Sunday, June 29, 2008

Future Energy for Bangladesh

Zubayer Zaman

While the country is facing severe power crisis, public life is shattered for unbearable sufferings of load shedding; experts are busy with debate and discussion over extraction of alternative energy source coal. The use of this valuable underground resource for the benefit of the country is becoming uncertain for emotional debate over various issues associated with coal sector development. The government is still indecisive about the coal extraction issue. Many concerned that if this indecisive situation continues, the country will soon face severe energy crisis; economic development will be threatened. Even Chief Adviser's Special Assistant for Energy Dr M Tamim expressed his concern that the country would face a tremendous power crisis after three to four years if proper decisions are not taken and implemented. The situation is not very encouraging; time to act now. Otherwise the country will pay the price for this inaction and indecision.

Power Generation & Demand
A big majority of the people are still to have access to electricity. Only 40% are enjoying the facility. With this situation, a major initiative with visionary planning would be required to ensure reliable access of electricity to every citizen. According to the government statistics, the peak hour electricity demand of the country is around 5000MW. Against this demand scenario, the installed power generation capacity of govt. and private power plants together is around 5,212 MW. But PDB could not generate power according to the installed capacity as most of the power plants lost their installed generation capacity. Moreover, at least a dozen of power plants always remain under maintenance works for their poor state. Fuel crisis also force to reduce generation of many power plants. Therefore PDB generates on an average 3,500MW against peak demand, making a 1,500MW power deficit, which brings unbearable load shedding and sufferings to public life. Transmission and distribution problem also makes the situation worse. General people have been facing this serious power crisis for decades. This has been always the subject of debate and discussion but still to find any reasonable solution. People find it very difficult to cope with the situation but it seems there is no relief or improvement of the situation in the near future.
Gas --The Major Source of Power Generation
Our power generation is heavily dependent on gas with minimal contribution from other sources. Only a 250MW coal based power generation started in 2005 dependent on Barapukuria coal mine, which often face interruption for technical difficulties or regular supply of coal. Hydropower generation capacity is 230 MW and around 200MW comes from imported oil sources. According to the estimates of 2007, about 80% of the power plants are gas based. Sector wise gas consumption according the Petrobangla estimates is power generation 42%, fertilizer industry 17%, captive power 12%, industry 14%, domestic 12% and others 3%. CNG use in the transport sector is also increasing rapidly with sky rocketing oil price in the international market. This statistics shows how heavily we are dependent on gas and how venerable we are regarding energy security. Any major reduction or interruption in gas supply would create serious crisis in power and industrial sector. The proven and probable gas reserve in all the gas fields operated by Petrobangla and International Oil Companies (IOCs) is approximately 15 TCF, of which 7 TCF has already been used. The gas demand is increasing at a rate of 10%. But the exploration and development of infrastructure were not initiated simultaneously with growing demand. At present the country is having 100 mmcf shortages of gas against 1800 mmcf demand daily. A significant numbers of industries couldn’t start operation due to lack of gas supply. Chittagong region is the worst sufferer of this crisis. The government has already stopped providing new gas connections in Chittagong and adjacent areas and has been maintaining a cautious approach in allowing new connection in Dhaka and adjacent areas because of gas shortage. Petrobangla has also informed Power Division about their inability to supply gas in any future big power plant. Recently the government has started gas rationing in various sectors and urged the industrialists/businessmen to be sensible in gas uses.
Coal
Bangladesh is blessed with a substantial amount of high quality coal in the northwest Bangladesh. The estimated resource in the five discovered coal fields is around 2500 million tonnes, which has heat value equivalent of 70 TCF gas. Among the discovered coal fields only Barapukuria and Phulbari coal resources are confidently defined, others are inferred only and significant efforts will be required to define the mineable reserve of those coal fields. But coal sector with all its potential has never been in the serious considerations parallel with gas sector development. Our policy makers never realized the importance of diversification of energy sources to reduce dependency on gas for long term energy security of the country.
Our only achievement in the coal sector is the development of a small-scale underground coal mine at Barapukuria with Chinese financial and management support. But the mine is having trouble to feed the nearby 250 MW coal fired power plant making the expectation bleak for significant contribution in coal based power generation. Phulbari, another coal field near Barapukuria with a reserve of 572 million tonnes is ready to start mining operation after completion of all relevant studies. The UK-Australia based mining company Asia Energy is involved with the development of Phulbari coalfield. The company has submitted its Scheme of Development to the government in October 2005 and has been waiting for the decision in this regard from the Government.
Coal Sector Development: Debate-Controversy
Nobody was looking into the potential of coal before the Phulbari Coal Project coming into the scene. Very seldom energy expert, policy makers, or pressure group/activists were seen talking or aware about the severe energy crisis that might be created for the sole dependency on gas. Actually the debate started after the declaration of 572 million tonnes of coal at Phulbari Basin by the foreign company Asia Energy. We have seen the active or even violent role of some activist groups against Phulbari Coal Project. Some international NGOs and activist groups are also seen very actively campaigning against this project. But those who are opposing extraction of coal or open pit mining don’t offer any feasible option to the nation to overcome this severe energy crisis.
Those who are opposing open pit mining are arguing that coal extraction by this method will create desertification in the whole northern region and its environmental consequences will be severe and there will be a permanent loss of huge amount of agricultural land. Others favoring this method with the logic that resource recovery is very high in this method, more than 90% comparing to 10-20% in underground mining which is vital for our energy security. Open pit mining will also allow extraction of some other valuable co-products which have high demand in the country. There are well tested mitigation measures in the world to manage the environmental impacts of open pit mining. The loss of agricultural land is temporary and can put back to productive uses after reclamation and rehabilitation. Threat of desertification is a mere propaganda to create panic in public mind against open pit mining. The extraction of groundwater over a period of few decades in Dhaka and surrounding areas has lowered the water table significantly to some 50-60m. If groundwater extraction of much larger scales (some 75,000 litre/sec) doesn’t make any sign of desertification in and around Dhaka City then why mine dewatering with a much smaller scale (5000-6000 liter/sec) would create desertification over the whole northern region? Moreover determination of mining method is not a general policy decision issue; it is very much site specific. Geological, geotechnical reality of the coal field and economic viability should dictate the decision. There is also a sharp difference in opinion over royalty rate, export issue and involvement of foreign companies and investment in coal sector development. But the question is how long we would continue the debate over coal extraction leaving the country in a severe power crisis.
Who will be benefited from this debate or delay in the process of coal sector development? Although our contribution to green house gas emission is very insignificant, there is a growing concern over global warming. The rapid economic growth of India and China increases burning of fossil fuel tremendously. China almost every week is setting up a new coal based power plant to meet the growing demand. There might be international agreements in future limiting the use of coal to control the emission of green house gases responsible for polluting the atmosphere. Bangladesh shouldn’t be left with a lot of coal in the ground that has no value due to these usage restrictions. So, whatever the reasons or interest behind this opposition, an acceptable and reasonable solution of all those issues raised is important for immediate development of a healthy coal sector.

Coal: The Reliable Future Energy
Coal is the most abundant fossil fuel in the world with recoverable reserve in around 70 countries. At current production levels, proven reserves are estimated to last for more than 150 years. Many countries are heavily dependent on coal for power generation. It is the single largest source of power generation of the world with 40% contribution in this sector. World steel industry also consumes significant amount of coal. Approximately 12% of the total hard coal production is currently utilized by the steel industry.
The substantial amount of high quality coal presents unparallel opportunity for Bangladesh to diversify fueling of the power sector, reduce dependency on gas and thus improve energy security. A mine with 10-15 million tonnes annual production capacity can feed few large 500MW power plants for next 30-40 years. Reliable long term supply of coal will also attract local and foreign investors in coal fired power generation. The preferred power generation strategy for Bangladesh would be to shift the base load of the power system to coal and save gas either for peak loading or for other valuable uses. Use of coal to fire large power plants would be one of the keys to rapid improvement in the power sector over the next decade. The coal for its semi-soft coking properties also has the potential to use in steel making industry along with other domestic and industrial uses. Coal has another potential use in briquette making. Coal briquette is widely used in many countries for domestic cooking and in small industries. It could a good option mainly for the north-western Bangladesh, where the forest resource is depleting rapidly for the dependency on fire wood for domestic cooking in absence of other alternative fuel sources.
We already have the experience of underground mining. Barapukuria mine clearly demonstrates how difficult it is mining in underground condition. Considering the energy situation and geology of the coal basins, Bangladesh has to go for large open pit coal mining adopting modern technologies and `best practice’ mitigation measures. The coal extraction has to be economically viable to manage all social and environmental issues associated with mine development. But to see the coal on the ground within next 2-3 years and use it for power generation to overcome the severe power crisis, decision has to be taken right now. Bangladesh cannot effort to loose time further for indecision.


