Transcript Energy Policy of Bangladesh & Prospects of Natural Gas

Energy Resources & Governance Issues:
Bangladesh Perspective
Prof. M. Nurul Islam
Institute of Appropriate Technology
Bangladesh University of Engineering & Technology
Dhaka-1000, Bangladesh
E-mail:[email protected]
Ph: 9662365
Cell: 01726-444489
Prepared at the 52nd Senior Staff Course (SSC), organized by
Bangladesh Public Administration Training Center (BPATC), Savar1243 (BPATC/Course/SSC-52/04/2010-15 dated 11-02-2010)
25 February, 2010
Energy Resources & Governance Issues:
Bangladesh Perspective
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
Introduction
Status of Laws & Policies for Energy Development
National Energy Policy (NEP) of Bangladesh
Revision of National Energy Policy
Institutional Reforms in Energy Sector
Stakeholders of National Energy Development
Energy Situation & Future Energy Mix of Bangladesh
The Framework of National Energy Policy
Management (Governance) of Energy Sector
Sustainable Human Resources Development
The Way Forward
Characteristic Features of Bad Practices
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1.0
Introduction
 Abundant Reserves of Energy Resources may not be Able to Ensure
Energy Security and Sustainable Economic Growth in the Absence of
Good Governance.
 As an OPEC Member Nigeria has been Exporting more than 700 million
barrels of Petroleum per year. Per capita income US$ 800 in 1982
decrease to US$ 300 in 2000; per capita GNI increased to US$ 930 in
2007.
 In early 2000, there was propaganda for the export of gas to Delhi via a
pipeline (Bangladesh was floating on gas) on the basis of fictitious gas
reserves. Later on from 2005 country has been suffering due to
shortage of gas.
 Since 2006 there is propaganda for sustainable extraction of coal from
Phulbari Coal Basin by open cut mining method (by a foreign
company) with opportunity to export 75% of extracted coal.
 In 2009 Government has approved PSCs with two IOCs with provision
of export of 80% of gas.
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 Due to assured supply of energy (from local and imported sources),
China and India have been maintaining high economic growth on a
sustainable basis.
 Present energy crises has resulted due to lack of attention of all
previous governments (BNP/Awami League/BNP/Caretaker)
 Major causes of energy problems:
(a) Lack of experience
(b) Frequent changes of key policy makers and decision makers;
(c ) Lack of political commitment to maintain continuity of policy;
(d) Lack of rational tariff policy;
(e) Lack of trained manpower;
(f) Lack of appropriate organizational structure & character;
(g) Corruption;
(h) Politicization of the system.
 Energy crisis cannot be solved instantly. It requires long lead time to
solve it.
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1.1 Sustainable Human Development
 Economic Growth
 Social Justice
 Environmental Sustainability
 Now and in Future Years
 Long-term Development
1.2 Energy Security & Other Related Security Issues
 Energy Demand=Energy Supply (Energy Security)
 Energy Demand > Energy Supply (Energy Crisis)
 Energy Security & Food Security
 Energy Security & Environmental Security
 Energy Security & Economic Security
1.3 Security & Development Issues in Bangladesh
 Democracy & Socio-political Stability
 Democratic Reforms & Economic Growth
 Promoting the Rule of Law.
 Responsiveness, Transparency & Accountability.
 Good Governance & Energy Security
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1.4 Oaths of Office as per Article 148 of the Constitution to
Ensure the Rule of Law
*




*
e)
*
f)
#
[President/Prime Minister/ Minister/State Minister/Deputy
Minister/Speaker/Deputy Speaker/Chief Justice & Judges]
I ……, do solemnly swear that I will faithfully discharge the duties of the
office of [*……] of Bangladesh according to law:
That I will bear true faith and allegiance to Bangladesh:
That I will preserve, protect and defend the Constitution
And that I will do right to all manner of people according to law, without
fear or favour, affection or ill-will.
[Member of Parliament] take oath as (a), (b), (c) and (e) presented below.
And that I will not allow my personal interest to influence the discharge
of my duties as a member of Parliament.
[CEC & EC/CAG/Member PSC] take oath as (a), (b), (c) and (f) presented
below.
And that I will not allow my personal interest to influence my official
conduct or my official decisions.
All the Officials working for the Republic do not make oath in public but
are obliged to make decisions according to law.
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2.0 Status of Laws and Policies for Energy Development

o
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
o
o
o
o
o
o
o
The Constitution of Bangladesh
Article 16: Provide Electricity in Rural Areas
Article 143: State Ownership of Mineral Resources
Article 145: Agreement(s)/Contract(s) Made with the
Authority of the Honorable President.
The Laws (Presidential Order; Acts, Ordinance)
Petroleum Act 1974
Rural Electrification Ordinance 1976
Investment Board Act 1989
The Mines & Minerals (Control & Development) Act
1992
Environment Conservation Act 1995
Bangladesh Energy Regulatory Commission Act 2003
Public Procurement Act 2006
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2.0 Status of Laws and Policies for Energy Development






