Power means energy and it also means electrical energy. It is mainly in the later sense that the profile has been drawn based on interviews, investigations, reports and anecdotes. While each and every source states the obvious - which is, production and supply of electricity in the country is grossly disproportionate to demand - as with any reporting involving variables there is an element of heterogeneity in the facts gathered and in the suggestions put forward by experts.

To many, the present crisis is the legacy of the serious mismanagement in the power sector. To some, the accentuation of the crisis could have been forestalled if the present government had bypassed bureaucratic procedures to establish new power plants and accelerate power production on an emergency basis.

There is a perception that the people as well as governments failed to perceive properly no matter how optimistic an outlook on natural gas reserves in Bangladesh may be the resource is not inexhaustible nor is the fuel always fully extractable. Already the luxury of indiscriminate and extravagant use and misuse of gas is having an impact, with shortage of gas supply threatened for some industries including the power sector.

According to the government (May 2008 report), currently through its power plants, almost all of which are gas based, the country is generating an average of 3412.96 MW of electricity daily against a demand for 4311MW. This means a deficit of about 900MW per day, which is contested by many analysts who put the figure at 1000MW.

Frequent power disruption due to daily load shedding of more than 765MW is causing tremendous suffering to the general people. Industries are increasingly finding it difficult to run properly, with some profit-earning establishments even incurring loss. Moreover the phenomenon is a deterrent to foreign investment. Therefore there is no alternative to addressing the issue with utmost priority.

General Observations

Hossain Khaled, President of Dhaka Chamber of Commerce & Industries (DCCI), holds the view that adequate power supply is the number one requirement for creating meaningful employment opportunities for the vast

unemployed population in Bangladesh and for achieving substantial success in poverty alleviation.

Qazi Kholiquzzaman Ahmad, Ph. D, President, Bangladesh Economic Association, and Chairman, Bangladesh Unnayan Parishad (BUP), expresses reservations, as many others do, about the government's capability of implementing its avowed policy of ensuring electricity for all by 2020. He thinks drastic measures must be taken to translate the policy to practice.

According to Khaled, the manufacturing sector's contribution to GDP is only 17.79% (FY2008). "The Industry absorbs only 13.56% of our total workforce. Every year 2.1 million workers are entering the labour market. More and more women workers are coming into relatively modern sectors for employment. Currently, the annual growth of women labour force is 7%." Khaled emphasizes the need for huge investment to employ this rapidly growing potential workforce. "But due to power shortage existing industries can not run in full capacity. Moreover, very few local and foreign investors are investing in new projects."

Kholiquzzaman points out that disruption of electricity has a dreadful effect on machines and equipment as their performance is hampered and efficiency level falls and they even sometimes break down -- all of which result in decrease in production and increase in production costs. He thinks it is of paramount importance that the Government prepare a fuel precaution policy for the country, otherwise he warns economic and social growth of the country will stumble very soon.

Indeed inadequate power supply slows down the growth of an economy. Picking up on the point Prof. M. Shamsul Alam of Chittagong University of Engineering and Technology (CHUET) emphasizes the need for ensuring fuel security in the country.

Reasons for Power Shortage

Supply and Demand Gap

Bangladesh witnessed encouraging economic growth in the last couple of decades. Many industries have boomed. At the same time, there has been a tremendous growth of population. All this has led to a sharp increase in electricity consumption.

With electricity deficit of 900MW to 1000MW per day, there is already a huge gap between demand for and supply of electricity in the country. According to the DCCI president the demand for power in industries as well as for domestic consumption is increasing at the rate of more than 10% a year. No doubt the situation is grim.

Failure of the Administration

Dr. Mizanur Rahman Shelley, Chairman, Centre for Development Research Bangladesh (CDRB), and Editor, Asian Affairs, thinks the power supply situation actually deteriorated mostly over the last one and a half decades. He blames our political administrators for failing to formulate and implement the right policies and in the right time. According to him, from 2001 onwards no new capacity was added to our power generation; the past government failed to give importance to this sector; rather than solving the problem of this sector, they tried with how they could make money from this sector. "This (Power/Energy) is a potential sector for some myopic people for gaining substantial financial benefits illegally."

Since a power project takes 3 to 5 years gestation period, immediate supply of electricity is not possible, argues Khaled. He mentions other reasons such as unacceptable terms and conditions imposed by the international financial institutions in providing fund. He also points out that corruption in the Government administration and bureaucratic bottlenecks have contributed to the slow progress in the formulation and implementation of power projects during the tenures of the previous governments. The result he says is the inheritance of this perennial shortage of power supply.

Wrong Government Policies

CHUET professor Alam criticizes the Government's energy policy. He says overdependence of the Government on foreign companies is the main cause of losses incurred in the production of power.

Referring to the fact that BAPEX buys gas for Tk250 per unit from foreign companies that have invested in the sector in Bangladesh and sells it for Tk7 only, Alam contends such policy is not sustainable in the long term. With fuel price rising further in the international market and more strain felt on the gas reserves in Bangladesh in future, the Government will find it difficult to keep

on providing huge subsidies on fuel. This he says will have a sudden adverse impact on the industries a well as general consumers.

