The price of electric fertilizers and industries should be rationally adjusted


The price of electricity, fertilizers and industries must be adjusted rationally. The oil and gas exploration campaign must be launched on a war footing. The decision to mine its own coal and use it for power generation at the mouth of the mine must also be made now when carrying out an economic analysis. This would relieve natural gas of monofuel dependence.

Energy & Power Magazine speakers hosted a webinar titled Gas Crisis & Price Hike Move: Challenges of Industrial Sector mentioned above. The speakers of the webinar jointly organized by the thirty-day periodical Rangberang and the monthly magazine Food and Pharma also found no justifiable reason for the proposed exorbitant price hike for a simple import of LNG from the spot market contributing only up to 5% of the current energy mix. They suggested providing special allowances for 10 carefully designed exploration wells each year for gas and oil. They also suggested further boosting hydropower import efforts from India, Nepal and Bhutan, if necessary, by jointly investing in generation and building a regional power grid.

Former BUET professor, Dr. Ijaz Hossain, was the main guest of the webinar moderated by Mollah Amzad Hossain, editor of the EP. Engineer Khondkar Saleque Sufi, an international energy consultant, was the main speaker. Dr Ahsan H Mansur, Executive Director of the Institute for Policy Research, Engr. Mizanur Rahman, Former Member of Bangladesh Energy Regulatory Commission (BERC) and Secretary General of Bangladesh Energy Society, Abul Kasem Khan, Chairman of Business Initiative Leading Development (BUILD), Humayun Rashid, Chairman of Standing Committee on FBCCI Energy and Services and CEO of Energypac and Arun Karmokar, President of Forum For Energy Reporters Bangladesh, participated in the webinar as a panelist.

Dr. Ijaz Hossain insisted on eliminating alarming gas losses from the system. According to him, it is nothing but theft and looting. He was told by industry insiders that the system loss cannot be less than 8%. Energy efficiency has increased slightly. But it’s not enough. This must be increased. Gas is an extremely valuable commodity now. Importing and supplying LNG at any price is a strange concept. Opting for the import of LNG, leaving our own exploration unattended was a major mistaken decision. Not mining your own coal reserve is another bad decision. Coal mining by applying appropriate technology has no significant impact on the environment. Instead, we remained almost exclusively dependent on natural gas. We need to consider whether it would still be economical to use expensive gas for fertilizer production. We need to decide which sector would use considerably cheaper, naturally available legacy gas. We have to decide which of the industrial, domestic, fertilizer or energy sectors would continue to use its own depleting gas resources. Legacy Gas should be used wherever maximum value is added.

Dr Ahsan Mansur said Bangladesh could not reduce its dependence on gas. Our gas resource is not unlimited. Part of the demand is not satisfied by importing expensive LNG. But we could make the necessary investments for a longer term availability of gas. Few effective initiatives could be directed towards importing electricity and hydropower from countries in the region. We have not yet been able to reach 10% solar energy contribution. We started paying through the nose for an exclusive gas addiction. The grant requirement has tripled now. We have to be rational for that. A fair balance must be ensured. The tariff for the industrial sector is the highest and for the domestic sector is the lowest. These can be adjusted rationally. Tariffs for the industrial sector must be kept at an affordable level and slightly increased for domestic use. A special fund for tariff rationalization can be created. A certain amount of money can be saved when the price drops. A subsidy can be provided when the price is higher from this fund. The private sector should be integrated into different segments of the gas value chain. Charcoal should be considered to relieve gas from excessive stress.

Engineer Mizanur Rahman pointed out that the rapid depletion of proven gas resources has pushed Bangladesh to import LNG. A debate was triggered for a proposal to increase the price of gasoline by 117%. This price adjustment initiative was taken after 3 years. In my opinion, the price should be increased once a year. It is not fair to make users pay the full cost of gas production and imported fuel. This was not considered before and is not being considered now either. But the situation demands to rationalize the tariff now.

Abul Kasem Khan observed that the growth towards an economy exclusively dependent on imported fuels would involve enormous risks. This can have a negative impact on economic growth and the development process. There are still significant opportunities to find gas in Bangladesh. But there is also the lack of necessary initiatives. The rationale for abandoning a significant amount of premium coal also needs to be reconsidered. Our carbon footprint is not mentionable. Many countries around the world have developed using their own coal resources and many still depend on them. Coal alone can create 75 years of energy security for Bangladesh. It’s time to give it some serious new attention.

Humayun Rashid reminded everyone that industrial entrepreneurs have continued to invest in efficient use of fuel. But the sector cannot bear the burden of once a significant increase in the price of gas. All must remember that the Tk5 subsidy in industry creates a Tk35 contribution to economic growth. FDI and local investments would be seriously affected if the government cannot take rational initiatives for a longer term supply of quality fuel and electricity at an affordable price. Moreover, aiming for exclusive dependence on imported fuels, neglecting exploration for its own fuel cannot be the right strategy.

Khondkar Saleque Sufi in his opening statement pointed out that local production contributes 78% to national gas production and 22% comes from imported LNG. Of the 22%, only 5% is purchased on the spot LNG market and, to be more precise, only three shipments from the volatile global market in the recent past. In such a situation, there is no justification for the proposed significant increase in natural gas prices for all end users. Import duties, taxes and VAT may be adjusted to absorb the price shock of importing LNG. Gas sales tax of Petrobangla companies may also be adjusted. All options should be explored. Without taking all this into account, a significant increase in the price of gas in the prevailing and ensuing situation would create serious adverse effects. The next 3 years would be extremely important for Bangladesh. The government must see that the irrational increase in the price of gas does not cause any impediment to the smooth rise of the economy of Bangladesh from the LDC to the lower level of the developing economy.

With 45 years of hands-on experience (30 years in all segments of the energy value chain in Bangladesh), he confidently assured that well-planned exploration initiatives on professional implementation can still lead to new gas resources of 8 to 10 Tcf, even in land areas (including border areas and deeper prospects of discovered gas fields). But it is highly unlikely that BAPEX’s sole policy on land exploration could prove counterproductive. He suggested engaging IOCs through PSCs alongside BAPEX, even ashore, creating attractive incentives.

Saleque said the failure to exploit its own coal resources has had a boomerang effect on Bangladesh. He wondered why there could not be a reliable comparative economic analysis of coal mining, putting in place power generation of around 10,000-15,000 MW versus socio-economic impacts and environmental? He also suggested everyone drive to eliminate theft and theft of masked gas in the event of a system loss. He reminded industrial entrepreneurs that for a sustainable supply of quality fuel, they must pay the economic price. But to protect the industry, subsidies at a rational level must also be provided. However, at all levels, waste must be minimized.

Arun Karmaker observed that there is no alternative to eliminating the inefficient use of gas and theft. Bangladesh has certainly not done well when it comes to importing LNG, grossly neglecting the exploration of its own resources. He believed that planned oil and gas exploration in the Surma and Bengal basins could still lead to 8 to 10 Tcf of new gas resources. He also suggested for all coordinated efforts to eliminate gasoline theft and thefts.


Comments are closed.