The Rules and Regulations
The Mines & Mineral Rules 1968 (Revised)
The Production Sharing Contract (PSC) 1986, 1997, 2008
The Environment Conservation Rules, 1997
The Public Procurement Regulations 2003
The Public Procurement Rules 2008
 Sectoral & Sub-sectoral Policies are Expressed Intent of
o
o
o
o


Government; Not Legally Binding like Law.
National Environment Policy 1992
Industrial Policy 1986, 1991, 1999, 2002, 2005
Petroleum Policy 1993
National Energy Policy 1996
All the Laws of Bangladesh from 1836-2008 have been Published by
Government in 38 Volumes
http://www.bdlaws.gov.bd (released on 26-10-2008)
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3.0 National Energy Policy (NEP) of Bangladesh
(Approved in 1995/ Published in 1996)
 Components of National Energy Policy (1996):
• Non-Renewable Energy Policy (GSB,
•
•
•
•
Petrobangla, BPC, Local & Foreign Private
Sectors).
Petroleum Policy (Approved in 1993)
(Petrobangla, BPC, IOC, Private Sector).
Power Policy (BPDB)
Rural Electrification Policy (REB)
Renewable and Rural Energy Policy (absence of
institution).
 Private Power Generation Policy 1996
• Facilitated Participation
of IPPs
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4.0 Revision of National Energy Policy
 No Comprehensive Review of Performance of NEP 1996 has been made







up to 2008.
Many Draft Versions of National Energy Policy are Available:
Draft National Energy Policy-2004 (Modifications of NEP-1996) Marginal
Gas Field Dev. Procedure to Legalize NIKO Deal.
Draft National Energy Policy-2006 (No data on demand supply of
energy).
Renewable Energy Policy has been approved by the Government
(Promoted by Power Division) on 23-12-2008 and Published in Gazette
on 04-01-2009.
Draft Coal Policy (Version 1 to Version 8): Debate on Export & No
Export of Coal, Open cut & Underground Mining (2005-2007).
Cabinet Advised (on 13-08-08) EMRD to Revise 8th Version.
Lack of capability to form an Integrated National Energy Policy
Consisting of All Types of Energy Sources (coal, petroleum, natural
gas, hydro, renewable, nuclear power) to Ensure Energy Security.
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5.0
Institutional Reforms in Energy Sector
 In 1998, MOPEMR Divided in to Two Divisions:
•
o
o
o
o
o





Energy & Mineral Resources (EMR) Division
Hydrocarbon Unit, Attached to EMR Division.
Petrobangla a State Owned Corporation.
Corporatization of Petrobangla Companies (Governed
under Company’s Act 1994).
In 2000, BAPEX Transformed to Exploration &
Production (E&P) Company.
Participation of International Oil Companies (IOCs)
Power Division.
Power Cell, Attached to Power Division.
Unbundling & Corporatization of some BPDB Units.
Participation of Independent Power Producers (IPPs).
BERC Established in 2003.
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6.0 Stakeholders of National Energy Development
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
Prime Minister, Ministers, Legislators, Politicians;
Bureaucrats, Development Planners;
Commissioners of Energy Regulatory Commission;
Ambassadors, High Commissioners, Diplomats;
Bi-lateral & Multilateral Donors;
Investors (IOCs, IPPs);
Investment Bankers (ADB, IDB, kFW, WB etc.);
Energy Managers, Service Providers;
Appliance Manufacturers and Promoters;
Academics & Researchers;
Legal Professionals (Lawyers);
Law Enforcement Agency Personnel;
Judiciary;
Consumers, Prospective Consumers & Non-consumers;
Civil Society;
Mass-Media.
Biasness of a Particular Group of Stakeholder for a Particular Type and/or
Component of Energy MNI-BPATC-SSC52
may Affect Energy
Security of the Country.
Energy-10
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7.0
Energy Situation & Future Energy Mix of Bangladesh
7.1 Importance of Energy in Economic Development
 Energy for Survival & Economic Growth
•
Per capita energy consumption of Bangladesh is one of
the lowest in the world. Major portion of Energy is
Consumed for Subsistence (e.g. cooking, lighting, heating etc.) &
Small Portion for Economic Growth (e.g. agriculture, industry,
transport, commerce etc). (In developed countries higher
proportion of energy is consumed for economic growth
and smaller proportion for subsistence).
 Increase in Per Capita Commercial Energy Consumption
is Necessary to Increase Per Capita Gross National
Income (GNI).
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Per Capita Commercial Energy in kgOE
in 2004
7.2 Per Capita Commercial Energy and Per Capita GNI
Per Capita GNI in US$ in 2004
•
•
Per Capita Commercial Energy Consumption of Bangladesh
is Very Low. Due to Dependence on Non-commercial Energy
the Position of Bangladesh is Off the Correlation Curve.
Increase in Per Capita Commercial Energy Consumption is
Necessary to Increase Per Capita GNI.
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Per Capita Commercial Energy in kgOE
7.3 Per Capita Commercial Energy Consumption &
Per Capita GNP
Source: Saghir & O’Sullivan 2006
Direct Correlation between per capita Energy Consumption & per capita GNI up to 1000 kgoE
per capita Energy Consumption
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Per Capita Commercial Energy in kgOE
7.4 Per Capital Commercial Energy Consumption &
Human Development Index (HDI)
Source: Saghir & O’Sullivan 2006
Direct Correlation between per capita Energy Consumption & Human Development Index (0.7)
up to 1000 kgoE per capita Energy Consumption
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7.5 Energy Situation & Energy Mix in Bangladesh
Primary Energy Supply of Bangladesh in 2005
(Dependency on Indigenous & Imported Energy Sources)
Total=31.78MTOE [Per Capita=226kgOE]
Renewable Energy (Biomass & Hydro) = 53.7%
Non-Renewable Energy (NG, Oil, Coal) = 46.3%
Oil
12%
Coal
5%
BF
53%
NG
30%
Hydro
0%
Indigenous Energy (Biomass, Hydro, NG) =83.5%
Imported Energy (Coal, Oil)
=16.5%
Approximate MNI-BPATC-SSC52
Cost of Imported Energy=$1.8
billion
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7.6 Energy Situation & Energy Mix in Bangladesh
Primary Commercial Energy Supply of Bangladesh in 2005
(Dependency on Indigenous & Imported Energy Sources)
(Total=14.78MTOE) [Per Capital=105.2kgOE]
Coal
10%
Oil
26%
Hydro
0%
NG
64%
Indigenous Commercial Energy (Hydro, NG) =64.6%
Imported Commercial Energy (Coal & Oil) =35.4%
Approximate Cost of Imported Energy
=$1.8 billion
Cost saved due to use of indigenous energy =$3.28billion
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7.7 Future (Indicative) Energy Mix of Bangladesh
 Increase in Per Capita Energy Consumption to Increase Per








