No more energy procurements without open tenders: Fouzul

Energy Adviser Muhammad Fouzul Kabir Khan has said that, moving forward, all energy and power sector procurements will be conducted through open tenders, ensuring competition to reduce prices and prevent monopolies.

"Due to a lack of competition and the monopoly of a few companies, we are purchasing energy at a higher price. To resolve this problem, we have repealed the black law of 2010 and brought competition back to this sector," he said at a seminar on "Predictable Energy Pricing and Supply Stability", organised by the Dhaka Chamber of Commerce and Industry (DCCI) at the trade body's office in the capital today.

Highlighting the visible benefits of open tenders, Fouzul Kabir Khan said that the price of fuel oil imports will drop by 35% due to the open process, leading to savings of Tk370 crore.

Aside from fuel oil, liquefied natural gas (LNG) is being procured through open tenders instead of private measures. Nearly 20 dozen foreign firms, including Aramco and Glencore, were approved as suppliers of spot LNG to boost competition and cut costs, the adviser recently told Reuters.

Noting that the per capita annual subsidy for electricity and gas is Tk3,000, the energy adviser said at the seminar that the electricity sector receives a Tk32,000 crore subsidy, while gas gets Tk20,000 crore, totalling Tk52,000 crore.

"The cause of this burden must be identified. Who made these energy agreements, why, and why were they imposed on the people of Bangladesh? Bangladeshi businessmen should also reflect on this," he said.

Citing his recent experience with the country's bureaucracy, Fouzul Kabir Khan said, "I am fighting with my own shadow, even though I was part of this bureaucracy."

He explained that state-owned Petrobangla has sought clearance from the Planning Ministry for the mandatory feasibility study requirement for drilling projects at various onshore gas fields to be waived.

"A feasibility study usually requires a third party and takes about a year to gather the necessary data. We didn't want to bypass it, but since Petrobangla already has all the required data, it should be managed internally," he said.

Khan also wondered if a year is required for the feasibility study, how can the job be completed quickly? "This is a tactic to buy time and we should speak out against such a time-consuming provision," he said.

Mentioning that tenders for 40 solar power projects in the private sector will be issued in phases, the power and energy adviser said, "Certain government agencies, such as power plants, railways, the Water Development Board and the Roads Division, own a large volume of unused lands. Solar power projects will be implemented on these lands. An initiative has been launched to provide 10-year tax holidays for future renewable energy projects."

Mohammad Tamim, a professor at the Department of Petroleum and Mineral Resources Engineering at BUET, presented the keynote paper at the event. 

In his presentation, he said that predicting fuel prices in advance is impossible, although estimates can be made. Forecasts for 5 or 10 years are often inaccurate. By 2030, the cost of generating electricity per unit may be Tk12. 

Fuel oil prices are expected to decrease further, which will lower the cost of LNG imported under long-term contracts, he said, adding that LNG should be purchased and stored when prices are low.

The professor explained that due to decreased demand in winter, power plants with a capacity of 4,000 MW need to be shut down but capacity charges for these plants have to be paid. Therefore, contracts with such plants should be cancelled. 

Oil-fired power plants are typically shut down during winter, and during summer, high demand can be met through solar power instead. Additionally, separate office schedules for winter and summer could be implemented to save energy, said the energy expert.

DCCI President Ashraf Ahmed delivered the opening speech at the seminar. Geologist Badrul Imam and former BUET professor Ijaz Hossain took part in the discussion. 

Imran Karim, vice chairman of Confidence Group, Md Nurul Akhter, president of the Bangladesh Solar and Renewable Association, Soumitra Kumar Mutsuddi, head of Corporate Affairs at BSRM and others were also present.