block 12, 13 and 14 under PSC. Besides, after evaluation of proposals received through offshore bidding round-2008, signing of agreement with 2 companies for 3 blocks is under process. Subject to signing of production sharing contract (PSC), a target has been set to produce 200 MMCF gas daily through exploratory activities. If the initiatives of drilling exploratory wells by Cairn at Magnama in block 16 and by Chevron at Kajol in block 7 under shallow sea areas become successful more similar ventures will be made to produce more gas.

10.35     Steps to be taken for increasing the supply of Natural Gas

10.36 Through the implementation of aforesaid plan, although it is possible to add additional estimated gas to National Grid, it will not be possible to fulfill the gas demand in full. In that case, in order to increase the supply of Natural Gas together with the short, medium and long term plans of the government, the following steps are necessary to be taken:

11.1      Import of Liquified Natural Gas

11.2      Acuteness of the gas supply shortage can be mitigated through importing LNG by the next one and half or two years. Steps needed to be taken in this case are as follows:

12.1      Coal

12.2      The diversification of sources of energy has created ample opportunity for our coal. By establishing power plant based on coal and using it in the industries as a source of energy we can ensure the proper use of extracted coal. It is notable that the coal of Bangladesh is considered to be high quality due to its high level of hit generation capacity.

12.3       Coal: Reserve and Usage

12.4      High quality Bituminous coal mines have been discovered at Khalashpur of Rangpur, at Boropukuria, Fhulbaria, Dighipara of Dinajpur and at Jamalganj of Bogra in the north-western zone of the country. The total reserve is around 2797 MT of this

5 coal mines and the hit generation capacity is equivalent to 37 TCF of gas approximately. If initiatives are taken for exploration all over the country, there is enough possibilities to discover more coal mines. The coal reserves of existing 5 coal mines are shown in the table below:

Table 17: Coal Reserves of Five Coal Mines

Source: Energy and Mineral Resources Division

33 Geological Survey of Bangladesh

12.5      Among the 5 coal mines, Boropukuria coal mine in Dinajpur has started commercial production by using underground mining method from September, 2005 with the annual target of 10 lac MT of coal extraction. A 250 MW power plant has been running by using the extracted coal of Boropukuria through which power is being supplied to the National Grid. 7 lac MT coal, extracted from Boropukuria coal mine, is being used daily in this power plant.

12.6       Steps to be taken for removing the problem of Coal Sector

12.7      Although there are enough reserves of coal in the country, there remains anxiety for the extraction methods and the technological security. At the same time, there are also expert opinions regarding the quick solution of energy problem through the importation of coal. To turn down this situation, Government’s activities are as follows:

13.1      Nuclear Energy

13.2      Since 1960s, a plan has been taken to establish a nuclear power plant in the country. But no effective action had taken in the last 50 years except land selection and acquisition for the nuclear power plant. Present Government, with the technical assistance of Russia, has made effective arrangement to establish a nuclear power plant with a capacity of 1000 MW in the pre-determined location at Rooppur. In this respect, Bangladesh government has signed a framework agreement with the Russian National Nuclear Institute. It is expected that the country will be able to enter into nuclear age through the establishment of nuclear power plant by 2016.

13.3 Challenges of Nuclear Energy Sector

13.4      In order to remove energy deficit and build up energy security in the country, the probable challenges are:

14.3  

Actions taken up on priority basis for implementation of energy saving programmes are as follows:

14.4      It is necessary to encourage the production and use of such energy from a source which is not harmful to environment in order to ensure safe energy supply along with habitable surroundings.

14.5       Steps taken to produce and extend use of renewable energy

14.7    In order to encourage people to use renewable energy, some of the significant steps taken by the Government are:

15.0    Immediate steps to be taken

16.1      Conclusion

16.2      The target for achieving higher economic growth with power supply deficit has faded other achievements in infrastructural development of the country; therefore, private investors are not showing much interest in investments. Power is one of the significant raw materials for all sorts of industries starting from agricultural industries. Electrification is also necessary for increasing socio-economic activities in rural areas. In order to overcome the present power deficit situation, targets are fixed in the Outline Perspective Plan of Bangladesh. If we go ahead as planned, it will be possible for all citizens to have access to power within 2021. In addition, the use of coal for power generation will be enhanced through reducing the dependence on natural gas and contribution of renewable energy in electricity production will also be increased.

16.3      A six year plan up to 2016 has been adopted to improve power scarcity and provide excess power for future. Vision of increasing economic growth to 8 percent by 2014 and 10 percent by 2017 through industrialization will be a reality with the implementation of this plan. It will ultimately help to reduce poverty and achieve Millennium Development Goals by employment generation in the country.