An anatomy of power crisis

Jan 12, 2024

In February last year, the government achieved the milestone of bringing power to all corners of Bangladesh, thanks to its hyperdrive to make it happen over the last one decade.

But no sooner had the government celebrated the achievement, the Ukraine war broke out, casting a shadow over the success with power and energy disruptions.

Today, the country is reeling under an unprecedented load shedding of around 2,500 megawatts, equivalent to what the country used to produce in total during the late nineties.

The reason is simple. There is not enough foreign exchange to import gas and coal. As a result, as of Saturday, a little over half of 24,143MW power capacity could be used.

Of the total 170 power units, only 57 ran at full capacity on Saturday, 62 were able to use half their capacity while 51 remained idle.

All this has huge fiscal implications -- both due to the capacity payment to the power companies for idle plants and a sheer waste of precious foreign exchange spent to set up the plants.

Because of the revenue crunch, private power producers have not been paid bills to the tune of Tk 18,000 crore as of March 2023.

Businesses are now crying for power as production has been hit hard, which has sinister implications both in terms of revenue and employment. When the wheels of industries slow down, the government gets less and less revenue, leading to a wider budget deficit.

Since 2009, the country's reliance on imported energy jumped up phenomenally mainly because there was no serious attempt to explore new oil and gas fields, or develop any coal mines or explore wind power. This excessive reliance has now created huge financial pressure on the government.

While the government blames the Ukraine war for all the trouble in the energy and other sectors, experts also fault certain wrong policies and failure to implement some aspects of good policies in the power sector.

Handling gas crisis

The government could have addressed the two-decade-old gas crisis better. Back in 2009, the gas crisis was already so acute that a good number of power plants that generated electricity using gas, and fertiliser factories were either partially operating or not operating at all.

A decade back, when the government decided to address the gas crisis by importing Liquefied Natural Gas (LNG), it seemed that LNG would bring relief to existing shortfalls.

But when the country started importing LNG in April 2018, it had already signed agreements to build several new gas-based power plants.

As a result, when the LNG started coming to Bangladesh, it could never fill in the blanks completely. The gas demands had already spiralled up because the government did not strategically cap the growth of new gas-based power plants or industries.

This is reflected in the fact that the power plants that suffered from the gas crisis two decades back are still suffering from the same.

All the while, at least 37 gas-based new power plants were built at a cost of around $9.5 billion. They are also waiting for optimal gas supplies so that they can generate power and make sense of the investment.

The oil and gas exploration also did not get due attention. There was an emphasis on strengthening the country's own exploration company Bapex, but the plan did not quite work due to the leadership failure of its owning company Petrobangla.

In 2010, for example, the then Petrobangla chairman declared the "discovery" of a big gas field in Netrokona based on a seismic survey.

Two years later, upon drilling this field, Bapex found nothing. The Petrobangla made similar claims about other gas discoveries which did not later add much to the total gas reserve.

There were some attempts to attract international oil companies to explore the Bay of Bengal for oil and gas. While a few oil companies engaged themselves in gathering seismic survey data in some parts of the Bay, only one company had pinpointed a potential area for drilling in the deep sea.

But the company wanted to renegotiate its terms and the government did not agree. The deal fell flat. Since then, nothing much happened in the Bay.

Talking about the power generation based on imported fuel, Md Abul Kalam Azad, chief coordination of Sustainable Development Goal (SDGs) of Bangladesh, said Bangladesh had no other option but to develop the present energy mix for power generation.

"We did not have enough gas production and we could not produce local coal from the mines due to fertile land, replacement of local community and underground water aquifer. So, we had to develop this generation system to meet the growing electricity demand," he said.

According to the government data, the country on average produced 1,941 million cubic feet of gas per day (mmcfd) from 17 gas fields in 2010-11.

The number of gas fields increased to 27 by 2020 when the country's daily gas production peaked at 2,700mmcfd and then it went down to around 2,100mmcfd now.

The country imports around 700 to 800mmcfd in the form of LNG. But the demand is estimated to be around 3700mmcfd.