Capita GNI.
Share of Imported Petroleum Fuels will Increase.
Share of Non-renewable (Fossil Fuels) Energy will Increase.
Consumption of NRE (Coal, Oil, Gas) Contribute to Green House
Gas (GHG) Emission.
Share of Traditional Renewable (Biomassfuels) Energy will
Decrease.
Share of Conventional Renewable (Hydropower) Energy will
Decrease.
Share of New-Renewable (Solar PV, Wind power) Energy in Power
Generation will Increase but contribution will be very small.
Renewable Energy Policy indicated that 5% of Renewable Power
by 2015 & 10% by 2020 [seems unrealistic]
Due to Technological, Financial, Geo-political & Environmental
Reasons Limited Prospect for Nuclear Power.
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8.0 The Framework of National Energy Policy
ECONOMIC (GDP) GROWTH
PROJECTED ENERGY DEMAND (Domestic,
Agriculture, Industry, Commercial, Transport, Power)
ENERGY
CONSERVATION
Energy Demand=Energy Supplies(Energy Security)
Energy Demand > Energy Supplies (Energy Crisis)
ENERGY
BALANCE
ENERGY SUPPLIES
INDIGENOUS ENERGY
SOURCES (TRE, Coal, Oil, NG,
IMPORTED ENERGY
SOURCES (Coal, Oil)
Hydro, Other RE)
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8.1 Objectives of National Energy Policy of
Bangladesh (1996)
 Energy For Sustainable Economic Growth
[Development of Energy Infrastructure].
 Energy Needs of Different Zones & SocioEconomic Groups [Development of Energy
Infrastructure].
 Optimum Development of Indigenous Energy
Sources [Increase Indigenous Energy Supply]
 Sustainable Operation of Energy Utilities
[Institutional & Policy Reforms].
 Rational Use of Energy Sources [Energy
Conservation and Efficient Use].
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8.1