Steps Recommended

Implementing effective policies, increasing efficiency and reducing wastage

The DCCI president suggests the government should focus on the implementation of the power projects already approved and included in the Annual Development Plan without further delay. "Steps should also be taken to strengthen public-private partnership in the power sector. The national grid may be opened for private sector generators and suppliers of power for nominal charge."

Developing the infrastructure for supplying power to all grids of the country is am urgency, says Alam. He also thinks it is essential to modernize completely our state owned companies through sufficient funding. He emphasizes the need for the Government to build the capacity of BAPEX so that BAPEX can explore more gas fields on their own and does not need to depend on the foreign companies.

Shelly says it is high time our own exploration agencies were strengthened. "I think BAPEX have a very good track record of success -- 1 gas field in 3 attempts whereas United States have 1 in 9. BAPEX have some dedicated personnel, but this particular company is not funded properly. Also the people are not getting incentives in terms of salaries and training or other capacity building. So I think the government should take steps to strengthen he BAPEX." However, some analysts say this is not as easy as it is said. After all, gas exploration needs huge investment, technical capabilities and expert management. They also blame BAPEX for being corrupt.

Kholiquzzaman apprehends there are still some quarters that are interested in coal export. "I hope the idea will be forsaken soon. All over the world, there is a shortage of electricity. All countries are trying hard to preserve their own fuel resources and import from others."

Khaled agrees. "The whole world has

become energy-hungry. In the long run, we should look for energy security. We should also conserve our non-renewable energy resources like gas and coal and utilize them economically."

Kholiquzzaman emphasizes the need for discovering new resource of natural fuel both on land and in sea. However, he makes it a point that the course of action must be transparent to all. "To whom we will give the Production Sharing Contract (PSC) to investigate the source of fuel resources, how the work will be done, what will be their conditions etc. -- all this needs to be dealt with transparently and information has to be disclosed to the public at large."

One way of dealing with the crisis is minimizing energy consumption and to ensure it both the people and the government need to be proactive. The Government should reduce the use of Air-conditioners in offices and there should general awareness of how important it is to reduce energy consumption, says Kholiquzzaman. "On many occasions we see the fans, lights or the air conditioners are working in an empty room of a Government office. If the Government takes measures against this, electricity will be saved to a large extent. We should prevent the wastage of electricity and distribute the saved electricity on a priority based planned way."

Preventing 'system-loss' and popularizing energy saving equipment and appliances are among other measures suggested by the experts.

Establishment of Small Power Plants

As short term steps, the experts believe, implementation of small power plants is a good idea. "But one thing we should remember is that until and unless we discover more gas fields, it will not be a wise decision to permit building a gas based power plant," says Alam.

According to Shelly, as it may be difficult to add new power generation units on a massive scale, small power plants can be a temporary solution. He thinks in the past (1996-2001) the government was successful in establishing a few barge mounted power plants, which were easy to install, and believes the present government is also encouraging power plants like 10MW to be installed by the private entrepreneurs within the country.

It was hoped that some small power plants would be in operation by now but the hope did not materialize due to some technical reasons as well as lack of sufficient pressure by the government on the entrepreneurs. However Shelly commends the role being played by some companies in the private sector. "The private sector has come forward by installing a type of generator, through which 200 households can be supplied with minimum electricity. People have accepted it because it is reasonably priced. Government should encourage this sort of initiative." Nevertheless, unless we can enhance our gas resources with further exploration, there will always remain difficulties in supplying gas to new power plants, concedes Shelly. So he suggests that the plants based on fuel other than gas should also be built so that power supply does not cease in the event of gas being exhausted.

Although large power plants are cost-effective building them may not be always feasible. "It appears that the Ministry of Energy and Power Resources is inclined to go for large scale power projects for getting the benefit of economies of scale," observes Khaled. "The government has been negotiating for establishment of two 450 MW power plants at Habiganj & Bibiana but it is difficult to arrange the required fund to implement such big projects. On the other hand small power plants can be established quickly at less investment price though the cost per unit will be high."

The government is going to hire 7 small power plants with a total capacity of 270 MW to meet the exigencies of the time, reveals Khaled. "As per the agreement these are to be operative from May, 2008 although progress of delivery is not satisfactory. Government has also taken a policy of Remote Area Power Supply System (RAPSS) to promote small power projects for supplying power to remote areas of the country. But it is yet to be implemented."