Source: Energy and Power

Date: 16 June, 2008

Source:http://www.ep-bd.com/

Coal: Where We Stand ?

Dr. SM Mahfuzur Rahman

The Information Gap & an Unwanted Bottleneck
One of the major limitations of researchers and decision makers in Bangladesh is the difficulty in having complete information related to the issue, which they intend to study or on which they are to take decisions. The case of coal mine in Phulbari is not an exception. Not many among the people, who are now involved in the debate on the mine actually have full information about the

a. Economy of Phulbari and the surrounding area,
b. Geophysical characteristics of the area,
c. Technical details of the possible mining methods that can be applied in Phulbari and their consequences, and
d. Mitigation measures for facing the adverse effects of adopting any particular method or a combination of methods.

Curiously enough, a section of the intelligentsia has taken a very open stand against mining coal in Phulbari apparently having only very scanty information on the above issues. This section of the people smartly ignores the whole agenda of energy crisis in the country. Instead, the leaders of the section are vehemently running the campaign that the mining in Phulbari coal field will cause disaster to the local community and environment and are not at all ready to consider that the various issues, including acquisition of land causing people to leave their ancestral abodes, temporary, or even permanent loss of agricultural land and difficulties in shifting infrastructures on the land acquired of mining the coal resources in Phulbari are to be looked at in a framework of overall analysis of

a. The resources of the Phulbari coal mine and their importance for the economy of the region and of the country;
b. All the different types of social and economic costs and benefits of mining at Phulbari and their magnitude;
c. The available mitigation measures for the possible adverse effects;
d. Anticipated gains for the nation by mining the coal and the losses by leaving it underground for an indefinite period;
e. Opportunities to be missed by postponing any initiative of coal mining in a situation when the country is facing severe energy crisis, the prices of energy resources are soaring high in the international market and the prospects of developing alternative energy sources in the country is very bleak; and
f. An outlook to the country’s coal resources when the regime of carbon trading in the world is changing very fast.

Unfortunately, much before being able to understand the importance of the mine, as well as of the problems and their possible solutions, a part of the Phulbari people had been instigated to organize movement against the mine and the key strategy used in motivating local people in the movement was the psychological play of the arguments that millions of local people will become permanently homeless, that the mine will eat up all the fertile agricultural land of the area and that the mine will cause desertification of the whole region. Obviously, the campaign was based on exaggeration of the ‘threats’ of mining coal in Phulbari for the local people.

Regional Disparity & the Poor Economy of the Coal Rich Area
It is a popular belief in Bangladesh that the north-western part of the country is the victim of prolonged regional discrimination by policy makers which has made the region a relatively backward one. There are many economically backward territories in other parts of the country also, but such territories in other parts are mostly enclaves, while the backwardness in northern Bangladesh stretches widely throughout the region. An important observation in the case is the alleged indifference of the policy makers to the causes of underdevelopment of the northern region of the country and to the need for eliminating the disparity.

A few years ago, people in the northern region of the country started to believe that with completion of the Jamuna Bridge, the region would get a momentum in development. It was expected that the factor mobility created by the Bridge alone would change the economic geography. In fact, the Bridge has a significant contribution to taking the agro resources, including agricultural raw materials from the northern to the eastern part of the country and making development of the eastern part easier. But since the Bridge could only provide the transport facilities and the northern part continued to remain deprived of power or gas supply, there had been no expansion of manufacturing industries in the region and the Bridge could only contribute to a faster drainage of resources from this part of the country to the eastern part. The effect was the increase in prices of agricultural products in the northern region. The local producers at the grassroots level however, did not get the benefit, which was appropriated largely by the middlemen. Most rural markets in the northern region now face scarcity of fish, milk, eggs and seasonal fruits. Because of the easy access to local markets the brokers and wholesale buyers purchase these products at cheaper prices for selling in towns and cities and thus create shortage of them for local consumers. The later now buy products of their own origin at prices much higher than what the urban buyers sometimes pay.

Inadequate power supply is the single most important reason for economic backwardness of the northern region of the country. Bogra, once an emerging industry center of the country, had a few pioneering industry units, which were closed down largely because of the failure in competitions with similar industries in other parts of the country. Most important among the causes was the power factor. Industries in Bogra could have uninterrupted power supply only through a support by producing diesel fuelled electricity. The cost of production of such power is much higher than the gas fuelled power available in the eastern regions. This makes the difference in competitiveness of the Bogra products and ultimately, a cause to the ‘death’ of the Bogra industries.

The scenario is the same in any other part of the northern region of the country and the conclusion is obvious: it is not possible to eliminate disparity between the eastern and northern regions of the country without availability of sufficient electricity in the later region. Discovery of coal deposits in Phulbari, Barapukuria and Dighipara in the southern part of Dinajpur district and in Khalaspir of the adjacent Rangpur district has opened up a great opportunity for providing electricity to the region and also solving the country’s energy crisis in the face of quick depletion of the gas reserves and bleak prospects of developing other energy sources.

The six southern upazilas of Dinajpur district – Parbatipur, Phulbari, Birampur, Nawabganj, Ghoraghat, and Hakimpur – which surround the coal deposits in Barapukuria, Phulbari and Dighipara, cover a total area of 1400 sq. km. and have a total population of about 1 million. Agriculture is the main profession of the local people. Fifty per cent of the area’s total population has farming as the principal (for majority, the single) profession and about one-third of them are agricultural laborers. This means that three-fourths of the people of the area live on agriculture, which was the scenario for the whole country some four decades ago. Employment structure in other regions of the country had changed over time because of the structural changes in the economy. But the employment structure remained unchanged in Phulbari and its surrounding areas, which only indicates that the economy of the sub-region did not have much change over a long period of time. About 2.5% of the people in the area are non-farm laborers, about 11.5% are engaged in business, 5.5% have jobs in private and government offices and the rest are involved in miscellaneous professions. That only a small proportion of people work as non-farm laborers shows that the industry sector has an extremely marginal development in the area.

There is no reliable statistics about the number of the different types of industry units in the six upazilas and also, not much is known about their production capacities, the capital and manpower employed, the technology used, and their contribution to use of local resources and to the economic and social development of the local people, as well as of the people of the country as a whole. This does not mean that the area is rich in industries and it is just a point of non-availability of statistics. The literature is relatively blank on the issue because there is no considerable industrial development except that there are a few automatic rice mills, a number of paddy husking/wheat grinding mills and some bakeries, ice factories, and saw mills and a handful of welding workshops. The area was once rich in traditional workshops of craftsmen such as the goldsmiths, blacksmiths and potters all of which are now in the decay and at present, they have practically no importance as industry units. The area has a great potential for development of agro-based industries which remained unrealized largely because of the poor transport and communication infrastructure and non-availability/acute shortage in supply of power. Less than 10 per cent of the 2700 km road network across the six upazilas are metalled and although the maps show existence of a large number of rivers and their tributaries in the area, they lost navigability long ago and are of no use now as part of transport network.

The area however, is blessed with some modern industrial projects – a railway workshop at Parbatipur, the Barapukuria Coal Mine and a 250Mwt power plant at the Barapukuria mine gate and the Madhyapara Hardrock Mine. It is assumed that the selection of Parbatipur, a large railway junction in the northern part of the country, as the location for setting up the railway workshop was historical. The railway department possessed a huge amount of land at Parbatipur and although the railway workshop might have some contribution to repair and maintenance of the railway wagons and or engines, there is every doubt whether it actually has any effect on the local economy. It was easy for the government to establish the workshop at Parbatipur because there was no resistance from any group of social activists in acquiring such a huge amount of fertile land. Most local people have little knowledge about what the workshop actually does. A significant reason for it is the fact that the workshop has practically no or a very insignificant multiplier effect in the region and it does not create new employment opportunities or could trigger any momentum in the region’s economic development. Unfortunately, neither the media nor any section of the intellectual community and the social workers have ever raised the question whether it is at all justified for the workshop to acquire such vast amount of the fertile agricultural land. But it can be guessed that perhaps the workshop could not be established in some other location of the country in the face of the resistance of the local people of those other places against acquiring the fertile and scarce lands for the purpose.

