Bangladesh ministry moves for joint venture policy on gas, coal fields

Aminul Islam, NewAge, April 4, 2009

The power and energy ministry has taken a move to formulate a policy for the public-private joint venture to develop gas and coal fields on a ‘fast track’ basis.
   

‘The main aim of the policy will be to allow Petrobangla to form joint ventures with local private sector or foreign companies to develop gas and coal fields.
   

The gas and coal fields cannot be developed quickly at present because of the existing procurement rules,’ said a high official of the ministry.
   

Petrobangla prepared and placed a draft joint venture policy on Thursday as per the ministry’s directive at an inter-ministerial meeting, headed by the adviser to the prime minister Tawfiq-e-Elahi Chowdhury.
   

The draft said that the joint venture for energy sector was needed as the country was facing a huge energy crisis although it had five coal fields and potential for more gas reserves.
   

Petrobangla would be able to form joint ventures for any energy-related projects like exploration, production, transmission and supply of coal, gas and other hydrocarbons and the ministry would be able to approve projects worth up to $50 million.
   

It also said a security-committee, headed by the chairman of Petrobangla or an additional secretary of the ministry, would be able to approve projects below $50 million.
   

The meeting, attended by representative of different ministries like the finance, planning, industries and commerce, Board of Investment, National Board of Revenue and Bangladesh Energy Regulatory Commission, however, asked Petrobangla to review the draft further.
  

‘The draft policy was sent back as it was similar to the Private Sector Infrastructure guideline, which was enacted in 2004 for tapping private sector investment in different projects.
   

The meeting felt that the energy sector joint venture policy would be more up to date and different,’ said an official.
   

Energy experts, however, said that such joint ventures could encourage more irregularities in the energy sector if the government failed to ensure competitive bidding in the process.
   

The past BNP-led BNP government signed a controversial joint venture agreement with the Canadian company Niko Resources for two gas fields in continuation of a move by the previous Awami League government, which declared three gas fields abandoned, despite having sufficient gas reserve to award the fields to Niko, said an expert.
   

‘It seems there was a move to sign more such joint venture agreements under the energy sector joint venture policy to award gas fields to foreign companies,’ he said.


Energy expert Professor Nurul Islam of BUET told New Age on Friday that there was no need for joint ventures to develop gas fields. ‘Joint ventures for gas fields will not give any benefit. For example, the joint venture for Feni gas field gives Bapex only 20 per cent share while 80 per cent share was being taken by Niko,’ he said.
   

He said a joint venture could be formed for the coal fields as per the draft coal policy. ‘A separate policy for joint venture for coal fields can be enacted but the joint venture partner for state-run companies for coal fields will have to be selected through competitive bidding,’ he said.
   

Sources in Petrobangla said that Petrobangla and the energy ministry were also eager to formulate the policy to engage some dubious companies like the Luxon Global of South Korea in exploring and developing coal fields.
   

‘Petrobangla has already got a number of offers from companies from South Korea and Poland to form joint ventures to explore coal at Dighipara field.
   

The dubious Luxon has become more active since its Bangladesh agent was elected a member of parliament from the ruling party Awami League. It will be convenient for them to form such joint ventures if there is a policy,’ said a source.
   

A high official of energy ministry, however, said that the draft of the policy would be formulated in such a way so that no irregularities could take place. ‘The draft of the policy was sent back as we want that there would be some sort of authority which will look after the formation of joint ventures and see whether any irregularities are taking place,’ he said.

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