Objectives of National Energy Policy of
Bangladesh (1996/2004)
Environmentally Sound Energy Development [Protection &
Improvement of Environment].
Public & Private Sector Participation [Implementation Strategies].
(Additional Objectives Included in Draft NEP of 2004)
•
•
•
Electricity to all by 2020 [Development of Power Infrastructures]
Rational Energy Tariff [Policy Reform]
Regional Energy Market [Policy Reform & Infrastructure
Development]
 Ultimate Objective of NEP is to Ensure Energy Security on a
Continuing Basis with Due Attention to Environmental
Sustainability.
 Indigenous Energy Resources Provide Best Energy Security.
 It was declared in Awami Legue Election Manifesto to reach Power
Generation Capacity to 20,000MW by 2021 & be known as a Digital
Bangladesh (which would required reliable power supply)
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8.2 Achievements of National Energy Policy of Bangladesh
During last 13 years (1996-2009)
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IOCs Operate 9 PSCs in 11 Blocks (out of 23 Blocks).
IOCs Discovered 3 Gas Fields (Shangu, Maulavibazar, Bibiyana)
with total recoverable reserve of 3.284 TCF.
BAPEX transformed to a E&P Company with 5 Gas Fields, 2 Blocks
(8,11), 4 Blocks with IOC & JVA with NIKO.
11 Companies (9 gas companies & 2 mining companies) of
Petrobangla Operate Under Company’s Act.
Power Generation by IPP (Foreign & Local).
Separate Companies of BPDB for Power Generation, Transmission
& Distribution.
BPC Ensures Petroleum Supply During Irrigation.
BERC Established in 2004 under BERC Act 2003.
© BERC has Started making decisions on Energy (petroleum, gas,
electricity) Tariffs from 2008 in place of Government Administered
Tariffs.
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8.3
•
•
•
•
•
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Constraints & Barriers to Implement NEP
No Independent Minister for MOPEMR (Prime Minister, Advisor, State
Minister).
No Institutional Setup to Provide Continuing Policy Support to Policy
Planners and Decision Makers.
No Political Consensus for Long-term Energy Security?
No Gas Export in Election Manifesto but desired to export gas after
election victory.
Third Round of Bidding (in Feb. 2008) took place without Assessment
of Experiences of First Round (1993-1996) & Second Round (19962001). There is provision to export 80% of gas in third bidding round.
Necessary to Enact Law for No Export of Energy (Gas & Coal) to
Ensure Energy Security.
Mr. Rashed Khan Menon, MP, introduced a private members’ bill in the
Parliament on 18th February, 2010 imposing a ban on export of mineral
resources in both crude & processed form for next 50 years.
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9.0 Management (Governance) of Energy Sector
 Dynamic National Energy Policy According to Framework.
 Sustainable Energy Security:
• Dynamic Action Programs for Medium & Long-Term Energy
Security are Required.
• Supervisory Control & Data Acquisition (SCADA) Installed
for Monitoring Short-Term (daily, yearly) Energy Security of
Gas (at Ashuganj) & Power (within DPDC office next to Secretariat).
 Environmental Dimensions of Energy Security
 Rational Tariffs for Sustainable Operation of Energy Utilities
& Development of Energy Sector.
 Improvements in Energy (primary energy & power) Efficiency.
 Balanced Development of Energy Supply Chains
(exploration, production, transmission, distribution).
 Balanced Development of Electricity Supply Chain
(generation, transmission, distribution).
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9.1
Environmental Dimensions of Energy Security

As per Environment Conservation Act & Rules it is mandatory to
undertake EIA & prepare EMP for all the development projects of
energy sector through out the fuel cycles & for the lifecycle of
the projects.
Some examples of energy security and environment are
presented below.
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o
Energy Security & Localized Environmental Degradation

Deforestation and Degradation of Soil.

Negative Impacts Karnaphuly Hydropower Project.

Negative Impacts Coal Mining Projects in Coal Zone.
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Energy Security & Dispersed Environmental Problems.
Mitigation of Indoor Air Pollution.
Reduction of Emission of Green House Gases.
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9.1.1
Global Atmospheric Concentration of Carbon Dioxide has increased from 290ppm (in 1870)
to 370 ppm (in 2000). Accumulation of GHG Contributes to Global Warming.
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9.1.2 Energy Use & Climate Change
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•
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According to IPCC Increase in Global Mean Surface
Temperature of Earth by 1.5 to 6 degree centigrade
between 1990 & 2100. Which will cause rise of Sea Level.
IPCC is Awarded Nobel Peace Prize in 2007 with Algore.
Kyoto Protocol 1997: Binding Commitments for
Industrialized Countries to Reduce their GHG Emission 5%
below 1990 Level by the First Commitment Period (20082012).
Follow up Actions of Bali Conference (held in Dec. 2007) to
Reach Agreement for Post-2012 period by 2009.
COP 15 Meeting held at Copenhagen in December 2009
without any decision.
Next Meeting to be held in Mexico in 2010.
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9.1.3 Carbon Dioxide Emissions for Different Countries
1990 (Kyoto)
Description
Ton/Capita
1998
Ton/Capita
2000
Ton/Capita
2002
Ton/Capita
Bangladesh
0.1
0.19
0.2
0.3
China
2.1
2.5
2.2
2.7
India
0.8
1.1
1.1
1.2
0.13
0.1
0.2
Nepal
Pakistan
0.6
0.74
0.8
0.7
Sri Lanka
0.2
0.43
0.6
0.5
USA
19.3
20.2
19.8
20.2
Low Income
Countries
0.7
0.69
0.8
0.8
Middle Income
Countries
2.7
5.9
3.2
3.3
High Income
Countries
11.9
13.1
12.4
12.8
World
3.3
3.87
3.8
3.9
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9.1.4 Energy Use & Climate Change
o
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o
Some People Argue that Bangladesh should Extract Coal at a
Faster Rate (by Open Cut Mining Method & Export the Extra
Quantity) to Avoid Future Restriction on Carbon Emission.
In 2005, Extraction of Coal in China: 2150Million Tons; USA:
1250 Million Tons & India: 460 Million Tons.
These Three Major Coal Producing & Consuming Countries
have Plan to Extract and use of Coal at a Higher Rate at least for
the Next 30 Years (World Energy Outlook 2007).
Per Capita Carbon Dioxide Emission of Bangladesh is Very Low
(0.3 tone per year) in Comparison to World Average (3.9 tone
per year). Per capita emission of carbon dioxide cannot be a
cause of restriction on the rate of extraction & use of coal for
Bangladesh. Argument to accelerate open cut mining is
motivated to support vested interests.
Bangladesh should plan to develop coal by appropriate mining
methods to meet the energy demand of the country for the next
25 years on a sustainable basis. Rate of extraction of coal may
be gradually increased from 1 million tone per year in 2005 to 10
Mt/yr in 2015 & 40 Mt/yr in 2020 to meet corresponding
demands.
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9.2
Rational Tariffs for Sustainable Operation & Development
 Government administered tariff fixation has resulted huge deficit for the
utilities: BPC up to 2007-08: Tk. 182,827 million, BPDB up to 2008-09 :
Tk. 100,780 million. Petrobangla’s deficit upto 2008: Tk. 19,050 million.