Kholiquzzaman does not favour the idea that Government build small power plants. He thinks small power plants are not cost effective and should not be pursued. If small power plants are to be built at all they must be built in some specific areas and not everywhere in the country indiscriminately. Coal may be used as input. "Establishment of a new power plant is very much time consuming too. First, the Government has to invite tender, mange fund, set up the plant and many more. Rather to improve the situation, the immediate steps of the government should be to pull through and maintain the existing power plants and prioritize the distribution of electricity based on the demand and the economic significance." He underscores the need for distribution in a planned way. "To plan the distribution we have to know the exact daily demand and we should maintain a steady electricity production rate. As we cannot afford to increase electricity production at present, strict supervision of existing production facilities to get the optimal production and proper distribution of produced electricity based on factual planning is the one and only way in front of us to improve the present situation."

Some experts however maintain both steps i.e. building more power plants and improving, maintaining and managing efficiently the existing power plants should be taken simultaneously

Alternative Energy

How long will our gas reserves last? There is no definitive answer to this question. Some say only 10 years, some 15, while some would say more than 20 years. "According to the Government, the gas reserve (P1 type) that we have now will start to decrease by 2011 if our economic progression continues with a rate of 7%. And if it continues, by 2016 another level of shortage will start that is called P2. So if we do not start looking for new sources of gas, by 2016 there will be a severe shortage of gas in Bangladesh," says Kholiquzzaman, adding that about 90% of electricity in our country is produced by gas and so production of electricity will also be affected significantly by then. "From now on we can think of coal as the supplementary source of energy. First, for coal mining we have to follow an environment friendly Coal Mining Policy. For this the current draft policy, which is very much supportive to the citizens and environment of our country, may be executed and followed. In the mean time we have to formulate an Integrated National Fuel Policy to ensure fuel availability for each sector and each person in Bangladesh. We must go through a planned way."

However Alam thinks the situation may not be as bad as we fear. He points out that in Chatak we have 1tcf gas reserve which has not yet been included in the calculation and also gas has been found in Hatia and Magnama. "Still we have 8 trillion cubic feet of proven gas reserve. I hope we will be able to explore more and we need not worry that much about gas crisis."

Alam is not favour of the current Coal Policy. He thinks extracting coal by Open Pit system will be disastrous -- it will not be cost-effective and also it will have serious consequences for the environment. According to the plan, in Boropukuria, 1 million coal will be extracted out of which 0.7 Million coal will be used to build power plants through which 125MW electricity will be added to the national grid. But he has doubts about the feasibility of the project and he fears excess coal is being extracted.

There is no exaggerating the fact that we should also explore alternative source of energy. Khaled says all possible renewable energy resources like wind power in coastal areas, solar power in char areas, biogas in rural areas and municipal garbage in urban areas should be harnessed for generation of electricity.

Kholiquzzaman says, "The Government should ensure a fuel precaution policy under an integrated fuel policy considering all sources of energy like gas, coal, biomass or other renewable sources." The Government policy should include such issues as how much fuel needs to be imported, from where it is going to be imported and how the import is going to be funded. "We can try to import electricity produced by water from India, Nepal or Bhutan. We can also think of importing gas from Myanmar, if possible. We need to judge all the available sources of energy. Only then can we determine where to go and what to do. We must plan the distribution and usage of those resources."

The long-pending project of nuclear power plant at Ruppur should be implemented to resolve long-term power and energy shortage and ensure energy security in the country, says Khaled. He also suggests that exploration of gas in offshore areas should be boosted so as to substitute energy imported at a very high cost. "Side by side skilled manpower for handling the power projects should be developed. The existing non-renewable gas and coal resources of the country should be conserved and used economically to maximize the gains of the national economy both in the short and the long run."

Regaining Investors' Confidence

According to Shelly, the current Government's massive drive against corruption is a commendable work but at the same time it has made investors frightened of taking any initiative to invest in the market. He says even the uncorrupted people are now afraid to make any legitimate business decision. So he suggests that it is essential that the Government create appropriate investment climate for business people.

Priority Sector for Receiving Power: Agriculture or Industry?

We need to lay more emphasis on food production as, at present, there is an insufficiency of food supply worldwide, says Kholiquzzaman. "So I think agriculture should get the power first. If the irrigation is hampered due to the shortage of electricity, harvest will not be up to the mark." However, he adds industries and households also need electricity and so proper planning in distribution is a must.

Alam says that in 2001, according to their study, they found the Agricultural sector was getting 25% subsidies in fuel cost. But he says the farmers may not enjoy these facilities for long as the price of fuel may go further up making the current price unsustainable.

But it is the industrial sector that should be given top priority in terms of supplying power so that our industries can face the challenges of globalization by becoming competitive and capture markets at home and abroad,. Khaled. However, he puts it emphatically that the need for power in all the sectors has to be met.

Shelly suggests striking a balance between the agricultural and the industrial sectors adding that food security is the number one issue and so agriculture should be the first priority. If there is scarcity of food, then the price of food will go up.

Referring to the Government's plan to procure 34 lakh metric tons of food to meet demand during one year, Alam says such short term planning is not enough. We need to have a long-term plan such as one for the next 10 years. "We need to plan from where we will get fuel support for producing food. We can not ensure food security by importing; we have to produce it on our own. For increasing production in the agricultural sector we have to reserve fuel."