Coal for Power to the Country & Development of the North-Western Region
Discovery of coal deposits in Barapukuria, Phulbari, Dighipara and Khalaspir has opened up new prospects for development of the North-western region of the country. Coal search and exploration started in the area fairly long ago and a good number of intensive studies have been done on various aspects of mining the area’s coal deposits, including the technical, social, economic and environmental issues. Review of the findings of these studies leads to the conclusion that with fast depletion of the reserves of natural gas, the main fuel for producing electricity and the main raw material for production of fertilizer, there is now no alternative to mining coal of Phulbari, which can solve the country’s energy crisis and provide new engines of growth. Some other major conclusions are:

a. Discovery of coal reserves in the Phulbari area of northern Bangladesh is seen as a blessing in a situation when the country is facing the threat of an inadequate supply of affordable commercial energy including electrical energy.
b. The growth rate to be achieved by Bangladesh in the coming few years for achieving the Millennium Development Goals should be higher than the 5-6% that the country could achieve in the past two decades but the reality for the country is that even the modest target of a sustained 7% economic growth is not achievable without regular supply of electricity.
c. The present installed capacity of around 5500MW of the country’s power plants fuelled about 85% by gas, 3% by hydro, 4% by furnace oil, 4% by diesel and 4% by coal is not sufficient to meet the country’s energy demand, the generation is much lower than the installed capacity and at the existing rate of use of gas in power plants, production of fertilizer, vehicles, brickfields and some industrial units and in household consumption, the reserves of gas will be exhausted in some 15 years, when power production will collapse in the country.
d. Given the fact that the country is not in a position to significantly develop other sources of energy to meet its energy requirements in the near future it has become an obvious necessity for her to mine coal.

The expected benefits of a coal project in Bangladesh are

1. Use of coal as an alternative fuel for generation of electricity and improvement of the energy security and the economic infrastructure as the basis for growth and development of the economy of the country as a whole and the north-western region in particular;
2. Saving natural gas by use of coal in electricity generation and the use of the saved gas in increased production of fertilizer and other beneficial purposes including in industry units and households by expanding the gas supply network and thereby arresting the depletion of forest resources;
3. Supply of coal as a cooking fuel (for example, in the form of briquette) in rural households now dependent on traditional biomass that are becoming expensive and have alternative uses;
4. Working of the multiplier effect of the implementation of coal project(s) and especially, development of derivative industries and the working of export elasticity to economic growth; and
5. Revenues of the government over the lifetime of the project.

Issues Which People Love Talking About, Thinking, Considering
The costs and benefits of mining the coal in Phulbari would significantly vary depending upon the method of mining. Open pit mine would cause loss of agricultural land and displacement of the population and commercial and residential land and structures within the mine footprint area in phases over the years of mining in the area. This type of loss is inevitable in any development work and there are plenty of cases in Bangladesh which are more questionable in terms of the justification of the size of valuable agricultural land acquired or the number of people displaced in the name of development. This does not mean that the coalmine in Phulbari can be allowed to develop causing irreversible damage to people, land and the environment. An extensive investigation and work with local communities are required in identifying households and the land affected by the project, valuation of assets lost, estimation of the compensation and resettlement/rehabilitation requirements and determination of mode of comprehensive arrangements for all losses of assets, structures, lands and the crops, vegetation, fisheries, poultry etc. and training of people to cope with situations created by possible loss of livelihood/professions.

There is however, no reason to believe that coalmines cause permanent losses of all lands and structures. Designers of a coal mine should know how to phase out the mining work and develop a mining plan with provision for removal and storage of the top soil, excavation and mining the coal, backfilling and then restoring the topsoil. The forests and wetlands can be realigned and there are proven technologies of keeping the water table in and around the mining area at normal levels, and also of mitigating environmental degradation. Underground mining would involve costs of managing water inrushes inside the mine beneath the ground, inevitable risks associated with spontaneous combustion of coal with the emissions of hazardous and toxic gas and the high temperature, the risk of land subsidence in the mining area, the cost of holding the roof atop the long walls and the like and more significantly, the loss of major part of coal that would not be possible to extract in the underground mining method.

There is a debate around whether to use the entire coal of the mines in Phulbari or other areas in the domestic economy or a part would be allowed to export. A ‘nationalist’ claim may suggest that there should not be any export at all and the claim apparently looks very reasonable. But once the emotional element in the thinking is eliminated one may take a few points in consideration irrespective of whether the mines are operated as projects of a foreign, or a domestic (government or private) company or of a partnership venture having both government and private (including foreign) ownership. The points are:

(a) What should be the economic size of the projects (i.e., how much should be the annual extraction of coal from a coal mine to match the scale of investment in a project and make the project economically viable);
(b) How much of the coal the country is prepared to absorb within the economy (i.e., the requirement of the new coal based power plants and the plants for production of coal briquettes, use of coal in brickfields and in domestic cooking and the like).
(c) What to do with some grades of coal (for example, the high grade semi-soft coking coal) available in Bangladesh that would possibly have no use within the country in the near future.

The equation is: a coal project may need to produce, say, 15 million tons per year to be an economically viable one (at the given trends in the domestic and international market price of coal and co-products) but the country is ready to absorb say, only 9 million tons per year. Some economists may reasonably consider it wise for the government to allow export of the ‘surplus’ coal (and use the income from the export for settling import bills for machineries and supplies required for operation of the mine and associated infrastructure, as well as for economic development through reduction in pressure on the foreign currency reserves and establishing better commands on balance of payments) instead of asking the project to stockpile it. But the government might possibly gain more by not allowing coal exports. In that case, the government is to create additional coal use capacities in the country (say for example, by establishing new coal fuelled power plants, briquette factories, supplies of coal to brick fields, industries that use coal as fuel and not diesel or petroleum).
This paper assumes that by not implementing the project, the country would face severe energy crisis within less than a decade. It also assumes on the basis of the experience of the Barapaukuria coal mine, which is now in operation around the coal deposits in Phulbari, that although underground mining might apparently look more acceptable in terms of lesser displacement of people and structures or of losses of agricultural land and crops, the method is highly inefficient in terms of resource recovery. Some major problems of underground mining have already been raised above. In addition, the shallow depth of coal deposits at Phulbari, loose soil structure of the surface and sub-surface crust and the thickness of the coal seams do not suggest that the underground mining would be safe and cost-effective. In addition, the extraction of coal by using underground mining would create voids that will inevitably cause land subsidence. There are in fact cases of subsidence in Barapukuria underground coal mine and many among those who are proponents of underground mining in Phulbari now say that if the underground mining method is applied in the project, the land on the surface cannot hold the weight of buildings or relatively heavy structures.

Reduction in coal recovery rates or increase in the costs of mining for measures against the risks would make the project economically non-viable not only for the implementing agency, be it a government, a private, or a joint venture company. A question to consider is: if underground mining ultimately leads to subsidence and subsequently, the loss of the habitat and agricultural land, why shouldn’t the policy makers think of considering open pit method for the project from the very beginning?

The logical point in that context is to make thorough estimates for the losses in settlements and the environmental effects of open pit method of mining in Phulbari and create provisions for compensation and rehabilitation and the protection of environment. Three major concerns are: resettlement, water and the project area economy. The project affected people (PAP) are to be appropriately compensated for the losses they would incur and resettled somewhere and they are to take up land that can be used for production or to have the opportunity of being engaged in gainful alternative livelihoods. Unused land under the possession of Parbatipur Railway Workshop can be an ideal location for the resettlement.

Mining coal in Phulbari would have a substantial impact on the ground water regime and the availability of water for irrigation, fishing and household purposes. There is already proven technology of water management in and around open cut mines in different soil and aquifer conditions in various parts of the world and therefore, it should not be a problem for a coal project in Phulbari to maintain the desirable ground water level and keep the water free of hazardous elements, provided that the investors in such project allocates sufficient attention and resources for the purpose.

The mining would introduce the prospect for three aspects of development that are vital for more rapid development of northern Bangladesh:

(a) Development of agriculture;
(b) Development of industry; and
(c) Development of trade and commerce.

The mining would significantly improve ongoing production in both agriculture (largely because of expanded irrigation support, extension and contract buyers, introduction of new crops and cultivation methods as well as more agro-business to supply inputs, and training of local farmers, if arranged as a part of rehabilitation program for the project affected people) and manufacturing and services sector (directly, by using sustained supply of electricity and indirectly, because of development of derivative industries as the multiplier effect of development of mining activities in the area). There is considerable room for increases in production from a more commercial agriculture using greater inputs and consequently producing higher incomes.

Sitting in the Middle of Nowhere?
There are broader implications of having a coal mine project in Phulbari for development of the country as a whole. The key point here is the manufacturing implications of serving the mine and the urban expansion that will occur as a consequence of the investment. Such project will create impetus to development of trade and commerce in Phulbari and the whole of northern region, as well as in other parts of the country. However, development of the coal mine only is not sufficient for the purpose. Neither will it automatically call for a fast growth of business. What is needed in addition is the improvement in roads, railway and port system, and among many others, improvement in the financial transactions.