As per PSC wellhead price of gas produced by IOCs varies between US$
2.75/MCF to US$ 2.91/MCF (Tk. 193/MCF to Tk. 204/MCF). Effective
wellhead price of IOCs gas may be about Tk. 105/mcf.

Wellhead price of gas produced by National Companies (BGFCL, SGFL)
is arbitrarily fixed @ Tk. 7.08/MCF. BAPEX: Tk. 25/MCF. Arbitrary
decisions to fix low wellhead price for national gas has made the country
more dependable on costly gas produced by IOCs & short of gas supply
by national gas companies.
No SD & VAT on IOCs gas.
SD & VAT on national gas @ 122.2% of cost of gas.
Weighted average price of gas fixed by BERC from 1st August, 2009: Tk.
121.5/MCF.
BERC’s tariff fixation has created a tax free Gas Development Fund of
Energy-10
Tk. 6,000 million/year toMNI-BPATC-SSC52
be spent for Exploration
& Production of gas.31

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 In September 2008 BERC has approved increase of bulk electricity tariff by 16%
through public hearing (for the first time in Bangladesh).
 In recent months Government has increased price of Petroleum fuels & again
decreased due to decrease of price of crude oil in International Market.
 Energy (oil, natural gas & electricity) Tariffs should be Fixed by BERC on the
Basis of Economic Rational to ensure sustainable development.
9.3 Improvements in Energy Efficiency
 Good potential to improve efficiency in each and every step of energy & power
supply chains starting from production to use. This important management
issue is not easily understood by the policy planners and decision makers.
 Possibilities of harnessing efficiency including energy use should be assessed
and implemented with all seriousness.
 Use of compact florescent lamp (CFL) & light emitting diode lamp (LEDL) have
been increasing.
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9.4 Sustainable Development of Biomassfuels
 Biomassfuels (traditional renewable energy resources) supply about
50% of total primary energy need of the country, mostly consumed
in rural areas & in some urban areas. In future the share of
biomassfuels in total energy supply will gradually decrease due to
increasing use of commercial fuels.
 Tree plantation programs undertaken & promoted by the
Department of Forest are insufficient to maintain regenerative
supply of biomassfuels. Simultaneous attentions are to be given by
the energy planners to undertake energy efficient projects &
substitution measures to reduce their demand.
 Renewable supply of biomassfuels will able to meet a part of total
energy need.
 Benefit of sequestration of carbon dioxide gas due to tree plantation
is shared along with the global population & other economic
benefits from trees are enjoyed by the local community & respective
owners.
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9.5 Sustainable Development of Natural Gas
(Cont...)
 Natural Gas: 23 gas fields Proven (GIIP) was: 20.84TCF
 Proven recoverable reserve was: 14.98TCF
 Production up to June, 2009: 8.39TCF
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Reserves as on July 2009
Remaining Proved (1P) Reserve=6.59TCF
Remaining probable reserve: 5.21TCF
Deduction of gas reserves of Kutubdia & Shahbazpur gas
fields would further reduce the availability of 0.512TCF gas.
Remaining possible reserve: 7.69TCF
Remaining proved (1P) reserved up to 2011
Remaining proved+probable (2P) Reserve up to 2015
Remaining proved+probable+possible (3P) reserve up to 2019
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9.5 Sustainable Development of Natural Gas
 2P reserve for short and medium-term plan
 3P & YTF (Yet to find from undiscovered resources) for longterm exploration plan.
 More exploration to estimate reserves from 3P to 2P to 1P. More
exploration to find new gas fields from YTF: 8.4tcf (95%) & 31tcf
(50%)
 Exploration in offshore areas by IOCs through PSCs
 Third Round Bidding in Offshore Area (2008) with Provision of
Export of 80% of Natural Gas.
 Exploration in onshore area should be reserved for BAPEX.
 Provide sufficient fund to BAPEX (4 wells/year).
 Formed NAPEX (BAPEX+BGFCL+SGFL) to strengthen national
E&P capabilities.
 Provide Economic wellhead gas price to NAPEX (cost + 25%
MNI-BPATC-SSC52 Energy-10
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rate of return).
9.6 Sustainable Development of Coal
•
•
•
•
•
•
•
•
(Cont...)
Total Coal Resources in 5 Fields: 3300 Million tonnes.
Jamalganj Coal (1053Mt) not Extractable Because of High Depth (6401158m).
Total in-situ coal resource in 4 Coal Fields: 2247Mt.
Proved in-situ reserve: 884Mt.
Barapukuria Coal Deposit: 303Mt. Underground Coal Mine in Operation
with Design Capacity: @ 1 Mt per year. Actual Production @ 0.5 Mt per
year.
Phulbari Coal Development Proposal Submitted by Asian Energy
Corporation (AEC) : Total Reserve 572Mt. Extractable Reserve by
Opencast Method: 475Mt Over a Period of 35 Years (@ 15Mt Per Year).
Khalaspir Coal Deposit (143Mt): A Consortium of Chinese and
Bangladeshi Company Proposed to Develop Coal Field by Under Ground
Mining Method @ 2 Mt Per year.
Dighipara Coal Basin (150Mt): Petrobangla has applied for Exploration &
Development License.
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Existing & Prospective Coal Zones of Bangladesh
Prospective Coal Zone
Phulbari
Barapukuria
Khalaspir
Existing Coal
Zone (12 Basin)
Dighipara
Jamalganj
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9.6 Sustainable Development of Coal
(Cont...)
 Salient Features of Draft Coal Policy (7th version) submitted on 8 Jan., 2008
• Coal Policy is an Integral Part of National Energy Policy.
• A Public Sector Organization (Coal-Bangla) will be responsible for overall coal
•
•
•
•
development. Coal Bangla may establish Joint Venture Agreement (JVA) with
local private sector and foreign Public Sector & Private Sector Organization(s).
In India, all Coal Mines have been Nationalized in 1973. Currently 95% of Total
Coal Production is Managed by Public Sector Organizations.
Joint venture partner must be selected through competitive bidding. No
Unsolicited Proposal can be considered.
Total Coal Requirement only for Power Generation: up to 2025: 450Mt, 2030:
825Mt, 2035: 1200Mt.
Total Extractable Coal from 4 Discovered Coal Fields may vary between 234Mt
(underground mining method) to 660Mt (open cut & underground mining
method) are insufficient to meet requirement up to 2030.
No Export of Thermal/Steam Coal without Ensuring 50 Years Energy Security.
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9.6 Sustainable Development of Coal
•
•
•
•
•
•
•
•
•
•
(Cont...)
Extraction of Coal is to be Matched with Local Demand.
Mandatory Mine Mouth Power Generation.
Coking coal will have to be converted to coke for local consumption.
Excess coke may be exported.
Operationalization of Inspectorate of Mining
Up dating of Environment Conservation Rules 1997 for Mining
Enactment of Laws to Return Acquired Lands to Original Owners after
physical & biological reclamation (to ensure environmental
sustainability).
BMD, GSB & DoE should be strengthened.
Human Resources Development Programs at University & Polytechnic
Levels will be Strengthened.
Allow commercial extraction of coal by underground method.
No commercial extraction of coal by open cut mining method until
successfully experimented by Coal Bangla in a pilot area (within
Barapukuria Coal Mine).
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9.6 Sustainable Development of Coal
(Cont...)

