Energy

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Energy When referred to as an economic category, energy stands for stores of convertible energy, which are nonrenewable (including fossil fuels like coal, oil and gas and nuclear-fission fuels) and renewable (like wind, tidal, and geothermal power). In 2005, the per capita consumption of such energy in Bangladesh was 170 kg oil equivalent, the third lowest in Asia after Cambodia and Nepal. Most of it (65.5%) is non-commercial energy mainly composing biomass absorbed in various forms in rural households and factories. Almost all rural households use open chula (stove) for cooking and these stoves are usually fed by dry leaves, fuel wood, agro-wastes, rice husk and cow dung. Many affluent rural people use kerosene stoves, gas stoves (fed by LP gas) and electric heaters (where electricity is available) for cooking. Some households use imported coal and a few have locally constructed biogas plants for the purpose. About 4% of the rural people depend on kerosene for lighting after dusk and a substantial number of farmers use diesel for running pump machines to irrigate lands. Only a few towns/cities of the eastern part of the country have a supply of piped gas. A vast majority of the country';s urban and rural households thus depend on fuel woods, the annual consumption of which is about 40 million tons, for cooking. This is causing fast depletion of the forest reserve of the country and has become a threat to the ecological balance.

Utilisation of renewable energy is not a new phenomenon in Bangladesh. People have used solar energy or wind for different purposes from ancient times. Solar energy is used for drying cloth, agricultural products, fish, salt etc. Wind is used by sailboats. However, the modern use of wind energy, e.g., for electricity generation or water pumping systems from a wind turbine on a commercial basis has not yet been started. Different organisations have assessed several locations to evaluate the wind energy potential of the coastal region and the scope of utilisation of wind energy resources for application in water pumping and power generation.

In Bangladesh, the average daily solar radiation varies from 5.05 kWh/m2 in winter to 8.36 kWh/m2 in summer. Some organisations have conducted limited experiments with solar dryers to dry spices and vegetables. Experiments conduced so far in the country to generate electricity from solar energy have not been found economically viable. The solar photovoltaic systems are, however, gaining acceptance as technology for electricity generation in remote rural areas. There have been initiatives by the rural electrification board (narsingdi pilot project) and Grameen Shakti to provide basic needs such as electric lighting and power for TV and radio with the help of solar photovoltaic systems. In addition, the Bangladesh power development board (BPDB) has two major solar photovoltaic installations - one at kaptai for the Rainfall Measuring Station and the other at Aricha for the East-West Interconnector. The solar photovoltaic system is used for lighting purposes in some transmission towers (for example, at the karnafuli river crossing, chittagong city). In 2001, BPDB conducted a feasibility study on development of solar energy systems in the three districts of the chittagong hill tracts. By that time, the electricity grid had reached 21 of the 25 upazilas of these three districts, and the rest received a partial supply of electricity from diesel generators.

According to estimates made by the private LPG (liquefied petroleum gas) marketing companies working in Bangladesh the demand for LPG in the country in 2001 was about 300,000 tons. The government owned Eastern Refinery Ltd. (ERL) located at Chittagong produced approximately 16,000 tons of LPG per year and the LPG storage, bottling and distribution plant of the Bangladesh Petroleum Corporation (BPC) at Kailashtila, sylhet had an annual LPG production of an additional 5,000 tons. LPG produced by ERL and the Kailashtila plant is marketed through marketing companies of the BPC. Recently, the government started giving permission to private sector companies to import, store, bottle and market LPG in the country. So far 11 private companies have been given licenses by BPC. One of these, the Union LP Gas Ltd., with a capacity to annually import, bottle and distribute 36,000 tons of LPG is currently marketing approximately 8,000 tons (as Bashundhara LP Gas) per year. Some of the other companies are the Summit Industrial Marketing, Jamuna Spacetech Joint Venture Ltd., Mobil-Jamuna and ELPIJI Malaysia Bangladesh Ltd (Joint venture with Wesfearmers of Australia). Summit';s annual capacity to import and market is 60,000 tons, while the annual sales targets of Jamuna Spacetech and the ELPIJI Malaysia-Bangladesh are 25,000 tons and 250,000 tons respectively.

In Bangladesh, commercial energy is available to less than 20% of the population and about 8% of the population have access to hydrocarbons (liquid fuel, natural gas and LPG). The annual per capita consumption of electricity is estimated to be 144 kWh in 2011. The country has very limited hydropower potential and the only hydropower station is the 230 MW Karnafuli Power Plant now under consideration for expansion with 2 new units of 50 MW each. Feasibility studies have been made for some new sites for mini hydropower projects.

The country';s proven reserves of oil (including condensate) are estimated at about 65 million barrels. Natural gas is the major primary commercial energy resource of the country and its reserves have been estimated at around 23 trillion cubic feet (TCF), of which the net recoverable reserve is around 12.19 TCF. Since the discovery of the first gas field in the country in 1955, the cumulative production in June 2000 had been around 4.10 TCF. Recent projections contained in the 'Plan and Vision Statement for Gas Sector'; suggest that within the year 2010, at least 5 TCF and until 2020, an additional 7 TCF of gas would be required to meet the demand in the country. During the last financial year, 330 billion cubic feet and during the last ten years, 2.4 TCF gas were consumed. The gas consumption growth in recent years progressed at a rate of 8-10% annually. It is estimated that 11% of the country';s total gas consumption accrues to the domestic sector and with the expansion of gas pipelines at the east and west ends of the river jamuna, domestic and other consumption is likely to increase at a fast rate. A conservative estimate suggests that at least 65.5 TCF gas would be required within the next 50 years to meet the domestic demand, including 42 TCF for power generation and 7 TCF for fertiliser production.