The Barapukuria Coal Mine is feeding coal to the 250 MW power plant at the mine gate. How much of the power generated by this plant goes to the national grid is not known but it could be gathered that the office of the Rural Electrification Board in Phulbari is keen to maintain uninterrupted power supply to the fast growing number of deep tube-wells in the area that pay solid revenue to the company and thanks to such business interest of the company, people in the area enjoy regular power supply, at least during the irrigation season. Many however, have strong doubts about the regularity of this supply once the season would be over.

Discovery of coal deposits in the north-western region of the country has attracted a great interest of the nation in the region. But despite the general understanding that the country is facing severe energy crisis and that there are strong potentials of these coal mines in solving the crisis, policy makers continue to hold a strategy of ‘critically reviewing all the different opposing views’ and ‘going slow in taking decisions’. Sometimes, arguments are put in a way that says that the strategy of going slow is justified because there had been public protests against implementation of any mining project in Phulbari and the protest even turned into violence leading to killings. The question is: why can’t the government investigate into the incidence while it has already earned a reputation of investigating into hundreds of different cases. The investigation would not only reveal the motives of the movement and the reason for killing but also pave the way for better understanding of the local community about the various aspects of the Phulbari coal mine, for their informed and meaningful participation in taking decision about mining coal in the area.

The government could investigate into how the so called ‘popular movement’ was organized and whether the motives of its organizers were at all very clean. Such an investigation is necessary for quick ending of the so-called ‘controversy’ over mining coal in Phulbari. Keeping the issue unresolved would only mean that the local people will continue to remain divided in opinions, which only goes in favor of those who want that the country should not develop its own coal mines and are not interested to respond to the question: what the nation would do in just a few years’ time when it will find that there is no electricity around. People now opposing the idea of mining coal in Phulbari may not be available for being held accountable in the critical situation when not only all factories in the county would stop, but also even the fans over the heads would not turn or the bulbs in the rooms or streets would not give lights. Given the present energy situation in Bangladesh and the forecasts for the future, there is no scope of wasting too much time on decision on the country’s coal.

The ‘go slow strategy’ for coal mining decision in north-western Bangladesh helps none but those self proclaimed ‘patriots’ who wish no coal mine in the name of protecting everything in the country. It may be safe for the government to sit and do nothing while ‘watching’ public opinion but possibly, it is not at all safe for the nation to wait for the candles to replace the bulbs or the hatpakha to replace fans and no power for the industry units, especially when oil prices in the world already exceeded $125 per barrel and diesel is no more any good fuel for electricity.

Dr. SM Mahfuzur Rahman: Professor, Department of International Business, University of Dhaka

Source: Energy & POwer
Date: 16 June,2008
Link: http://www.ep-bd.com/

Law Ministry for change in present law before adopting coal policy

The law ministry has asked the energy ministry to amend the present "Mines and Minerals Rules Act-1968" before adopting the coal policy as it is contradictory to the proposed draft coal policy."The energy ministry can recommend to the law ministry for enacting a new law in this regard and send it to the advisory council along with the proposed coal policy. However, the energy ministry will decide what they will do but this change is a must for the sake of justice", a joint secretary from law ministry said at an inter-ministerial meeting yesterday.The law ministry's representative told the first inter-ministerial meeting on draft coal policy that some points in the draft are 'contradictory' to the present rules under which the mining sector is being governed now. So the energy ministry should recommend to the law ministry to reform those law first or make new law in this regard. Otherwise, it would not work, meeting sources said. The energy ministry held the interministrial secretary-level meeting yesterday. M. Mohsin, secretary, energy ministry presided over the meeting. Representatives from environment, land, agriculture, power ministries and NBR were present.Although the government committee on draft policy has already suggested the energy ministry to amend some laws and rules in this regard but some crucial parts of the draft coal policy including royalty, mode of awarding coal field, mining method, foreign investment policy remain unresolved. Law ministry's official said that according to the mine and minerals rules the royalty is fixed and it is awarded on the basis of "first come first serve." But the draft says that royalty would be decided by a committee and coal field should be awarded through tendering process which is contradictory, law ministry official told the meeting. "The present government policy has encouraged the privatisation and foreign investment policy. But the draft is virtually narrowing the path of foreign investment as well as privatisation", meeting sources told The Independent quoting law ministry official.Meeting sources further said none of the representatives submitted any observation on the policy in writing rather they raised some issues which have already been elaborately discussed."Yes it is law ministry's observation, the environment ministry has also raised some issues which we discussed. Whatever the observation we get from them we will send those along with the coal policy to the advisory council", M. Mohsin, secretary, energy ministry, told The Independent.The energy ministry has finalised the coal policy recommending formation of "Khoni-Bangla", a management body to oversee the country's mineral resources including coal, hardrock, lime stone, silica sand, etc. It is alsolearnt that the energy ministry has finalised the policy without making major changes in the draft policy prepared by country's renowned experts and following the secretary-level meeting it will be sent to Chief Adviser Dr Fakhruddin Ahmed along with the committee's observation, for approval.The committee did not say anything about the coal extraction method. The issue should be specially on coal field. It may be mentioned that the committee suggested to the government to examine the pros and cons of open-pit mining and that the government should go for open pit on a limited scale. The policy has not mentioned anything about it.It is learnt that the energy ministry in the draft policy suggested the land reclamation issue be kept under government's jurisdiction. However, the committee suggested to give the land to its owner. The country has a known reserve of 2.7 billion metric tons of coal but there is no specific policy on coal development, although there are some rules and regulations to lease out coalfields to foreign companies.
Source: The Independent
Date: 27/06/08

Thursday, June 26, 2008

How Much Natural Resource Is Adequate For A Country?