Hydro-geological (100-150m aquifer over the coal seams), geological
(very thick coal seams located below aquifer), spatial (all the four coal
basins are located with in smaller area), socio-economic (high
population density and three cropped area) & environmental
conditions of the coal zone of Bangladesh are very complex for open
cut coal mining. Experiences of open cut mining can not be
transferred from other countries. As for example: Population
Densities (Person/Sq.km) of the countries (in 2004) practicing Open
Cut Coal Mining are: Australia-3, Canada-3 USA-32, Indonesia-120,
China-139, Germany-237, India-363. Population Density of
Bangladesh is 1079/Sq.km (Highest in the World)

It is therefore necessary to undertake site specific pilot study in
Bangladesh for open cut mining.
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9.6 Sustainable Development of Coal
 Initially Coal Bangla should be given responsibility to
undertake a pilot project on open cut mining to assess the
following:
 Impacts on environment due to drying of mine.
 Theoretical (Computer model) & actual study on reinjection of water in aquifer.
 Effectiveness of Pollution control measures for Acid Mine
Drainage Materials (AMD).
 Reclamation of land to productive condition (physical &
biological reclamation) & return to the owners.
 Effectiveness of rehabilitation measures.
 Social impacts.
 Motivation of local people through training & discussions.
 If the result of pilot study found successful, open cut mining
may be allowed on commercial basis.
 Adoption of Clean Coal Technology for Future.
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9.7 Problems with Extraction of Peat
 170 Million Tons Peat Deposit (3 to 5 feet thick layer, 5 to 7
feet below agricultural land) in Madaripur & Khulna Area.
 Negative
impacts due to loss of agricultural crops &
morphological changes of land is higher than the positive
impact of extracted peat.
 Commercial
extraction is not feasible due to technoeconomic, environmental & social reasons.
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9.8 Sustainable Development of Renewable Energy




