Phulbari coal project and other contentious energy issues in store for next govt

NewAge, January 4, 2008

The Awami League-led alliance, which is set to form the government, will need to deal with some contentious issues in energy sector such as formulation of a coal policy taking into account national interests, demand for the cancellation of the agreement with Asia Energy for the Phulbari coal field and the award of offshore blocks to international oil companies.

It will also find it tough to implement its election pledge to increase the power generation to 7000MW by 2013 from about 3800MW now because of gas shortage, which has already hit generation in the existing power plants.

The interim government has left the coal policy, Asia Energy and offshore blocks issue for the elected government amid controversy and protests by rights groups over the open-pit mining method and export provision in the model production sharing contracts for gas blocks.

‘Successive heads of the government have kept the power and energy ministry in their hands. The sector is plagued with corruption as a huge amount of money is transacted in the sector and it is heavily investment-dependent. A full minister should be appointed this time for the energy and power sector,’ observed an energy expert as he talked with New Age on Saturday.

Energy expert Professor Nurul Islam of Bangladesh University of Engineering and Technology, on the other hand, said the new government should formulate an integrated national energy policy by including coal policy and barring export of any local energy such as gas and coal as Bangladesh is facing an energy crisis.

He told New Age on Saturday the government should integrate into the national energy policy the version of coal policy the advisory committee, headed by BUET professor Abdul Matin Patwari, finalised. The latest draft of the coal policy, however, is slightly different as the energy division made some changes.

Nurul also recommended the government should cancel the procedure to award two international oil companies nine offshore blocks and go for fresh bidding by scrapping the provision for the export of gas up to 80 per cent in the model production sharing contract.

‘Leaders of the Awami League, Workers Party of Bangladesh and Jatiya Samajtantrik Dal time and again expressed their solidarity with us in our demand for a coal policy barring open-pit mine, cancellation of the agreement with Asia Energy and award of offshore blocks to two international oil companies. As they are set to form the government, we hope they will meet our demands,’ said Professor Anu Muhammad, member secretary on the National Committee to Protect Oil, Gas, Mineral Resources Power and Port.

Anu Muhammad also hoped the new government will implement fully the agreement the former BNP-led government signed with the committee to bar open-pit mining in Bangladesh and to expel Asia Energy from Bangladesh.

‘We also demand the new government should cancel the offshore bidding as the existing PSC has a provision for export of 80 per cent of gas,’ he said. He said they would continue with their movements until their demands are met.

Power experts feel the Awami League-led government will be in better position in terms of availability of funds for the installation of power plants as the government has already signed contracts with the Asian Development Bank, World Bank and the Japan Bank of International Cooperation for around $1 billion of loan for the installation of power plants with 1,000MW capacity. Three to four more power plants are in the pipeline whereas the investors have interest in the installation of around 1,000MW impendent power plant.

‘But the main problem the new government will face is the conditions of the lenders and shortage of gas to run the plants. If the new government wants to increase power generation to 7,000MW, around 700 million cubic feet of additional gas will be needed for the additional 3,000MW of power,’ said a power division official.

With the existing gas reserve, it is highly unlikely to produce another 700mmcfd of gas by 2013 while the additional coal extraction is unlikely before 2013 even if the government approves coal policy in three months, he said.

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