Mushfiqur Rahman
A very commonly asked question is "How much natural resource is enough?" In our country there is a popular ongoing debate on coal extraction to meet the present pressing demands for energy versus the suggestion for keeping the resource underground for the future needs, until we will learn how to mine the coal resources without causing any interference with activity on the surface (above the resources) and until we have home grown technology and local financing. Hard to believe? Certainly the recent announcement that the research level in our universities has waned doesn't instill confidence that we Bangladeshis can do it all alone at least in the foreseeable future. At times a section of people relate the coal extraction issues with the questions of resource adequacy paradigm. A section of activists have successfully established the perception that we have consumed almost all our natural gas resources and only a small amount of coal should be extracted for beneficial use in the future. So we need to promote the strategy of coal extraction only by ‘local miners (?)’ so that the extracted resources can be used locally. At the same time the fact remains unchanged that there is no local miner and investment to facilitate any serious coal mining and we don't see plans materializing for enough coal (to help solve our energy crisis) to be mined in the foreseeable future. So the country has been systematically moving from shortages of commercial energy to disastrous crisis, almost like someone is planning to hold back our country's economic development. Simply put we have an eager workforce and the urge to do better, but without energy industry and human development can't move forward. The discovery of coal resources in our country is not new, but for the last forty years of the knowledge of having coal we could hardly secure much and only one million tonnes has so far been realised from our only commercial coal mining operation. Even then the cost of producing this coal has been enormous and difficult to economically justify. Although this existing coal mine has been dependent on foreign funding, technology and manpower support, its performance demonstrates inadequate studies were carried out and choice of mining method was not made based on proper analysis of the ground conditions and nature of the coal seam(s), especially the large thickness. There is now speculation that this underground mine which apparently will extract less than five million tones of coal from the total 390 million tonnes coal reserve, will be wound down and the Government may invite new investors to develop the coal deposit using the open pit mine method. This will obviously negate the existing underground operation and its infrastructure will be demolished to make way for a much higher production and recovery of our precious coal. So the coal exploration and mining with its more than forty years history followed inadequate strategies and has failed to secure any practical mining which is economically, environmentally and socially sustainable. The country has been badly suffering from commercial energy supply shortages but ironically is still sitting on good quality coal resources estimates to be at least 2.5 billion tonnes. So the possession of vital natural resource in the country (remaining safely under the ground) does not necessarily automatically mean the resources will be available for its economic use, ie; that we Bangladeshis will get any benefit. While the people of our country and our Government continue to debate the adequacy of natural resources we are running out of time and denying ourselves the benefit from the coal resource, ie; a reliable new energy supply, new power stations, no load shedding, industrial development and jobs, no problem with power for irrigation pumps, etc etc. If we recall the natural resource related fundamental studies, we see the longest running issue in natural resource economics is resource adequacy. The conventional approach towards natural resources as ‘input’ to production always leads to the simple conclusion that the existing natural resources are not adequate for any nation and it can never be adequate in the long term. The reason is simple; the growth required for economic development will always require more and more inputs so in time the needs of our future generations will not be indefinitely met by our existing natural resources. A section of people within the society always try to project the ideas that the existing natural resources are extremely limited specially those which are non renewable. They love to believe that the natural resource scarcities will restrict economic growth in future. In 1914 the US Bureau of Mines estimated that there would be oil left over for only ten year's consumption. In 1939 the Department of the Interior projected that oil would last only 13 years, and again in 1951 it was projected that oil would run out 13 years later. Even if we were to run out of oil, this would not mean that oil was unavailable. Rather it would become more and more expensive. If we want to examine whether oil is getting more and more scarce we simply have to look at whether oil is getting more and more expensive, ie; supply and demand. A similar analogy can be drawn for other natural resources and their scarcity projections. Before the industrial revolution when the economic activities were tied more closely to local natural resources, fears for shortages of items like forest resources and water were common. With the industrial revolution becoming obvious through the significant contribution of in 1769 of James Watt’s steam engine invention, the reliance on coal grew manifold. Accordingly concerns shifted to the possibility that the depletion of coal will lead to the collapse of development. In the Twentieth Century coal was partially replaced by oil as it is easier to transport, store and use. As recent as the mid 1970s petroleum crisis there were no shortages of scaremongering about natural resource scarcity and economic collapse.In 1973 and 1979 a pair of sudden price increases awakened the industrial world to its dependence on cheap crude oil. Prices first tripled in response to an Arab embargo and then nearly doubled again when the Shah's of Iran Regime was overthrown resulting a major recession worldwide. Many analysts warned this crisis as a proof that the world soon will run out of oil. But the reality was different. The dire predictions were emotional and reactions political. By 1973 the world had consumed only about one eighth of its readily accessible crude oil. The five Middle Eastern countries (members of OPEC) could make the price hike for crude oil worldwide not because the oil was growing scares, but because they had managed to corner 36% of the market. Later, when the demand sagged, the Alaskan and North Sea oil weakened OPEC’s economic firm control, the price curve of oil collapsed. Ever since we have been depending on naturally occurred fuel we have been worried about running out of fuel.The pessimists are not infamous. We may recall at least Thomas Malthus who became famous for his treaties that human population growth would inevitably outstrip the ability of nature to provide sustenance in ever-increasing amounts. With the assumptions of exponential growth and limited resources, we can easily make a doomsday prophecy. Our present day energy supply is mainly based on coal, oil and natural gas which were created over millions and millions of years. Many people believe that consuming the wealth created over millions of years within a few hundred years is just not right. We should consume our natural resources in a way that our future generations effectively get their share of these resources through developing our country's economy and human resources to the best of our ability, and positioning our country and people so that our nation is able to afford whatever is required in the future. The argument of "sustainable resource use" sounds attractive, however, it is inevitable that at some stage in the future a generation of people will be left with no fossil fuel at all, even if we slow down consumption and use just one barrel of oil a year! The strong counter argument is that although we can't preserve our natural resources for future generations we have an obligation to leave for them the knowledge and capital such that they can secure a quality of life that is better than ours, ie; this is the definition of 'progress'. The same argument furthers the logic that if our society, while using coal and other fossil fuels in the near term, can further its technical know-how and economy, then it should be able to develop longer term energy resources (some of which are yet to be identified) to ultimately sustain our nation.The former Saudi oil minister and founding architect of OPEC genuinely pointed out: ‘the Stone Age came to an end not for lack of stones, and oil age will end but not for a lack of oil’. Thus we can appreciate that eventually better substitutes and superior materials will and do replace the conventionally used natural resources over time. We stopped using stone because bronze and iron were superior substitute materials. The patterns of natural resource use have changed dramatically. History shows that substitution does occur in response to changing conditions, scarcity of supply and price. In the 1970s high energy prices encouraged substitution for energy inputs including the pursuit of energy efficient machines. Today we see this happening in the car industry where we are now able to buy cars that are no longer restricted to use conventional fossil fuel but can run on bio-fuels, battery power and hydrogen.In the backdrop of the new ‘oil crisis’, analysts say that the world contains enormous caches of unconventional oil that can substitute for normal crude oil, with the rising oil price to making such alternatives profitable to manufacture. The Orinicco oil belt in Venezuela has been assessed to contain 1.2 trillion barrels of sludge known as heavy oil. Tar sands and shale deposits in Canada and the former Soviet Union may contain the equivalent of more than 300 billion barrels of oil. The United States Energy Information Agency estimates that based on today's oil price, it would be possible to economically produce about 550 billion barrels of oil from tar sands and oil shale which would have the effect of increasing the present global oil reserves by some 50%. It is further estimated that within 25 years we could be able to access commercially twice as much oil than the world currently has available. The total size of oil shale resources is staggering. It is estimated that globally there is about 240 times more oil shale than the conventional petroleum resources. In addition the development of technology for conversion of coal to synthetic oil, especially the ‘rejected’ low quality coal, will add a volume of oil to the world's reserve. Theoretically these unconventional oil reserves could quench the world's thirst for liquid petroleum as conventional reserves are depleted. The above potential substitutes are an addition to the current conventional oil reserves that (based on existing finds) will last at least another 40 years at present consumption rates. There is also an estimated at least 60 years worth of gas and 230 years worth of coal. Consequently, there is no need for immediate worry about running out of fossil fuels. But the industry will be undergoing difficulties for some time and investment will be needed to ramp up production of unconventional oil.From a macroeconomic standpoint, natural resources are neither necessary nor sufficient for achieving high growth rates. Countries like Japan, Korea, and Singapore for instance have achieved high growth rates despite relatively poor natural resource endowments. On the other hand, many countries like Nigeria, Venezuela, and Zambia with very substantial resource endowments have not only failed to secure high growth in recent decades but have rather regressed. On the other hand, history clearly shows many examples where natural resource endowments have been instrumental in supporting economic growth. Some countries of the Middle East, for example the United Arab Emirates, have achieved high incomes and significant national development based on their petroleum resources. Economic growth in any country is related to the growth in its productive capacity and relative to the growth of its population. Productive capacity is a function of several factors including the quality of productive inputs, (labour, traditional capital, natural capital etc.) available to the economy and the productivity of those inputs in turning out useful goods and services. Natural resources may be linked to economic growth and we can consider them as natural capital, the quantities and qualities are gifted by the nature. But the human being is to make use to this natural capital to produce goods and services combining with other inputs. So the burning issue remains: we will promote using our natural resources to develop our human resources and industrial productive capacity to rocket our economic growth and build the necessary knowledge and financial means for our future generation's well-being or will we continue our never-ending debate and procrastination thus leaving our natural resources buried and depriving our nation of a better present and even better future?
Mushfiqur Rahman: A mining engineer. The views are of the authors and do not necessarily reflect the opinions or views of the organization where he works or with which he is associated in any form.
Source: Energy & Power
Date: 16 June,2008

