'Bangladesh would face an energy crisis even if the war didn't break out'

Professor Anu Muhammad

Professor of economics at Jahangirnagar University, Anu Muhammad, has long been working in favour of increasing national capacity in the country's power and energy sector. He is the former member secretary of the National Committee for the Protection of Oil, Gas, Mineral Resources, Power and Ports. In an interview with Prothom Alo's senior correspondent Mohiuddin, he talks about the ongoing energy crisis and the condition of power, gas, coal, nuclear and renewable energy sectors, locally and globally.

Q :

The government maintains that global circumstances, particularly the Russia-Ukraine war, are responsible for the prevailing energy crisis. What are your thoughts about this?

The Russia-Ukraine war has put pressure on the economy of all countries. So it certainly is a reason for the energy crisis in the country. But it can be said with all certainty that even if the war had not taken place, Bangladesh would have still faced an energy crisis. The cause behind this is the government's master plan in the power sector. This plan was aimed at appeasing certain local and foreign business quarters.

The present government has been in power for a consecutive three terms, 13 years at a stretch. Yet there has been no proper gas exploration. That is why this gas crisis has emerged and this is being used as an excuse to import liquefied natural gas (LNG). Coal, nuclear and LNG dependence is not right. Dependence on imports means the risk of uncertainty. And then again, there were no discussions within the country on the master plan, local experts were not consulted. A certain Japanese agency carried this out and they are doing business in this sector.

Q :

So has the plan to import being made to benefit certain selected quarters?

In the case of setting up a nuclear power plant, no consideration was given to the fact that this is a densely populated country. The same amount of electricity can be generated at one tenth of the amount being spent on this power plant. All over the world, coal fired power plants are becoming extremely costly in order to maintain environmental conditionalities and yet the government had taken up coal-fired power generation. The price of coal was also on a rise in the global market. Even without the war, there were apprehensions about increasing LNG and coal prices.

With any sense or any responsibility, this should not have happened. The government looked after the interests of local and foreign quarters, not that of the people. They successfully manipulated this through the master plan. Large companies of Russia, China, India and other countries took opportunity of this. Those who receive commissions, local and foreign business groups, are all responsible for the present circumstances.

Q :

So the government also looked after foreign business interests?

A government cannot take up a project that can harm the Sundarbans. This happened out of political compulsion. India has all sorts of political agenda here. India benefits in all ways from the Rampal coal-fired power project. Other than ownership, there is the construction, coal supply, bank loans that benefit it directly. In a similar manner, Japan, Russia and China benefit for various other projects. The government is facilitating them.

Q :

What is the reason for neglecting gas exploration? What scope was there for increasing gas production in the country?

Surveys of various foreign agencies have revealed that there is huge potential of finding gas in the country. Exploration of gas has been neglected in an intentional and planned manner. Foreign companies want to make big profits, they don't take Bangladesh's interests into consideration. There was no plan to increase national capacity. Petrobangla and BAPEX were not developed in that manner.

Q :

It has been 10 years since the maritime boundary dispute was settled. Exploration had begun from before that, but till date not a single exploratory well could be drilled offshore. The offshore resources are not be explored.

Myanmar in the meantime has found gas offshore. With the price of gas falling in the international market, the foreign companies packed up and left. They just see profit. So in weak countries like Bangladesh, dependence of foreign companies create problems. Padma Bridge was constructed with our own resources and management. With this experience, the state-owned companies can explore for offshore gas, taking on foreign consultants if needed.

Q :

Many are now saying that, rather than depending on BAPEX alone, foreign companies should be used for inland exploration too. What is your opinion?

Why can an organisation not gain adequate capacity and competence over a span of 50 years? The Indian state-owned oil and gas company ONGC has become a global company in an even shorter span of time. Malaysia's Petronas was set up the same time as Petrobangla and now that is a global company. They planned and built up their capacity. But if the government wants to cripple the state-owned organisation, then what can be done? Why should Russia's Gazprom get BAPEX's work at three times higher the cost?

Q :

PDB has made big losses in power production, with coal import costs, increased prices of fuel oil and gas, payment for quick rental power plant and so on. These expenses are increasing by the year. Couldn't such a situation have been avoided?