Peat and coal reserves in the southern and northern parts of the country are located deep beneath the surface and are difficult to develop. So far only one coal mine is being developed by petrobangla with a limited annual output target of one million tons mainly for fueling the proposed 250 MW power plant at Barapukuria.

The present installed capacity of electricity generation of the country is approximately 3,803 MW, including about 600 MW in independent power producers (IPP). Some of the IPPs, especially the barge-mounted ones are often kept running below the generation capacity because of shortage of funds and incapacity of BPDB to consume the full production of IPP stations at off-peak hours.

One recent estimate suggests that almost seven-tenths of the total energy needs of the country are met by traditional energy sources like biomass, woods, bagasse etc. Almost 70% of the rest are derived from indigenous natural gas and the rest is derived from oil. The amount of natural gas used in the country is about 1,000 million cubic feet per day and about one third of the amount is used as feedstock for fertiliser production and nearly one half for generation of electricity. The imported petroleum is used mainly as fuel for vehicles (gasoline and diesel) and to a much lesser extent for lighting and cooking (kerosene). Petroleum is also used for industrial and commercial purposes, in the generation of electricity and as aviation fuel. The break-up of electricity consumption is 43% in households, 42% in industries, 11% in commercial establishments and about 4% in agriculture (basically, irrigation). The ratio of natural gas and oil in commercial energy in percentage terms is 70:30.

Besides public and IPP generators, a captive generation of over 500 MW is available to various industrial and commercial units for their exclusive operation. In terms of energy generation 85% of the total in 2000 was generated in gas-fired power plants. However, the available generation (average per day) is only around 2,650-2,800 MW throughout the country.

Bangladesh has a large unsatisfied demand for commercial energy with most of the supply limited to urban areas. The country';s economy operates at low levels of commercial energy consumption, which is a crucial bottleneck to economic development. The country spends around US$640 million for the import of energy (petroleum) in a year. The rural electrification programme connects on average 200,000 new consumers every year. At this rate, it would take until 2010 to double the percentage of rural households with access to electricity, leaving 80% of them still without the same.

In line with global trends in the 1990';s, Bangladesh has opted for private sector participation in the generation of electricity. By 1999, a 330 MW barge-mounted IPP had come into operation under BPDB and the cost on average is approximately US5.1 cent/kWh compared to the global average of US6.5 cent/kWh in such plants. Recently, two new land based IPP of total capacity 800MW had been established with a per unit tariff rate of about US2.75 cent/kWh.

The Power System Master Plan designed for Bangladesh provided a 20-year forecast, which shows the demand for electricity in the country as 4,600 MW in 2005, 6,800 MW in 2010 and about 10,000 MW in 2015. The government';s Power Policy Statement disclosed that the demand for power in January 2000 was around 3,000 MW and would increase 5-fold to around 15,000 MW by 2020. According to the statement, the government considered it appropriate to limit power generation by IPPs within 2,238 MW. Agreements are already in place to generate 1,188 MW by IPPS and more agreements are at negotiation stage for generating additional 1,050 MW by IPPs. It has been expected that by 2007, the government owned power plants would generate 3,019 MW and mixed sector (Rural Power Company) will add an additional 70 MW by 2004. Further, 65 MW more is estimated to be added by some small plants like the one of the Chittagong City Corporation (15MW), the Sandwip Power Network Ltd. (10 MW), Narayanganj Rolls Royce (10 MW) and Rahim Steel Ltd. (10 MW), planned for construction in the near future.

Problems in the power system in Bangladesh include shortfall of generation, load-shedding and low voltage, largely due to excess pressure on the supply network, dilapidated transformers and transmission lines and management failures in distribution systems. In June 2001, the country had 23 power stations and 7 out of their 58 power generation units were out of operation. At the same time, BPDB';s 8 highly expensive diesel fueled small power plants located at remote places and islands have become liabilities because of the unusually high per unit cost of electricity generation and production at levels far below the installed capacity. BPDB feels it urgent to overhaul a large number of its existing power plants but it can not go for such a move systematically as there is no reserve margin of power generation capacity at this moment.

Thirty per cent of the electricity produced by BPDB is distributed by the organisation itself, 50% is distributed by desa and the remaining 20% by Rural Electrification Board (REB). The transmission cost at the distribution level is a little more than Tk 2/kWh but BPDB supplies to DESA at Tk 1.91/kWh and at Tk 1.84/kWh to REB. BPDB earns a revenue of less than Tk 250 million per month from DESA and although BPDB';s official retail price for it';s consumers is more than Tk 3/kWh, its average realisation limit per unit is only Tk 1.75/kWh. As a result, BPDB is now on the verge of bankruptcy. According to some estimates, about $1 billion worth of industrial output is lost annually as a result of power outages. The government had created some new organisations and also allowed the formation of some others in the private sector with the objectives of solving problems in transmission and reducing the 'system loss';.

Based on an estimate that during the decade between 2000 and 2010, the power sector would require an investment of $6 billion, a significant part of which would not be available in the public sector, the government took a policy decision to invite private sector investments in the sector. External assistance is also sought for increasing power generation. To streamline the legislative basis for the reforms and to enable establishment of an independent regulatory authority, an Electricity Reform Act (in place of the Electricity Act 1910) is being formulated for approval by the Parliament. [Mushfiqur Rahman]