Infrastructure Development Company Limited (IDCOL) has
implemented successful program for the promotion of solar PV with
participation of Grameen Shakti, BRAC Foundation, Shrijoni
Bangladesh, TMSS, Coast Trust and Some other NGOs working at the
field level. IDCOL have also undertaken a project on promotion of
biogas technology at household level.
Establish 0.4 million solar home system in rural areas with capacity of
11MW.
IFRD, of BCSIR implemented projects on promotion of biogas
technology & improved stoves on intermittent basis.
Sustainable Energy Development Agency (SEDA) should be
established for Promotion of Renewable Energy Development &
Efficient Energy Use Programs. The process of establishing SEDA
has bee continuing for last 14 years.
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9.9 Continuing Assessment of Import & Export of Energy
 Energy Import (Reduce energy import bill)
•
•
•
•
Petroleum Import will Increase;
Reduce Petroleum Import by promoting CNG in Transport.
Coal Import will Decrease with the Increase of Local Coal Production.
PGCB has signed agreement with Indian Power Grid Company Ltd. for import
of 250MW electricity from India tentatively from July 2012.
• Low Prospect of Import of Electricity from (Bhutan, Nepal). Because of India’s
Need for Electricity.
• Possibility of Gas Import (if new gas not discovered) via pipeline and/or as LNG
should be considered seriously.
 Energy Export would Affect Energy Security (provision of gas export from
offshore areas).
• Increase local use of Coal; No Coal Export.
• Develop Capacity to Purchase IOC’s Share of Gas through Tariff
Rationalization.
• Phasing of Coal Development & IOC’s Exploration Corresponding to Local
Demand of Coal & Gas to Avoid Export Pressure.
 Bill submitted in the Parliament to ban export of energy for next 50 years
should be enacted to ensure energy security
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10.0 Sustainable Human Resources Development (HRD)
 At
entry level competent professionals should be
Recruited on a regular basis.
 Training
Program for Energy Managers Should be
Developed & Implemented on a Continuing Basis to
Improve the Capability of the Professionals Working
at Lower, Medium & Higher Levels of Management of
Different Energy Organizations.
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10.0
Sustainable Human Resources Development (HRD)
 Considering
the complex & technical nature of different
factors affecting the decision making process in energy
sector, Special Workshops & Seminars on different aspects
of National Energy Policy should be organized periodically
for the Policy Planners and Decision Makers of Energy
Sector & other related sectors.
 Lack
of National Capability in Handling FDI Project
Proposals. Necessary Institutional Arrangements should
made to Develop Capabilities to Assess FDI Projects.
 Separate
Budget Allocation should be Made for HRD for
Energy Management.
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11.0 The Way Forward (1)
 Bangladesh located in the most energy deficit region (Asia
Pacific) of the World. Should try to meet long-term energy
security based on indigenous energy sources (Natural Gas
& Coal).
 The country has adequate reserves of Natural gas and coal
to ensure long-term energy security, provided coal & gas
are not exported & developed in synchronization with
demand.
 Political consensus required for- long-term (50 Yrs) energy
security, rational energy pricing and institutional reforms.
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11.0 The Way Forward (2)











