私营企业创造孟加拉国电力奇迹

Life without a sustainable supply of energy is almost unimaginable. The importance of energy is even more supplementary in the context of developing countries, which have traditionally experienced prolonged periods of energy crises. A common characteristic of all underdeveloped nations around the world is the inability to meet their demand for energy, to which Bangladesh is no exception. But the investment and employment-starved nation of 160 million populations realised the importance of electricity and came up with short,medium and long terms plan to bring the country's entire populations under sustainable power coverage in matching with its long-term development strategies –Vision 2021, SDGs (sustainable development goals) by 2030 and developed country by 2041.

When the current Awami League (AL) led coalition government came to power in 2009, the highest power production was recorded at 3,268 megawatt. It had caused multi-pronged strains to the economy in the form of frequent load shedding, badly disrupting industrial production and daily life.

For getting rid of the situation, the government riding on a short-term plan to be come a middle income nation by 2021 highly promoted private sector to quickly increase electricity production through setting up quick rental power plants. Initially, there were heavy criticism against those plants as the government kept spending more and increasing the power tariff for both domestic and industrial customers under the pressure of the private sector.Besides medium and long-term move, the government kept backing up rental or quick rental plants even though the power tariff went up manifold within few years of the ruling government. However,it ultimately paid off for the economy as power cuts nowadays are at a tolerable level, although there are some irregularities in the distribution while the supply of electricity to industries has improved remarkably.

The power production rose to around 20000 mw with bringing more populations under the coverage of electricity. According to the government statistics,the number of electricity consumers increased to 31.2 million in 2018 from 18 million in 2009.

Private sector made the miracle

The private sector power generation witnessed a substantial growth due to a favourable investment policy offered by the government over the last one decade, contributing 54.35 percent of the total electricity against 45.65 percent produced by state-owned power plants.According to the latest statistics prepared by the Power Division under the Ministry of Power, Energy and Mineral Resources, the country's total power generation capacity reached 20,343 MW of which 11,057 MW came from private sector producers, while 9,286 MW came from public entities.Captive power generation of about 3,000 MW are also included in the private sector generation, while about 250 MW of renewable energy came from solar home systems included in the public sector generation.

Private sector investors also appreciated the government's supportive role in achieving this progress demanding the continuation of such state policy to promote private investment in power sector. According to Bangladesh Independent Power Producers Association (BIPPA), the private sector has invested about $12 billion over the last 10 years by setting up more than 50 power plants. BIPPA leaders said they have now planned to invest another $50 billion in the next 12 years to keep up the private sector's participation in power sector development. The private investors want to invest as independent power producers (IPPs) as well as private partners via the public-private partnership (PPP) initiative to set up at least 55 plants to generate some 12,000 MW of power or more.

Companies from the United States (US) are accounted for major share of the power generation while firms from countries like China, India, Germany, Russia, South Korea, Saudi Arabia and Canada are flocking to Bangladesh's power sector after being encouraged by the available investment-friendly climate.

Based on the success in the power generation segment, the government is now preparing a policy guideline to encourage more private sector investment in power transmission and distribution segments.

Power Sector Master Plan-2016 (PSMP)

With an aim to ensure sustainable power to each individual and industrial outlet, the government formulated a long-term power sector master plan in 2016 where the target of electricity was set to 60,000 mw by 2040. Overall investment to reach the target was estimated at $71.5 billion and private sector is projected to be contributed 55 percent of requirement.

It has also been clearly mentioned in the master plan that what will be the major source of fuel, energy options and how it will effect the country's dream of becoming a developed one by 2041.

Traditionally, petroleum-based electricity power plants in Bangladesh were in action. But following the oil price shocks in the 1970s, the government decided to employ natural gas in the production of electricity. However, recent shortages have compelled the nation to resort to the use of imported fuels. It is worth mentioning that the primary energy resources and power generation capacity and efficiency are limited in Bangladesh, which obliges it to rely significantly on expensive oil-based power generation in order to avoid major power cuts. Moreover, it has been estimated that at the current rate of natural gas employment and provided no new natural gas fields are discovered any time soon, the country is likely to run out of its natural gas reserves by 2031. Given the ominous concerns, the use of imported High Speed Diesel (HSD) and Furnace Oil (FO) has risen alarmingly which, although added electricity to the national grid, actually meant that the government's public expenditure budget was inefficiently allocated to pay the corresponding import bills. This had probably crowded out the nation's potential investment in other productive sectors creating adverse economic impacts. Thus, it is crucial for Bangladesh to prepare itself for the near future and plan its fuel diversification strategies keeping in line with the trends in the global energy markets.

