State-owned energy companies key to economic independence in Bangladesh

Editorial, NewAge, February 1, 2009

It has been a common complaint within certain quarters of government as well as in activist circles that successive governments have systematically deprived state-owned agencies, namely the Bangladesh Petroleum Exploration and Production Company, of adequate funds to carry out and expand operations. This has effectively handicapped the state-owned driller from further exploration and development of potential gas-fields, although it has proven to be quite efficient at it when given the occasional opportunity. The authorities have hardly ever paid heed to such calls. Consequently the foreign oil companies continued to edge out local gas production with new fields at their disposal. The scales were finally tipped sometime last week according to a report in New Age on Saturday. The international oil companies now supply more gas, although marginally so, than do state-owned agencies.
   

The immediate problem here is one of finances. Gas supplied by local agencies would cost the government between Tk 7 and Tk 25 per unit (1,000 thousand cubic feet of gas). But it costs about Tk 130 per unit in case of foreign companies. With just over half of about 1,800 million units coming from foreign companies, Petrobangla’s demand for foreign currency is also on the rise. The more long-term concern is that the state-owned company’s quality of human resource has deteriorated to unfortunate levels. A number of its personnel have either migrated to foreign companies or gone abroad.
   

While successive governments have paid little attention to strengthening and modernisation of the state-owned oil and gas agencies, failing to provide them with adequate funds and resources, other countries have done the opposite and turned their agencies into global players. ONGC of India and Petronas of Malaysia are notable among them. Adequate power supply remains one of the major problems for the government and considering that a large portion of the power plants run on natural gas, the government has no choice but to continue to purchase gas from the foreign companies.
   

It should, however, be kept in mind that if this trend continues, dependence on foreign companies will only increase, and with it will increase the demand for foreign currency since sales from those companies are deemed as imports. The government should realise that there needs to be a decisive change in policy as regards the energy sector, with a specific focus to strengthen the state-owned agencies with increased investment and necessary assistance.

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