While power generation capacity is almost double than demand, management in this sector is fragile. Even before the Russia-Ukraine war, many areas could not avail uninterrupted electricity supply. The price of electricity depends on fuel, organisational management and the selection of the best process. For long electricity was available from gas at low costs. This was a blessing but was not held on to. The government did not increase its gas production not did it look into renewable energy sources. Reliance on import of fuel and appeasing certain groups has led to the terms of the rental power plants to be extended time and again. Capacity charge is being paid for these idle power plants. This has increased PDB's losses.

Q :

But the government claims that investment wouldn't be made unless there was capacity charge.

This argument of the government would be plausible if there was a shortfall in power capacity. But even after the capacity had increased, why was the term of these deals extended? The deals are such that even if electricity is not used, capacity charges have to be paid. Even after these were no longer needed, the deals were extended further. Repeatedly extending the contract was done intentionally.

The government is now seeking loan from the World Bank, IMF, ADB all together, but has paid much more than this over the past 11 years in capacity charge. A total of Tk 900 billion has been spent in this sector, with 12 companies receiving Tk 600 billion. These companies in the private sector include Summit, United, Orion and other local and foreign groups. More power is being imported from India. Even if the power is not imported, capacity charge will have to be paid.

There has always been a lack of transparency and accountability in this sector. Public opinion was not given any consideration in taking up such large projects. In fact, in 2010 a special law was passed with provision for indemnity. Under this line, the court cannot be approached against the decisions of the government in the power and energy sector. This was done to facilitate certain vested interest groups, otherwise there was no need for such a law.

Q :

The price of fuel oil has gone up by 42 to 51 per cent. Could this not have been avoided?

There is no justification to increase the price of fuel oil. From 2014 till date, the government has paid no subsidy on fuel oil. Quite to the contrary, BPC has made a profit of Tk 430 billion. Recently only was there a loss of Tk 80 billion. This could have been adjusted with the profits. Also, many countries exempt payment of duty for a fixed span of time. The increase in expenditure of the people and the entire economy because of this price hike, would have been considerably less than the government's revenue from duty if the price was not hiked. The people and the economy face much more losses than the profit made by the government through duty. Just for duty of Tk 90 billion, the economy has to spend 10 times more. Much of the expenditure cannot even be measured.

The people have been hit hard by the increase in the price of fuel oil. With their capacity to purchase food decreasing, nutrition has decreased too. Many people are being deprived of medical treatment and education. This will have serious long term damage.

Q :

In order to overcome the energy crisis, many are advising the extraction of our own coal. What is your recommendation?

Many countries were shutting down their coal mines and coal-fired power plants. Coal did not feature in the future plans. Those with business interests, were not accepting this. Now with the outbreak of the war they are taking advantage of the situation and trying to revive this. But this will not be permanent. Coal is no longer cheap energy. There are obligations to use modern technology to minimise the harm done to the soil, air and environment in the extraction of coal. This has pushed up coal extraction costs extensively. The global climate change has not reduced. So any attempt to revive coal extraction will be met with resistance. It is a business campaign that says many countries are bringing back coal.

Those who talk about coal extraction are only taking coal into consideration. They are not taking into consideration the fall in groundwater level. They are not thinking of arable land being destroyed, of people being displaced. There will be much higher damages than gains in extracting coal. So coal extraction is a losing project. Actually, the costs of renewable energy are lessening. Renewable energy is the future of technology. Coal is the past and a discarded technology.

Q :

It is heard that Asia Energy is becoming active once again regarding coal extraction in Fulbari, Dinajpur. Are they taking advantage of the prevailing crisis?

Asia Energy has no experience of coal extraction in any place of the world. It is a company that suddenly sprouted up simply to extract coal from Fulbari. They did not manage to do so in fact of protest. The government claims that they do not have any deal with the company now. Asia Energy has now signed an agreement with a Chinese firm. An unholy global alliance is at work here. Government persons are involved too. They are taking advantage of the situation. The people of six upazilas, including Fulbari, gave their lives and their power of resistance remains strong. It will be suicidal if the government takes up initiative here again.

Q :

What can the government do to overcome this situation? Are there any short term solutions ahead?

Increasing the price of fuel without resolving the problem is no answer. This is a wrong and harmful measure. First of all, the increase in fuel prices must be withdrawn. Immediate attention must be paid to increasing production from the gas fields. An expert committee must be formed to determine what is to be done for gas exploration. Stress must be placed on mid-term and long-term offshore gas exploration so that the demand for fuel in the coming decades can be met.