Coal is obsolete fuel

The share of coal in power generation is still insignificant in Bangladesh, but its future target is horrendous. When rest of the world is in competition to declare their fossil-fuel divestment, coal phase out plans, Bangladesh is looking for the fastest ever coal plant expansion project in the history. According to PSMP– 2016, coal fleet capacity will reach up to 19 thousand MW in total by 2041 which is now only 500 MW. The fuel mix of Bangladesh’s power plants is heavily based on natural gas. The Government of Bangladesh plans to reduce dependence on natural gas and move towards coal with plans to generate 50 percent of total electricity using coal-based power plants by 2030. Bangladesh can also tap its superior quality coal deposits for clean coal-based electricity generation purposes, provided skills development in the energy sector is ensured. Large scale coal-based power plants can be set up which, although is subject to time, can resolve the nation's electricity deficit to a great extent, provided measures to protect the environment are ensured.

Nuclear-based power

In PSMP-2016, 10 per cent of total power generation target has been set to achieve by 2041 from nuclear. To meet that goal Bangladesh needs to construct 7,200 MW capacity of nuclear power plant. Amid concerns from various corners, Bangladesh government already signed an agreement with Russia to set up Rooppur nuclear power plant with investing $ 12.65 billion. The PSMP-2016 prescribed for importing 4000 million cubic feet of expensive LNG per day by 2041. No wonder that such expensive energy mix will increase the gas and electricity usage cost in manifold. Along with the suggestion for the usage of coal, nuclear and LNG in the energy mix, PSMP-2016 suggested for gradual increase of the gas price by 19 to 29 percent per year. Similar, increase of the electricity price is suggested as well.

Alternatives are cheap

All around the globe renewable energy becomes a crisis solver but in Bangladesh this alternative itself in crisis. Non-hydro renewable energy based power generation capacity is only 1.5 per cent in Bangladesh whereas in neighboring India it is more than 15 per cent. Germany is producing 30 per cent of its total generated electricity from renewables now. It has set a goal to produce at least 55 per cent of its total electricity from renewables by 2035. Solar and wind power is producing at lower than Tk. 3.5 in India and Indian government is aiming to install 175000 MW of solar, wind, biomass and small hydro all together within next 4 years. On the other hand, Bangladesh’s recently formulated PSMP-2016 surprisingly couldn’t find any reason to set more than 15 per cent renewable energy based generation target to achieve by 2041. Bangladesh has successfully managed to implement a large-scale Solar Home System (SHS) project with over 4.12 million SHSs installed nationwide. Prime Minister Sheikh Hasina has publicly supported the expansion of renewable energy in Bangladesh, targeting 20,000 MW by 2021.

Finally, Bangladesh is advised to participate in cross-border electricity trading across the South Asian region, importing hydro power, the cheapest form of electricity, from Bhutan. It is important for the nation to participate in such regional power trade activities following its relative comparative disadvantage in producing hydro-power due to its geographic limitations. Power trade can play a pivotal role in tackling energy insufficiencies whereby excess power can be exchanged with neighbouring nations. It is noteworthy to mention that regional trade among South Asian economies is not as much as regional trade between other countries, especially amongst the developed ones. At present, Bangladesh mainly imports electricity from India. However, it can also look to diversify its import basket in terms of trading partners and can look towards countries like Bhutan and Nepal that have comparative advantages in producing hydropower.

Opportunities

Bangladesh may have sizable reserves of untapped gas in its 18 offshore blocks in the Bay of Bengal. Exploration has been stymied by the government's failure to offer attractive fiscal terms during the bidding process.The deep-water area of Bangladesh is virtually unexplored and the Government of Bangladesh plans to acquire 2D seismic survey data for the Bay of Bengal that will be made available to potential offshore exploration companies. Geologists have indicated that prospects are good for locating gas, but commercially viable reserves have yet to be confirmed.

In addition to offshore deep-water exploration, possibilities exist for reinvigorating aging brown fields, further developing onshore gas fields, overhauling roads, waterways and infrastructure to facilitate fuel transport, and building pipeline infrastructure to carry imported LNG and drilled natural gas to distribution hubs.

Incentives provided to foreign investors in the energy sector include:

• Tax exemption on royalties, technical know-how and technical assistance fees, and facilities for their repatriation;

• Tax exemption on interest paid on foreign loans;

• Tax exemption on capital gains from transfer of shares by the investing company;

• Avoidance of double taxation for foreign investors on the basis of bilateral agreements;

• Exemption from income tax payments for up to three years for the expatriate personnel employed in approved industries;

• Approved remittance of up to 50 percent of salary for foreigners employed in Bangladesh as well as facilities for repatriation of their savings and retirement benefits at the time of their return;

• No restrictions on issuance of work permits for project-related foreign nationals and employees;

Bangladesh’s power sector sustainable clean and affordable energy as a part of the SDGs in the lime light, Bangladesh should ideally consider energy options which not only would mitigate its energy famine but would also contribute to its macroeconomic indicators. We don't forget the fact that uninterrupted supply of electricity to industries, agriculture and household will certainly give enough power to the economy to make it a sustainable.

Author | Jubair Hasan    For China Investment  journalist of the Financial Express, Bangladesh