Is there any fear of this crisis worsening and the price of fuel oil increasing further if the war continues?
We are now in a war-time situation. As the price of all commodities is high now, the price of fuel will remain high too. But I think that the oil producing countries will increase their production because of this fuel crisis and the refineries will also increase their capacity. This may have a positive impact on the price of fuel oil. The US may relax its sanctions and embargoes on countries like Iran and Venezuela which haven't been producing oil to full capacity due to these constraints. Saudi Arabia also has the capacity to produce more oil. US is making moves in this regard. So despite the war, we will be facing a new scenario in the days ahead. In that sense I feel that there is not too much of a threat of oil prices rising further. In fact, prices may even fall to an extent.
What should Bangladesh do in the prevailing circumstances? How realistic is it to seek alternative sources of fuel or buy oil from Russia at lower prices? There are geopolitical issues involved in this too.
We have to take certain matters into consideration. We import around 6 million (60 lakh) tonnes of oil in total, refined and unrefined. Of this, only 1.2 million (12 lakh) tonnes is unrefined. Russia only sells unrefined oil. They have refineries, only for their own use. Under the prevailing circumstances, they are wanting to sell unrefined oil for 65 dollars. In the international market, unrefined oil is selling at around 110 dollars. If we could import unrefined oil from Russia and refine it here, there would be significant savings. But our refineries are not suitable to refine the type of unrefined oil that comes from Russia. So even if we wanted, we can't simply buy unrefined oil from Russia to use here. And only 6 to 6.5 per cent of India's refining capacity is capable of refining Russian oil. In comparison, China's refineries are capable of refining Russia's unrefined oil. And so China is purchasing large amounts of unrefined oil from Russia. So while Russia's oil is available at cheap prices, that is of no use to us. Meanwhile, Russia is facing sanctions. And so bringing oil from Russia is also challenging for us in political considerations.
India is buying oil from Russia. There is talk of importing Russian oil through India. Will that be possible?
If India imports unrefined oil from Russia, refines it and then sends it to Bangladesh, that will be considered an Indian product. It doesn't matter where the raw material comes from. So that is possible. We do bring oil from India anyway. Diesel comes to Baghabari by pipeline from Assam.
In the prevailing circumstances, how important is energy savings? The government has taken measures to close down shops by 8pm to save energy. What other steps can be taken to save energy?
Energy savings has now become an important matter for us. We do not want the price of diesel to go up here because of increased fuel prices in the international market. If the price of diesel goes up, this may have an impact on inflation. We have seen how the Tk 15 increase in diesel prices affected our market. The problem is that when the price of diesel goes up, the prices of other commodities go up disproportionately high. There is a disproportionate price hike in the entire supply system. Businesspersons take full advantage of this and hike prices to the optimum. No one has any control over this. So if the price of fuel oil, diesel in particular, goes up in the future, the price of other commodities must be kept in control. In response to the 23 per cent rise in diesel prices, we have seen how bus, truck and launch fares as well as the cost of transporting goods, shot up by 28 to 43 per cent. Fuel makes up only 40 to 50 per cent of bus, truck and other transport fare. So prices shouldn't go up by more than 10 to 15 per cent. But the transport owners managed to convince the government and increased the prices by 28 per cent. Now if the price of diesel is raised for any reason, transport fare cannot be raised by any means. As it is, they are taking excessive fares.
If the situation is to be brought under control, not increasing fuel costs, then energy savings is a must. The government has taken the decision to shut down shops by 8pm. But I feel the citizens need to be conscious too. We must keep in mind that we are going through a war situation. Even on an individual level, we need to be careful about using our lights, fans and cars. We can also save energy by enhancing our skill in power production, running industries and in all areas. But it is vital that pilferage be halted. We know that there is around 7 per cent pilferage in gas. This amounts to the cost of around 150 million cubic feet of gas. There will be huge savings if this can be curtailed.
Constrictive measures may obstruct economic growth. How can a balance be struck?
This is a serious challenge. If the price of fuel goes up, a lot of development is lost, poverty increases. We see it increased during the corona outbreak and many slipped under the poverty line. With the price of commodities going up, people's purchasing power is decreasing and many are becoming poor. I feel this is just temporary and during this time, all unnecessary development work should be stopped. After all, the poor must be protected. Outside of the development areas for growth, there is a lot of other unnecessary expenditure too that must be curbed. The government must undertake austerity measures. It must continue with its subsidies. This continues in developed countries. Fuel prices have gone up in Europe, but food prices have not. In our country, both have increased. In the circumstances, everyone must take balanced measures in all areas.
With gas production steadily falling and demands rising, initiative was taken to import LNG. So expenditure has gone up in the energy sector and it has become dependent on imports. Who is to blame for such a predicament in the energy sector?
The ones who planned this energy sector are to blame. A large part of our imported fuel goes to power generation. If we look at our Power System Master Plan 2016, we will see all indications of becoming completely dependent on energy import. It indicates that 40 per cent of the power generation sector will become dependent on imported fuel by 2030 and 90 per cent dependent on imports by 2040. So this is in our planning. And on the other hand, Petrobangla has taken it for granted that their production will fall. They have no plan whatsoever on how to maintain or increase production. They take it for granted that there is no more gas, that gas will finish. Petrobangla has said that by 2023 our overall gas production will decrease and that will be met by gas imports. In other words, Petrobangla and the Power System Master Plan have admitted that Bangladesh will be dependent on imports for energy. Yet we have repeatedly been saying that we must step up our gas explorations. We must use advanced technology to ensure optimum production from our gas fields.
The maritime boundary has been determined, so why hasn't there been any progress in offshore gas extraction?
All conflicts over our maritime boundary were resolved in 2014. There are no more obstacles before us for offshore gas exploration. After that tenders were called twice for survey of our maritime boundary and the same company was awarded the work twice. But later, under various pretexts, the tender was cancelled.
Why was it cancelled?
The ministry cancelled this with no explanation. A committee had been formed by Petrobangla. They took everything into consideration and selected a renowned US company which had experience in maritime surveys. The ministry cancelled this twice. We do not know why. Yet if the survey was carried out, we would be able to ascertain the possible offshore gas reserves. The matter of offshore gas exploration is being completely overlooked. Even on land, a BAPEX-dependent plan was made, but that too was a complete failure. Whether it is BAPEX or Petrobangla, they assume that there is no more gas in Bangladesh. So long Petrobangla had been saying that they would take up all sorts of measures to produce an additional 600 million cubic feet of gas by 2025 from the gas fields in its jurisdiction. If this had been done earlier, we wouldn't have been in such a crisis. Also, Petrobangla is a highly technical organisation. Continuity is imperative here. For the past seven or eight years we have seen civil servants being placed at the top positions here. They work here for three to six months and then go elsewhere, being replaced by someone new. They do not understand the importance of one's own fuel.
* This interview appeared in the print and online editions of Prothom Alo and has been rewritten by Ayesha Kabir for the English edition