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Energy sector in Bangladesh is bracing for expansion on the heels of possible import of fuels that include, liquefied natural gas (LNG), coal, inter-country electricity and nuclear power. Official data suggest the government is set to produce 21000 megawatt (mw) of power by 2020, 32000mw by 2030 and 54000mw by 2040 with imported fuel.
Dependence on imported fuel does not bode well for the economy, according to experts. But the government has opted for relying on imported fuel for the years ahead. By the end of the next year, 1.0 billion cubic feet LNG will be imported every day, which will cost Tk 240 billion. Over time, the government will increase its daily import phase by phase.
The power plants, on the other hand, are scheduled to be run on imported coal. The excessive use of high-priced LNG and coal will result in price hike of electricity and industrial commercial goods. The power prices have already been hiked twice in the last one year. Introduction of LNG will be much costlier than that of the locally produced natural gas. Recent hike in LNG prices in the international market bears testimony to such claims.
The price of LNG is linked with the price of oil internationally. That means if the price of oil increases or decreases in global markets, it has a direct impact on the price of LNG.
Although the government is gearing up efforts for the import and distribution of the LNG to meet the country's demands, it appears there have been no proper assessments of demand. Decision has not been taken as to how many floating and land-based terminals will be built and how much LNG will be imported.
Deals and memoranda of understanding (MoU) have already been signed for establishing six LNG terminals and also expressions of interest (EoI) were initialled for establishing more terminals. But there is no plan yet on how many terminals will actually be required and how much LNG will be imported. Even the plan for importing LNG to meet the demand of natural gas was also not made based on any cost benefit study. Everything was apparently done in haste on the basis of estimation.
Bangladesh is now reeling under natural gas shortage with daily average output of around 2,700 mmcfd of gas against the demand for over 3,500 mmcfd. The LNG import plan was undertaken in 2010 to meet the gas shortage. But the price of imported LNG will be higher than the price of natural gas extracted in the country.
The point to ponder here is the issue of increased gas prices for which the people will suffer. LNG will be purchased at international prices when its import is set to begin this year. Taxes on gas will have to be rationalised and the prices of gas will undoubtedly increase. However, the finance minister hinted at a recent meeting that the price would be adjusted by subsidising.
Energy is undoubtedly a major driving force for the country's growth. There has to be a balance between demand and supply. Otherwise, the energy sector will be in jeopardy. Gas prices have already been adjusted many times in the country.
It is, however, not understandable as to why the government is not that much serious about exploring natural gas wells both in offshore and onshore fields. Local scientists believe hunt for new gas fields is not getting due priority from the government. Every time, citizens are being warned that the natural gas reserves would soon dry up. But the government is sceptical about telling them why there is inordinate delay in exploring untapped potentials in the Bay.
The latest gas field was discovered in Bhola last year, earlier one found in Rupganj in 2014. Offshore gas hunt remains stalled for two decades for unknown reasons.
In the circumstances, a proper survey along with a pragmatic planning is seen essential for exploring natural gas reserves in the Bay. Onshore and offshore gas exploration must be given topmost priority instead of giving importance to LNG import.
If a single offshore exploration drive ends in success, the country will have no gas crisis for a considerable period of time. The government should take note of such views expressed by the local scientists.