Experts urge rapid mixed energy solution as govt eyes more private capital

Bangladesh's energy experts have a message for policymakers: the mistakes were predictable, the warnings were given but unheeded, and the crisis is now here.

At a seminar in Dhaka today (11 August), the consensus was clear. Domestic gas production is falling and must urgently be pushed back towards 2,000mmcfd. Demand will hit 4,600mmcfd by 2030.

A power capacity of 7,000MW sits idle for a lack of fuel. And there is no single solution – only a combination of more exploration, more LNG, more coal, more solar, and more private sector involvement that was never adequately encouraged.

"The mistakes that were warned about in the past have now become real problems," said former Buet professor and energy expert Dr Ijaz Hossain, who delivered the keynote address. Nobody in the room disagreed.

The observations came as Power, Energy and Mineral Resources Minister Iqbal Hasan Mahmood called for greater private investment in infrastructure related to primary fuels, including gas, coal and petroleum, at the seminar, saying such investment should be encouraged as the government alone could not meet the country's growing energy requirements.

Addressing the programme, energy expert and Independent University Bangladesh Vice-Chancellor Professor M Tamim noted that there was no single immediate solution to the crisis.

"In addition to increasing gas production, energy imports should be made as needed, maximum use of coal-based power plants should be made, and 2,000MW to 3,000MW of solar power should be added quickly," he said.

East Coast Group Chairman Azam J Chowdhury stressed that Bangladesh should use all available sources, including renewable energy, oil, gas and LNG, rather than depending on any one source. Greater private-sector involvement would also be needed, he said.

Azam called for increased LNG imports to meet urgent demand and proposed a large land-based LNG terminal at Matarbari in the longer term, saying it could provide an opportunity to develop the area as a regional energy hub.

"Policy uncertainty and unilateral decisions discourage the private sector. Economic development is not possible by artificially reducing energy prices. Competitive average energy costs must be ensured by combining all sources," he said.

Bangladesh Independent Power Producers' Association (Bippa) President David Hasanat said gas shortages were preventing around 7,000MW of electricity from being generated.

He called for the third floating storage and regasification unit (FSRU) to be implemented within two years and for a land-based LNG terminal to be built in the longer term. He also urged the government to use the country's coal reserves to support industry and investment.

The seminar "Energy Sector: Crisis, Prospects and Ways Forward" was organised by the Forum for Energy Reporters Bangladesh (FERB) at Dhaka Club. FERB Chairman M Azizur Rahman presided over the programme, while its Executive Director Serajul Islam Siraj delivered the welcome speech.

Much needed privatisation

At the seminar, Iqbal said private investment was "very much needed, especially in the energy sector". The government is preparing a common policy to allow qualified private companies to import and sell fuel oil alongside state-owned distributors such as Padma Oil, Jamuna Oil and Meghna Petroleum.

"We are not doing this to give benefits to a particular company. Rather, we are making a general policy so that everyone can do business," the minister said.

Under the proposed policy, consumers would be able to choose between state-owned and private fuel retailers.

Iqbal said the government's approach was partly shaped by the experience of the recent Middle East conflict, when fears of a fuel shortage led to long queues at petrol stations despite the country having sufficient stocks.

The minister also rejected allegations on social media that the initiative was intended to benefit particular businesses, describing such claims as "absurd".

He said the government had not decided to provide special facilities to any particular company and was instead preparing a general policy under which eligible private companies would be able to participate.

Consumers Association of Bangladesh energy adviser M Shamsul Alam, however, warned that opening the fuel market to private companies could expose consumers to overpricing and monopolistic practices without proper regulation.

"The proposed common policy on fuel sales by private enterprises must be thoroughly vetted, and consumers' rights must be safeguarded to ensure they do not fall victim to private monopolies," he said while speaking to TBS on the matter.

Shamsul also identified reasonable energy pricing as one of the sector's major challenges.

"The government continues to purchase gas and electricity from foreign companies at high rates rather than investing in building the capacity of domestic institutions," he said.

LNG and renewable energy

Speaking about renewable energy at the seminar, State Minister for Power, Energy and Mineral Resources Aninda Islam Amit said the government was targeting 10,000MW of electricity from renewable sources, with around 40-60% of that capacity potentially coming from ground-mounted and rooftop solar projects.

He said city corporations would designate buildings for rooftop solar installations, while private investors could finance the projects and recover their investments through net metering.

"We are very adamant. It does not matter which building it is," he said. The government could also consider holding-tax-related incentives to facilitate rooftop solar installations, he added.

Amit also acknowledged that Bangladesh has around 30,000MW of installed power generation capacity, but fuel shortages are preventing many plants from operating at full capacity.

The country currently faces a gas supply deficit of around 1,200mmcfd against demand, even after combining domestic production and imports. Domestic gas production is declining by around 150mmcfd annually, he said.

"Even if you have the money, you cannot increase LNG imports overnight because you do not have the infrastructure," Amit said.

The government is moving ahead with plans to establish a land-based LNG terminal at Matarbari, which Amit described as the "ultimate solution" for expanding LNG import capacity.

He said the tender for appointing a transaction adviser had closed and land for the proposed terminal had already been identified.

The government is also hopeful that the ongoing offshore oil and gas bidding round will be successful, while preparations for an onshore bidding round are under way, Amit said.

Bapex will also be strengthened by improving its equipment and workforce, he said. Officials from the state-owned exploration company will be sent abroad for six-month to two-year certificate courses to develop specialised skills.