Challenges of energy supply at affordable price

Published reports suggest that the government has been considering to bring changes again in the final draft Power System Master Plan (PSMP) 2016 to promote larger share of Liquefied Natural Gas (LNG)-based power generation. The Draft PSMP has been waiting for finalisation for almost two years. The last published PSMP 2010 required updating after five years. Bangladesh government's Power Cell (a technical wing of the Power Division, Ministry of Power, Energy and Mineral Resources) had engaged Japanese consulting firms with the support of the Japan International Cooperation Agency (JICA) to prepare the updated PSMP. The final draft PSMP 2016 was submitted to the government for approval several months back.

The draft PSMP 2016 significantly shifted its focus (as desired by the authorities) from the PSMP 2010 in many areas including in primary energy balance projection for power generation. The PSMP 2010 projected the share of domestic coal nearly at 30 per cent and imported coal at 20 per cent for power generation. On the contrary, the draft PSMP 2016 proposed 35 per cent coal supply from imported sources and 1.0 per cent from domestic sources for power generation.   On the other hand, the PSMP suggested to limit liquid fuel (imported) share within 6.6 per cent for power generation and the PSMP (draft) 2016 proposed 5.0 per cent. The LNG contribution in primary fuel input was projected at 35 per cent in the PSMP 2016 draft. The same PSMP targets to generate 57,000 MW power within 2041 using 35 per cent coal, 35 per cent  gas (domestic and imported LNG) and the remaining 30 per cent from other sources of energy.

Government agencies in the energy sector have been generally following the draft PSMP 2016 and the arrangements for LNG import. Initiatives for import-based coal-fired power plants development (1,200 MW at Matarbari, 1,320 MW at Payra and 1,320 MW at Rampal) are the results of the same guidelines. Unfortunately, the share of import base coal-fired power development remains far behind that of the projected PSMP 2016 so far. Initiatives for LNG import has been progressing with enthusiasm by Petrobangla. The targets of 3,000 million cubic feet a day (mmcfd) equivalent LNG import within 2025 and additional 1,000 mmcfd within 2030 have been planned. The government has been optimistic to get gas from imported LNG in the gas pipeline grids ahead of the target time. Already Contracts and Memorandum of Understanding have been signed with US firm 'Excellarate Energy' and local 'Summit Group' for setting up gas supply facilities each with 500 mmcfd capacity from imported LNG using floating Storage and Re-Gasification Unit (FSRU). Excellarate is expected to supply gas from Maheshkhali FSRU by April 2018 and Summit Group to supply gas from LNG at the end 2018. The Indian Reliance Group is expected to establish by the mid 2019 a 500 mmcfd capacity LNG re-gasification facility. A Chinese firm intends to establish a similar capacity of LNG re-gasification facility within 2020. Different public limited companies under the Power Division have been taking initiatives to establish LNG based power plants. The government has signed several LNG supply contracts and MOUs with international public and private companies.

Despite the consumers' concerns for at least three-fold increase of natural gas price (mainly due to existing price gaps between imported LNG and locally produced gas), experts consider LNG import a right initiative. There are expectations that building LNG-to-gas conversion facilities and connecting pipeline construction works will progress in a coordinated manner so that imported gas can be timely supplied to industry and business centres of the country. Also, there is a challenge to ensure quality gas supply commensurate with the increase of gas demands. The quality supply of energy is linked to enhancing efficiency of energy use. Also proper utilisation and maximisation of value edition from gas resource uses can be ensured only with proper energy pricing. The present gas crisis is significantly linked to inefficient and wasteful uses of gas. So far the gas price is predominantly considered from the view points of its exploration, production and transmission, distribution costs. The price of gas itself is not taken into considerations. Making available gas at a price below its economic cost has encouraged wasteful uses of gas resources and finally led to gas crisis. Experts suggest not to repeat the same for future energy planning.

Experts also suggest for making a balance between imported fuel and domestic fuel for power generation. The present trend of primary energy development and use will lead to 80-90 per cent dependency on imported fuel for power generation by 2030. Imported liquid fuel already contributes to 37 per cent share of energy for power generation in the country. If the present trend of power plant development initiatives continues, there is an apprehension that the liquid fuel's contribution as primary energy would soon exceed 50 per cent share for power generation. Unrealised coal based power plant project development and failure of implementing multiple base load power projects as per schedule have led to the situation. Experts also feel that failure of local coal development and mine-mouth coal fired power plant development have contributed to the over-dependence of liquid fuel-based power generation.

Also, the projected plans for coal-based power plant development failed to attain their schedules as the import-based power plant installation works were undertaken without professional assessment of the projects' challenges. Following the suggestions and studies presented by non-professionals, the government was misled and no infrastructure development has so far been implemented to enable coal import for the projected power plants. Thus the question has surfaced whether the schedule of imported coal-based power generation and supply of power at an affordable price from imported sources of primary energy can be ensured and sustained?

The writer is a mining engineer and writes on energy and environment issues.

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