Charting The Way Forward

Professor Ajoy K. Ghose

There is no dearth of debates on whether on not Bangladesh faces an energy crisis of a monumental dimension. It is increasingly becoming apparent however that unless some drastic policy decisions are taken right now, the energy dilemma will exacerbate to a level that will be beyond the control of the nation. Bangladesh’s energy landscape presents some ominous indicators. Gas, which had thus far been the mainstay of the nation’s energy base is, by all accounts, being rapidly depleted and unless the nation strikes it rich with new discoveries in its offshore fields, the energy future appears to be dark and dismal. The recently discovered coal resources in northwest Bangladesh are mired in controversy and organized opposition by civil society is setting up major roadblocks to coal development with the coal policy gathering dust in the files of the government. As energy is the very life blood of a nation, ensuring secure, reliable, affordable supplies of energy is a serious concern for Bangladesh, even though the energy use is very low with a per capita primary energy supply of 0.16 toe/capita(2004 data), possibly the lowest in the region. While traditional biomass meets some 50% of the total energy requirements, especially in rural Bangladesh, this is contributing to large-scale deforestation, besides serious impacts on the health of rural population because of indoor air pollution. Clearly, the dependence on traditional fuels and inefficient technologies, militate against the vision of the Bangladesh Government to provide for “electricity for all” by 2020. Even the per capita electricity consumption at 167 kWh/year falls short of the necessary stimulus required to attain a GDP growth rate of 6-7%.
Energy availability will be central to the development agenda of Bangladesh, as the catalyst for change for a better future. There are serious concerns about the security of energy supplies, investment in energy infrastructure and rising aspirations of the people with energy use continuing to grow inexorably. Even if there are no quick fixes, a road map for the nation’s energy future has to be drawn up and translated into reality if only to kick start the national economy and ward off potential political and social instability. Energy Landscape of Bangladesh The energy landscape of Bangladesh is a variegated one where biomass fuels account for 52% of the energy consumption. Of the commercial energy resources, natural gas has a dominant share, besides minor contributions from hydro, oil and coal and very limited share of renewables. Natural gas consuming sectors include the power sector, the fertilizer industry, domestic, captive power and transport and the demand has increased manifold over the years. Despite the myth that Bangladesh is “floating over gas”, the prospectivity for striking more gas deposits is high. According to World Energy Congress Survey of 2004, the proved recoverable reserves are estimated at 301 billion cubic metres and the R/P ratio is estimated at some 26 years. With rapidly escalating demand for gas, the reserves are fast depleting and the nation faces a resource crunch, unless new discoveries are made in gas fields. As much of Bangladesh is poorly explored, both off-shore and on-shore, the potential for further discoveries is thought to be substantial and a windfall of a few new deposits of the size of Titas or Habiganj could help ameliorate the energy resource crunch. This calls for extensive exploration efforts with matching investments and recourse to high technology.
The total installed capacity of power plants in 2005-2006 was 5245 MW, and the maximum demand was 3782 MW. The aggregate generation was 23,703 MkWh, of which the share of gas was 81.5%, hydro 4.3%, furnace oil 5.3%, diesel 4.07% and coal 4.74%. The access to electrical energy was only around 42%, despite the targeted 100 per cent electrification of all 84,000 villages in the country.The discovery of coal in northwest Bangladesh in 1960’s has opened up a new energy source which could provide a boost, if not a reinforcement, to the energy scenario of the country .This marks in fact a major milestone in sustainable energy development, given appropriate policy support. Five major coal deposits have been delineated in the recent past which include Jamalganj, Barapukuria, Khalaspir, Phulbari and Dighipara with an aggregate resource base of 3300 million tonnes, of which Phulbari and Barapukuria have been explored in detail with reserves estimated at 572 million tonnes and 303 million tonnes respectively. Developed with Chinese assistance, Barapukuria coal mine commenced production in Sepotember, 2005. The choice of underground method of exploitation has been fraught with serious consequences; the recovery is low and the bulk production has fallen short of the planned target production of 1million tonnes per year. The coal deposits discovered so far in Bangladesh are characterized by a sequence of 6 or 7 seams, some of which are thick to very thick.
The coal seams are overlain by Upper and Lower Dupi Tila formations which are highly water-bearing aquifers which pose serious problems of dewatering. At Barapukuria, a water inrush in 1996 led to significant sterilization of coal reserves. Currently, Barapukuria is producing around 0.3 to 0.4 million tonnes /year, but the recovery will not exceed 10% of the aggregate proven reserves. It is time to re-think the exploitation strategy and convert the underground operations to an open pit operation which besides improving recovery, safety and lowering cost of production would also permit of high production volume. The Phulbari coal deposit has been planned for exploitation by an open pit mine, with an ultimate pit depth of 330 m, for a production volume of 15Million tonnes per year. The project has encountered severe opposition from the civil society on the grounds of possible impacts on groundwater resources in the region, the problems of displacement of project affected people and likely damage to valuable agricultural land.
Much of the opposition is grounded on imaginary/unreal arguments; the displacement of the people would certainly call for a sensitive handling of the situation with a well-conceived R & R plan, providing for fair compensation and resettlement entitlements, training and provision of jobs for “locals” and building up appropriate social infrastructure for the people. The feasibility report of the Phulbari project has been submitted to the Government and is awaiting approval; the project has already received appropriate environmental clearances.
Both Khalaspir and Dighipara coal deposits need to be explored in depth to justify the mining plans. It should be possible to work them by open pit method to circumvent the problems likely with underground exploitation under aquifers. It would be in the interest of Bangladesh to examine the prospects of these deposits by open pit exploitation using the current shelf of strategies and state-of-the-art knowledge around the world and the Government would be well advised to set up a committee of experts rather than having the issues discussed and debated endlessly by civil society, who are oftentimes very ill-informed of coal mining technology per se.
The coal deposit at Jamalganj is a deep-seated one, with depth varying between 640 to 1160 m, and could be an ideal candidate for underground exploitation. However, keeping in view the escalating costs of underground mining from depth, lack of precedent experience in Bangladesh, one could conceive of different strategies for recovering the heat content of the coal seams such as recourse to underground coal gasification (UCG) at Jamalganj.
The coal resources of Bangladesh open up a new window of opportunity for staving off the energy crisis in the foreseeable future. The coal seams are of high quality and will provide fuel for thermal power plants to meet the crying need for electricity. One could even conceive of conversion of coal to liquids using such coals, keeping in view the skyrocketing oil prices, which could touch $150 per barrel within 2008 itself.
A well-conceived sustainable coal development plan for Bangladesh needs to be worked out identifying the share of coal in the national energy mix. It should be possible to accelerate coal development through joint ventures for Khalaspir and Dighipara and approving the feasibility report for Phulbari. By 2015, Phulbari could produce 12-15 million tonnes per year, while Barapukuria(if converted to an open pit operation) and Khalaspir and Dighipara augment the coal production by 5 million tonnes. Thermal power generation, given appropriate investments, should be possible for a capacity of 3000MW, using 9 million tonnes of high quality coal from Phulbari, and Barapukuria.
The focus on power generation for the urban sector has led to a neglect of distributed generation, especially of renewables. If the vision of 2020 has to be met, the rural sector must receive a higher priority.
Sustainable Energy Development – The Way ForwardBangladesh faces a daunting challenge in meeting her “energy hunger”, and overcoming the glaring rural-urban disparity in terms of access to energy. By 2020, the vision of “electricity for all” has to be realized and the per capita electricity consumption has to be raised to at least 750 kWh per year, if only to lift the nation by the bootstrap out of energy deprivation for a new economic future. With the skewed diversion of investments and human resources to urban energy supplies, the rural sector has been ignored and the situation can only be corrected by massive increase in the national power generation capacity and focus on accelerated rural electrification. Much of the new generation capacity could be based on coal, if the road blocks to coal development are lifted. The investment in power generation could be partly offset by exporting coal. The exploitation of coal in Bangladesh would herald the beginning of new energy and economic era and deserves the support of the Government in full.