Handling coal

Although a bit different but a similar fate happened when the government went for coal-fired plants. Since 2009, the government implemented four coal power plants with a capacity of 4,230MW, and more projects are underway.

Instead of tapping its own coal in a greater way, it relied on imported coal, meaning huge foreign currency drainage.

Bangladesh has five coalfields having in place an estimated 2 billion tonnes of reserve.

Of them, the country has only developed one mine in Barapukuria that has as much as 390 million tonnes of coal. But as the country resorted to underground mining, it has so far produced only 13 million tonnes, which has been mainly used for the generation of around 525MW of power at the mine site.

Back in 2010, the government had thought of turning a part of the mine into an open pit mine but abandoned the idea due to environmental concerns.

However, the existing mine has caused land subsidence of more than 300 acres of land and caused other environmental hazards. Bangladesh neither got to save the environment, nor make a much better economic return out of this project.

There had been no move to explore and develop the other coal fields of the country. But all the while, the government signed several massive coal power projects for which billions of dollars' worth of coal need to be imported each year.

Handling renewable energy

The government initiated its aggressive drive to build the power and energy infrastructure in 2009. And within years, considering the future energy security, it had set a goal of building 10 per cent renewable energy in the total energy mix by 2021.

It was a great goal -- once a renewable energy infrastructure is built, it no longer has to depend on any imported or local energy supply.

But this is where the government failed to implement this policy.

In 2021, renewable energy coverage achieved less than 3 per cent of the total energy mix. There was more emphasis on building large fossil fuel projects, while little attention was given to green power.

Earlier in 2017, a National Renewable Energy Laboratory study said Bangladesh has a wind speed of 5.75-7.75 metres per second and which has a potential of 30,000MW wind power generation per day.

It is now estimated to establish 1,370MW megawatts of wind energy by 2030, a potential that the nation could have tapped long ago.

Electricity import

The idea of importing cheap electricity from India, Nepal and Bhutan has been there since the nineties.

But this government materialised the idea through the import of power from India in 2013. The cost of this power is not cheap but reasonable. And this has enhanced the energy security of the country.

But earlier this year, the government started importing power from the Indian Adani group under a deal never discussed in the public before.

This deal is so tilted towards Adani that it would financially drain Bangladesh. Bangladesh will pay around $11.01 billion for importing 1,496MW of electricity from Adani Godda 1,600MW Thermal Power Plant over its 25 years lifetime, revealed a report co-published by the Bangladesh Working Group on External Debt (BWGED) and Indian Growthwatch.

According to their estimate, Bangladesh can build three Padma bridges, nine Karnaphuli River tunnels or four metro rails with the money it is paying to the Adani Group as capacity payment under a power purchase agreement (PPA).

With this, Bangladesh has digressed from the original idea of buying cheap hydro or other renewable power from the neighbouring countries and created a long-term burden on itself.

When the power crisis continues, public life in both cities and the countryside has become increasingly unbearable, with load shedding occurring even every one or two hours in some areas.

This situation is especially suffocating for consumers in rural areas, particularly the elderly and minors, who are left in a state of discomfort due to prolonged hours of repeated power outages amidst the unbearable heat.

Businesses and services that rely on electricity face disruptions, and shops and markets are compelled to close earlier than usual. Moreover, the load shedding has triggered a severe water crisis in various cities over the past few days.

Engineer Khaled Mahmood, former chairman of the Bangladesh Power Development Board (BPDB), however, said this crisis is temporary.

"The energy mix on which our power generation capacity is based is adequate. The current situation will improve once the dollar crisis comes under control," he believes.

However, for future planning, Khaled Mahmood recommended strengthening Bapex so that local gas production improves and urged the authorities to produce coal from local mines instead of importing it.

Abul Kalam Azad, also a former secretary of the Power Division, suggested that the government focus on harnessing local primary energy sources such as gas and coal. He also asked the government to boost renewable energy capacity by implementing rooftop solar panels on public and private office and industry buildings.

power crisis