Will government make use of local coal reserve?

At a time when power and energy prices are soaring in Bangladesh, the old issue of developing its proven domestic coal reserves comes to the fore. For over 15 years, energy planners in Bangladesh have dabbled with import-only fossil fuels to keep wheels of the economy turning. Undoubtedly, the country prospered in the fields of agriculture and industry. Things began to go awry due to external geo-political issues that have resulted in import-only fuel supply prices on its head and made it literally impossible for Bangladesh to foot the energy bills.

With the growing political influence of the import lobby came one decision after another (at policy level) to build a power sector that is heavily dependent on imported fossil fuels. The issue of developing its own proven coal reserves were left on the backburner, despite having generated interest of international mining companies and having access to foreign finance to develop these mines. The government caved in to unrealistic demands of a small coterie of so-called intellectuals and so-called 'experts' and did not heed the warnings of its own professionals engaged in publicly owned companies and energy professionals.

The battle was lost before it could begin and today, it has the power infrastructure to produce power, but it can't afford the energy needed to fire up those plants. To cut a long story short, the country now has over-capacity in power production but is sorely lacking in other areas of the energy infrastructure and now there is neither money nor time to rectify the mistakes that were at least 10 years in the making. So, Bangladesh is now suffering from energy poverty. Still claims are being made from certain quarters about finding some mythical gas field here or there that will solve the energy problem "any day now".

Sadly, for both bulk (industry) and retail consumers of energy (pre-paid / post-paid gas or electricity) are regularly subjected to upward revisions of energy bills. The common excuse that's given is that state companies involved in the import and sale of these energy supplies have been suffering massive losses. Entire industrial sectors have developed over this period on the promise of cheap energy. Suddenly when subsidies on this energy or power are withdrawn, it's expected that industry will somehow "manage" this cost increase. It speaks volumes for the strange manner in which energy planning is done in this country.

Given the macroeconomic situation, the country can ill afford capacity payment of hundreds of millions of dollars to domestic and foreign power producers. It can't even manage to pay the international energy companies engaged in gas production. Inevitably, the rate of power cuts will increase, as will the failure to supply requisite gas to consumers. Since industrial production is more important than residential consumers, the latter will have to suffer more than the former. Even then, recent media reports have stated that many small and medium industries are going belly-up all over the country because they simply cannot foot the new utility bills.

There has been renewed interest in developing domestic untapped coal reserves. However, if past events are anything to go by, the import lobby with its massive clout and influence over national energy policy-making, will move heaven-and-earth to delay any serious government effort to tap into its own coal reserves. These delaying tactics have been witnessed before. For instance, the decade-long inertia to revise the production sharing contract (PSC) only helped a small coterie of self-serving, private sector group to get fat off government largesse that came through the opaque contracts inked with independent power producers (IPPs) and helped build a solely import-dependent liquefied natural gas (LNG) infrastructure.

Coal was left in peace under the ground. These days, there are debates about whether the country will stick to its failed experiment of mine-mouth evacuation (underground mining) of coal, or go for 'open-pit' mining. The usual suspects --- the pseudo-intellectual individuals who wrongly influenced government decision-making 12 years ago and landed the government and the economy in this mess --- are up in arms again. The fact that Bangladesh is a US$500 billion economy that requires massive amounts of energy and power to keep growing continues to elude a section of half-baked "energy experts", who have neither the requisite technical knowledge, nor of how far things have developed in the world of mining, keep harping on the same old tune. In the final analysis of things, it's up to national policymakers to either develop cheap sources of energy domestically (on which it will have control) or keep importing energy from international sources. The question is whether the state will continue to be held hostage to international market price dictates or chart a course to self-sufficiency in energy.

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