Source: Energy and Power.
Date: 16 June, 2008
Link: http://www.ep-bd.com/

Denial of Everything

EP Report

Expectations from the military-backed caretaker government of Dr. Fakhruddin Ahmed knew no limit simply because of their high sounding dreams they showed the nation since the 1/11 changeover. Intentional or unintentional, the so-called politics of the non-party government made things so complicated that now the windows of opportunities for the branded “political thieves” are opening up that they will come out tomorrow, if not today, as “political heroes”. Political analysts think “political game” of putting the two key leaders of the two main political parties behind the bars marred the opportunities to streamline the politics.
“Since 90 percent of people of Bangladesh are supporters of the two parties, the two ex Premiers should have been given the benefit of doubt to allow them to bring their parties on the right tracks,” an analyst said adding “the belated call from the Chief Advisor of national consensus would have witnessed a success had he sat with the two leaders within first couple of months and convinced them about the consensus, alongside carrying out the anti-corruption drive.”
“Now the opportunities are missed if we don’t want to fall into another deep crisis again,” said the analyst.
Like super structure, the country missed opportunities in the basic structure too. If the caretaker government did not mishandle the two key political players of the country, it one side could ensure commitment from them of peaceful politics in future without hurting the economy; and on other could concentrate more on economic affairs -- not only the day to day matters, but also by preparing a roadmap for economic upliftment in next 10 years with participation from all concerned quarters and again realizing the commitment from the politicians that they will work together to materialize the plan.
Anyway, Bangladesh lacks in visionary leadership and the caretaker government was no exception. Bangladesh missed the opportunity after the independence, then after overthrowing autocrat Ershad in 1990 and now following the 1/11 in 2007.
If the political roadmap progresses properly, the national election will be held in the third week of December. The country is expected to embark with an elected government in 2009. Now it’s clear that the qualitative change in politics is a far cry not for anyone else but due to the previously high ambitious “minus 2” plan of the caretaker government itself. Now it appears that the government will not able to bring minimum change in politics as now they had to “manage 2” formula as the “minus 2” boomeranged. “Had the government didn’t go for the minus 2 certainly certain changes could have been possible through the two leaders themselves,” another analyst said, adding “end of the day we’re going to have a big zero after all these high sounding changes following the 1/11 changeover.”
So, when the government of Fakhruddin Ahmed will hand over power to the elected government almost everything will be similar it was earlier. Even the changes expected in other sectors like economy are not being possible. Energy sector is no exception.
According to latest official statistics, per capita power consumption in Bangladesh is 140 kilowatt hour (kwh). The per capita power consumption in Sri Lanka is 325 Kwh, Pakistan 408 Kwh, India 663 Kwh, European countries 7,500-8,000 Kwh, Australia around 8,000 Kwh and in USA it is 10,000 Kwh.
Bangladesh not only remains at the bottom of the list of power consumption, it keeps electricity out of reach of 70 percent people of the country.
The power sector master plan suggests that the country requires 43,000 megawatt (MW) electricity to ensure power for all by 2025. According to the plan, 76 percent of the requirement or 33,000 MW will come from coal although now the percentage is only 5. In USA coal contributes to over 50 percent of total power generation, in India it is 70 percent and the figure for fast growing China is similar.
On the other hand, 87 percent of Bangladesh’s power generation depends on natural gas. But, the future of gas for Bangladesh is bleak and the existing fields are depleting.
According to United States Geological Survey (USGS), the prospect of gas resources with 50 percent probability is 32 TCF while it is 42 percent as per study carried out by the Norwegian Petroleum Directorate (NPD). But, in terms of 90 percent probability it is not over 8 TCF.
Whatever the prospect is, nothing has been done in public sector to explore the prospect after 1990. After the major discovery of Bibiyana in 1998, a good discovery by an IOC was Moulvibazar in 1999 and then a small discovery in Bangura. Many might be surprised witnessing the silent role of the IOCs in last one decade while it is considered that 93 percent of gas discovery in the country was by the IOCs.
Analysts found the indecision of the government for such a situation. The IOCs didn’t find any clear indication from the government that what it will do with the discovered gas if an IOC makes the discovery investing millions of dollars. In fact, that was the reason that the IOC had wanted that gas is exported from Bangladesh. But, the government neither could decide in favor of gas export not could assure the IOCs that its discovered gas will have market inside the country.
In fact, that’s the reason the IOCs backtracked from the exploration activities and the country did not any discovery by them. Experts said had the government dared to export a portion of the gas from the Bibiyana, not only Chevron but also other IOCs would get encouraged to go for new exploration. If export was not possible due to political reasons, the government could go for major power projects creating market for the gas discovered by the IOCs. Still, the government sat idle and the result is that the country is now experiencing serious power crisis in one hand and on the other gas shortage, too.
Lately, the government went for third round bidding for offshore blocks. Still, the response is not overwhelming. Also, the High Court has issued show cause notice upon the government.
If one asks why the dismal situation of the country’s gas sector, the answer is simple: Denial of everything. A civil society group that could be an effective pressure group emerged as sycophantic elements that opposed everything. Without realizing own capacity in terms of both technology and investment these people are opposed to any kind of foreign investment in the energy sector.
Although the cell phone companies are sucking billions of dollars of common people in the name `days talks’ and `night talks’ and the country’s state-run BTTB had the capacity to go for such mobile phone networks, these “patriots” would not utter a single word. But, they are ready to sacrifice their lives if a foreign company invests in Bangladesh, obviously they are not charity organizations... profit is their main objective, and by the investment the company otherwise helps the country to ensure energy security these formerly leftists will threaten to collapse the country no matter whether they have the ability or not.
Similarly, they opposed the gas export idea showing only one side the coin. The intellectuals would never say what the objective when a national committee had suggested to export of portion of IOCs gas, that was to encourage the foreign companies to invest more for more discoveries and more energy security. The idea to oppose the gas export bid was popular, but in reality now the government and people of the country are feeling the heat of power crisis due to gas shortage.
The same people who once burnt jute godowns after the independence in the name of Maoist revolution are now shedding tears for jute industry of the country. Their present bid to “protect oil and gas” is also that kind of patriotism. These intellectuals are “so far sighted” that only a few years back they couldn’t understand the value of coal and thus forgot to incorporate the word coal in their organizational banner. Suddenly they woke up and now their main concentration is coal although they had launched the “crusade to protect oil and gas”.
The group had incorporated their bid to protect the port and after the caretaker government brought revolutionary changes in Chittagong Port, now it is clear that what kind of port the formerly leftists had wanted and what should be it in reality that is now we are watching.
Bangladesh’s present gas crisis could be overcome had there be the much-talked-about Myanmar-Bangladesh-India tri-nation gas pipeline. It would help Bangladesh to import gas in case of necessity. But, this was also not welcomed by the “sole protectors” of the country and the result is in hands.
But, the dangerous thing is that the past government almost bowed down to the irrational demands and finally could not take any courageous decision. In fact, it is also true that a government that was sunken by the corruption does not have the courage to take apparent unpopular decisions and show the people the fruit after a few years.
As the country fell behind in terms of gas exploration, now the golden opportunity for the country is coal prospect. The recoverable coal reserve in the country is 2.0 billion tonnes which is equivalent to about 65 TCF of gas. The Phulbari coal field, having a recoverable reserve of 572 million tonnes is ready for development.
But, again the problem is a Dhaka-based group supported by some international NGOs who by misleading information could convince the people around the coal field. The group at first campaigned that they would lay down their lives, but would not allow any mine. Later they said that the mine has to be underground. Once they campaigned that the entire area around Phulbari would be deserted if there is any coal mine over there. Now their campaign is that the agreement with the foreign company is anti-state, so the mine has to be developed by a local company.
The debate over method of the mining has been continuing for past few years. Unfortunately, the debate is not concentrated within the experts. Rather, it became an issue of a few people who hardly could manage a few hundred people in their support, but maintain regular presence in local and foreign media.
The Barapukuria itself proved that the geology of Bangladesh is not suitable for underground mining even if we consider that underground mine can give at best 20 percent of total reserve while an open pit mine will ensure at least 95 percent. Just consider that production from second slice of the Barapukuria might not be possible, which is scheduled from 2011. Also, consider the frequent accidents that take place in underground mines in China and the accidents witnessed by Barapukuria, too.
Interestingly, the group coupled with some environmentalists are opposed to development of coal production in Bangladesh although the share of coal in power generation in the most developed USA is above 50 percent. It is 80-82 percent for China and 75 percent in India. And for Bangladesh it is not over 5 percent.
Surprisingly, the statement of the “protectors” is similar to that of the developed countries who are interested to buy Bangladesh’s carbon credit.
Bangladesh is passing through a critical juncture in the political arena. Also, energy is the biggest challenge for the country specially when the oil price reached US$ 139 per barrel and projected to be $ 200 by the year end. For survival of the country, country’s people and the economy there is no alternative to ensure energy security. And if the country sits idle keeping coal reserve equivalent to 65 TCF of gas beneath the soil it’ll be simply living in the fool’s paradise.
So, the question is whether the country will be continuing to live in the fool’s paradise or come out paradox of denial of everything for better future of the people of the country? It’s the best time to launch a true campaign for energy for people, not depriving them in the name of their protection.
The role of politicians in this regard is very vital. They have to understand the ground reality and come of the years old practice of denial of everything only because they are in the opposition.

Source:Energy & Power
Date: 16 June, 2008
Link:http://www.ep-bd.com/

Thursday, June 19, 2008

Govt alone won't go for big investment in power generation, says Tamim -Star Business Report


The government says its involvement in future power generation will be on the basis of a public-private partnership.