Prepare Dynamic & Integrated National Energy Policy.
Enact Law to Ban Export of Energy (Natural gas & Coal).
One Minister should be responsible for MOPEMR.
Change the Name of the Ministry from “Ministry of Power Energy &
Mineral Resources” to “Ministry of Energy & Power”.
Reduce Corruption on Priority Basis (Ensure Good Governance).
Demand Management of Power in a Planned Manner.
Give Subsidy for Fuel used in Irrigation.
Establish NAPEX by Merger of BAPEX, BGFCL, SGFL.
Establishment of NAPEX will be more Beneficial than forming Joint
Venture Agreement with the IOCs (BAPEX-NIKO JVA).
Activate the PSCs of Second Round of Bidding.
Optimum Development of all Indigenous Energy Resources Including RE.
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11.0 The Way Forward (3)
 Give Priority Attention to Repair & Maintenance Projects.
 Consider Development of Nuclear Power Under Long Term
Perspective.
 Sustainable Development of Energy Supply Chain.
 Sustainable Development of Electricity Supply Chain.
 Rational Tariffs for Energy .
 Special Projects to Supply Energy in Energy Deprived Areas (gas
supply to Rajshahi & Khulna Divisions).
 Special Projects to Supply Energy for the Poor.
 Encourage Public-Private Participation for Energy Sector
Development.
 Capacity Development through Training (governance issues have
become knowledge intensive).
 Strategies for Energy Import.
 Strategies for Electricity Import.
 Ensure Environmental Sustainability.
 Continue Institutional Reforms to Improve Management Efficiency.
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12.0 Characteristics Features of Bad Practices (1)
 Continuing pressure from vested interested
groups to export natural gas and coal by
sacrificing energy security.
 Manipulation of procurements (tenders).
 Unsolicited proposals submitted during
politically unstable period & pursued for longtime.
 Unsolicited offers from foreign investors are
accepted giving undue incentives by the
name of creating good image for the country.
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12.0 Characteristics Features of Bad Practices (2)
 Public sector enterprises are asked by the Policy
Planners & Decision Makers to make joint venture
agreements (JVAs) with foreign companies (some are
inexperienced).
 Ambassadors of Foreign Countries sign as witness
to these contracts and they are found to Publicly
Lobby in Favor of Specific Projects.
 Foreign Promoters Bring Home Country Political
Leaders (Member of legislative body, Ministers, Head
of the Government) for Lobbying.
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12.0 Characteristics Features of Bad Practices (3)
•
•
•
•
•
•
•
•
•
•
Offer Consultancy to Get Undue Favour
Bear expenses of foreign trips with family
Bear expenses of Children’s Higher Education
Organize permanent residency
Appoint Retired (Senior) Government Officers (e.g. Ministry of
Energy & Department of Environment) for Lobbying.
Appoint Prominent Legal Professionals from two major
political parties to settle their disputes with the government for
their not so legal deals.
Mobilize Support of Mass-Media in Favor of their Projects.
Spread Incorrect Information & Data through Mass-Media.
Intimidate Government Officials Participating in Negotiations &
Make Bad Behavior with them if they Contest During
Negotiation Process.
Transfer to less important positions
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Organizations Involved with Production, Transmission & Distribution of Natural Gas
Hydrocarbon Unit
Energy Division
BERC
Petrobangla
BOGMC
(Overall Management)
Exp. & Prod.
(IOCs)
Exploration &
Production
(BAPEX )
Production
(BGFCL,
SGFL)
Transmission (GTCL), Transmission & Distribution
(BGSL, TGTDCL, JGTDSL), Distribution (PGCL)
MNI-BPATC-SSC52 Energy-10
Distribution
(RPGCL)
53
Management of Gas Flow System
Production Companies
BGFCL
BAPEX
(E&P)
SGFL
Chevron
Cairn
Niko
Gas
Transmission
Company
Ltd.
JGTDSL
TGTDCL
PGCL
BGSL
Marketing Company
Marketing Company
Marketing Company
Marketing Company
CONSUMERS
CONSUMERS
CONSUMERS
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CONSUMERS
54
Distribution of Petroleum Products
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Organizational Structure of Power Sector
BERC
Generation
POWER DIVSION
Ministry of Power Energy & Mineral
Resources
Power Cell
Power Development Board (BPDB)
Ashuganj Power Station Co. Ltd. (APSCL)
Independent Power Producer (IPP)
Rural Power Company Ltd. (RPCL)
Transmission
Power Grid Company of Bangladesh (PGCB)
Distribution
Power Development Board (BPDB)
Dhaka Electric Supply Authority (DESA)
Dhaka Electric Supply Co. (DESCO)
West Zone Power Distribution Co.
Rural Electrification Board (REB)
Palli Bidyut Samity (PBSs)
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CV of Prof. M. Nurul Islam (Continued)
Professor M. Nurul Islam graduated in Chemical Engineering from BUET in 1967.
He joined as a lecturer in Chemical Engineering Department, BUET in 1968. He
obtained Ph.D. degree from University of Newcastle upon Tyne, UK in 1973. He
was appointed as a Professor of Chemical Engineering, BUET in 1983. He was
appointed as a Research Professor of the Institute of Appropriate Technology
(IAT), BUET in 1990. He has served as the Director of IAT for 12 years during
1988-2007.
In 1981, Professor M. Nurul Islam worked as a Panel Member of US National
Academy of Sciences (NAS) on Renewable Energy Technology. The panel report
was published by NAS as a book.
He co-edited a book on 'Rural Energy to Meet Development Needs: Asian Village
Approaches' in 1984, published from USA. He co-edited two books on 'Rural
Energy Systems and Rural Energy Planning' published by Asian and Pacific
Development Centre (APDC), Kuala Lumpur, Malaysia in 1993 and 1995
respectively. His book on 'Energy Problem: Bangladesh Perspective (in Bangla)'
was published in December 2001.
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CV of Prof. M. Nurul Islam (Continued)
In 1990, Prof. Islam worked as a member of Energy Task Force constituted by the government of
Bangladesh, the report was published in a book. During 1993-95, he worked as a member of
National Energy Policy Formulation Committee. The Government Approved the Draft National
Energy Policy (NEP) in 1995 and was Published in a Gazette in 1996.
In 1996, he worked as a member of National Committee on formulation of Pricing Policy of Natural
Gas. During 2001-2002 he Worked as a Member of Natural Gas Demand, Reserve and Resources
Committee Constituted by the Government. During 2001-2006 he worked as a member of Energy
Advisory Committee of the Energy and Mineral Resources Division.
During 2005-2006 Prof. Islam worked as the convener of the Committee to assess the Feasibility
Study Report and Scheme for Development of Phulbari Coal Project submitted by Asia Energy
Corporation (Bangladesh) Pty Ltd. He worked as a Member of the Coal Policy Review Committee
of the Energy Division in 2007.
During 2005-2008 Prof. Islam worked as a Director of the Management Board of Bangladesh
Petroleum Exploration and Production Company Limited (BAPEX). During 2007-2008 Prof. Islam
worked as a Director of the Management Board of Sylhet Gas Field Ltd. (SGFL).
During 2008-09 Prof. Islam worked as a Director of the Management Board of Bangladesh Gas
Field Company Ltd (BGFCL). During 2007-09 Prof. Islam worked as a Member of
Governing Board of SAARC Energy Center (SEC), Islamabad, Pakistan.
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