Govt alone won't go for big investment in power generation, says Tamim
Star Business Report. The government alone will not go for big investment in power generation system anymore, said the special assistant to the chief adviser for the power and energy ministry. "What we change in the power sector is that government is not going to invest in a big way in power generation anymore. All government involvement in the future will be a public-private partnership," Professor M Tamim told a discussion in Dhaka yesterday. The discussion on Need of Energy Producers and Government Perspective was organised by the International Business Forum of Bangladesh (IBFB) at a city hotel. Tamim said formulation of an energy policy is now under process, which will lift the universal subsidy that benefits the consumers who do not need it. "It's the state's responsibility to provide power to the poor. But today, everybody is not poor. The people who can afford do not deserve subsidy and that has to be lifted. This type of consumers has to be separated. We are in the process of doing it," he said, adding that merchant power plant by both local and foreign entrepreneurs will be allowed under the new policy. "The free market economy allows such a power plant concept. Anybody can generate power. But the government will neither ensure fuel nor purchase that power," Tamim categorically said, urging the entrepreneurs to find market and fix the price of their produce. "If you find anybody to purchase your electricity at the rate of Tk10, please go ahead, produce electricity and make business of Tk4 out of Tk10. I have no problem. But don't ask me for fuel, because government cannot provide fuel or gas," he said. To mitigate the power crisis, the present government has decided to replace the country's oldest inefficient power plants, the special assistant said. He assured the local entrepreneurs that they would be awarded the task of rehabilitating any power plant that falls inefficient. "The local entrepreneurs can bid on the basis of price. If anyone likes to replace the Ashuganj power plant, a 20 percent efficient one, the government will ensure gas supply and also purchase the electricity produced there,” Tamim went on, pointing it out that the equity share between the government and the private sector would be on 49-51 percent basis. Mahmudul Islam Chowdhury, president of IBFB, Jalal Ahmed, chairman of Petrobangla, M S Islam head of international cooperation of Grameen Shakti, Steve Wilson, president of Chevron Bangladesh, and Ajay Nambiar, director (commercial) of Cairn Energy Bangladesh, also spoke on the occasion. They laid emphasis on new investment on energy sector, suggesting a search for alternative energy to mitigate the increasing demand

Source:The Daily Star
Date:19.06.08
Link:http://www.thedailystar.net/story.php?nid=41776

Sunday, June 15, 2008

If not coal, what?


FORREST COOKSON

The widespread attack by foreign NGOs against use of coal and the Phulbari Coal Project in particular is highly irresponsible. The basis of the attacks are five assertions repeated over and over:1. Open cast coal mines are bad.2. Coal mines cause a lot of dislocation of people.3. Mines will destroy valuable farm land that should be kept in agriculture.4. Private foreign investors exploit Bangladesh so should not be allowed.5. ADB should not participate in coal projects.These websites call for people to tell the ADB not to support the Project. Note that the Bangladesh government has not yet made a decision on the use of coal but these NGOs are trying to pressure ADB to reject participation, before the government’s views are known! This attack partially worked as ADB has now put aside its monitoring of the Phulbari Coal Project until the government decides what it wants! The ADB has not dropped its potential participation but is, properly waiting the government’s decision. In the meantime the NGOs are trying to build up international groups to oppose support by ADB for coal development in Bangladesh. The Bangladesh government should certainly listen to interested parties, but as a sovereign nation the leaders must decide what is best for Bangladesh. Neither the donors nor the NGOs have a right to try to force the government to act as they wish.The difficulty with these attacks by the NGOs is that they completely ignore the most important question: “How will Bangladesh fuel its electricity needs?” The answers to this question floating around are:1. Use natural gas instead of coal – but, of course, there is an acute shortage of gas that will take at least ten years to solve. The pressures by NGOs to stop mining of coal have already caused a two year delay in achieving any significant step towards developing Bangladesh’s coal sector. While there is potential for more gas in Bangladesh it has not yet been discovered. Until a hole is drilled and commercial gas quantity proven, it is prudent to diversify the sources of fuel for power plants. Furthermore, the best way to run the power system is to put the base load on to coal fired plants and handle the peaking demands using gas.2. Let Bangladeshis develop the coal resources without foreign participation: In Bangladesh there is very limited availability of experienced technical staff in designing and operating large coal mines (open cast or underground). The capital requirements for such mines are immense. Proponents of this idea know very well this is not feasible but it appeals to Bangalee nationalism. Of course in time Bangladeshi citizens will play a greater and greater role in the provision of skilled staff and capital for developing the coal sector but it will take a long time. The belief that there is staff and capital sitting around ready to implement coal projects is simply wrong. This path will slowdown the development of coal fired plants by at least a decade. If enforced for both coal and gas it is two decades!3. Develop nuclear power: This can only be achieved with use of foreign capital and technicians. Furthermore to build up to 8000 MWs will take 10 nuclear power plants. This cannot be done in 15 years. Using nuclear power will result in very intrusive safeguards and provide years of argument over the environmental impact. It is important to go forward with nuclear power but it cannot solve the problems of the next 10 to 15 years.4. Renewable energy: It is a particularly silly idea to think all of Bangladesh’s additional energy requirements can be met by renewable sources. Renewable energy is very expensive and its use in Bangladesh in solar form is heavily subsidised. Wind power potential is limited and wind power remains much more expensive than hydrocarbon based electricity. Just as for nuclear power renewable energy use should be encouraged but only hydrocarbon based power will provide needed electricity for the next 10 to 15 years. All these approaches proposed by foreign NGOs are simply wrong for Bangladesh! It is outrageous that these organisations should be undermining Bangladesh’s development efforts. Their position is “It is better to be poor than to develop the coal resources.”The position is so simple: Economic growth needs cheap electrical energy available only from use of coal and gas. Renewable energy is too expensive for mass use. The opposition by JACSES (Japan) or AID Watch (Australia) to development of energy in Bangladesh is a deeply immoral act. People sitting in developed countries using electricity at a high rate generated by coal, gas and nuclear plants are preaching to Bangladesh not to produce electricity with the coal and gas Bangladesh has! Let these people come and live in Bangladesh for five years without electricity at the income level of the median rural household. Perhaps they would then understand the urgency of expanding the power sector and accelerating economic growth. Expanding electricity availability for rural households is one of the most important tasks to be achieved; it is unfortunate that these foreign NGOs, judged by their actions, are working to keep this from happening.No doubt greater use of gas and coal will have some negative input on the environment. Should Bangladesh sacrifice its economic growth to reduce this adverse impact? Bangladesh does far less damage to the environment than either Australia or Japan. Let these NGOs clean up their own houses.Turning now to the objections.Open cast coal mines are bad: There is no alternative to the open cast mine. The technical problems [water regime, acceptable environment recovery] are manageable according to the world class mine design engineers engaged by Asia Energy. The government must insure that the vendor takes care of the environment. Rather than attacking open cast mines one should ask “How can we achieve this while protecting the affected population and the environment?” Open cast mines are necessary to build up Bangladesh power sector; otherwise not enough coal is available from underground mines. The target is 12 million mt per annum for power; this can never be achieved with underground mines. In any event expert opinion is that the coal deposits are only marginally suitable for underground mining.Coal mines cause a lot of dislocated of people: The critics miss the point, Asia Energy has to agree to resettle all affected persons in such a way that people are better off financially than before the resettlement. It does not matter who is right about the number. The government must make agreements with the coal companies to insure this happens. Difficulties are not a reason not to do the project, but rather a reason to be particularly careful and to work to overcome difficulties. The government must insure that resettlement is done according to its rules protecting the financial position of these affected. The NGOs efforts to drive out ADB will adversely effect the poor in the project area. The hypocrisy is breath taking. The coal projects will use up valuable farm land that should be kept in agriculture: This is true but the project will make an enormous contribution to the economy. Land is lost to agriculture continuously and if Bangladesh is ever to become a middle income country it has to maximise return to the land through industrial development. The future of Bangladesh does not rest with rice farming but through industrial development.Private foreign investors exploit Bangladesh, so should not be allowed: Many believe this and hence argue such investment should be banned. But others say: Environmental NGOs are bad and should be banned. This is the level of this argument! Noise not fact. Self righteous behaviour is best replaced with some humility and doubt. Of course foreign investors are trying to make money! The question is the word “exploit.” The earnings are large became the investments are large. Private foreign investment in the Bangladesh energy sector has been beneficial for both the nation and the investor. It has provided gas at less than $1 per thousand cubic feet and electricity at less than 3 ¢ US per kwh. For all the accusations and claims the Bangladesh government through good management and encouraging competition did very well using foreign investors in gas and electricity.ADB should not participate in coal projects: I do not know if the government will approve the Phulbari Coal Project. But if the government does Asia Energy faces no difficulty in financing the project from private sources or sovereign wealth funds. The government should welcome ADB participation to strengthen achievement of high standards for resettlement and environmental management.Anyone genuinely interested in the Bangladesh peoples’ welfare wants the power and influence of the ADB on the side of the people. Indeed the implementation of large coal projects in Dinajpur will accelerate the growth of this part of Bangladesh raising incomes, providing employment and attracting people from surrounding areas. Asia Energy does not need ADB for financing the Project; it is the Bangladesh government that can use ADB to strengthen its hand! Open debate about the pros and cons of energy projects and strategy is of great benefit to Bangladesh. But for NGOs to interfere in the relationship of ADB and the government seems questionable behaviour. This argument needs to be based on truth and analysis not misrepresentations and unsubstantiated claims.
Date:15.06.08
Source: The Independent

Wednesday, June 4, 2008