Bangladesh News

The government’s failure to overcome persistent gas crisis is now resulting in suspension of 11 large and medium power projects with their production capacity totalling around 3,200 megawatt (MW), pushing the country towards a deeper power crisis in the coming years.

Petrobangla that ensures gas supply to power projects categorically said recently it would not be able to supply gas to these projects in the next three years. Gas may be given to some of these after 2011 on completion of certain other gas related projects.

But till a year back, Petrobangla was ready to provide gas to these projects which include three independent power projects (IPPs) and seven public sector ones. All these are more than a few years old.

According to the power ministry, the country’s installed power generation capacity should reach 9,666 MW by 2012 against a peak demand for 7,887 MW. To achieve this target, the nation must produce around 5,000 MW more within that time. But the present initiatives would ensure only around 1,100 MW additional power in the next few years, leaving a shortfall of around 4,000 MW.

Gas supply shortfall is already preventing generation of another 700 MW power. Power Development Board (PDB) sources said it is currently producing around 4,000 MW power against an officially estimated demand for 4,500 MW (unofficial demand 5,600 MW). “If gas supply was adequate, we could have met the official power demand,” said a PDB source.

Petrobangla on the other hand is unable to supply more than 1,800 million cubic feet per day (mmcfd) gas as the previous BNP-led alliance government took almost no initiative for oil and gas exploration. Gas production could not be increased due to lack of adequate pipeline network. The present caretaker government is also very slow on these matters.

Petrobangla however assured gas supply to some rental power projects with a total production capacity of around 300 MW and 450 MW Bibiyana IPP scheme, Sylhet 150 MW scheme, Siddhirganj 220 MW peaking power (now nearing completion) and Bhola 150 MW projects.

Of these, Bibiyana project is brand new and a result of pressure from Chevron that operates Bibiyana gas field. This power tender drew only one tariff offer from a Korean-Malaysian consortium. The tariff is very high but the power ministry is going ahead with the scheme.

IPPs that do not have assurance of timely gas supply are 450 MW Sirajganj and Meghnaghat 450 MW phase 2 and 3 projects. Of them, Sirajganj and Meghnaghat-2 projects were in the process of re-tendering.

Contract for Sirajganj project was awarded to Summit group in 2004 but it was cancelled by the-then prime minister Khaleda Zia. During her rule in 2006, contract for Meghnaghat-2 project was awarded to scamster Obaidul Karim’s shell company BON Consortium through irregularities. BON Consortium ultimately failed to arrange the project’s finance.

Petrobangla says it will not be able to install gas pipeline and gas compressor for Sirajganj project before 2012, and it is not sure if gas can be supplied to the project before 2013.

The public sector projects that are now uncertain due to gas crisis are Chandpur 150 MW, Haripur 360 MW, Khulna 210 MW, Khulna 150 MW peaking unit, Sirajganj 150 MW peaking unit, Bheramara 450 MW, Konabari 350 MW and Chandpur 50 MW power projects.

Of these, Chandpur project is being retendered. During Khaleda Zia’s rule in 2005, Chinese company Harbin was awarded contract for this project controversially and by hiding project cost by $10 million. Harbin ultimately backed out of the project when it sought additional $10 million last year but the government refused to pay.

“It is so surprising that Chandpur project even now does not have assurance of gas supply. If the project was timely implemented, it would have started power generation by now,” a PDB source said.

Retendering for this project will be completed by December with the aim of implementing it by June 2010. Petrobangla officials at a meeting with those of the PDB and power ministry said as the Harbin deal was cancelled, it had dropped a project to ensure gas supply to Chandpur plant site. Now, it will have to take up a fresh project. Petrobangla mentioned that in that case, it will not be able to import a gas compressor before 2012 and it does not know when it will be able to ensure gas supply to this power project.

Petrobangla says it cannot supply gas for Haripur 360 MW power plant before 2014. It further says it can supply no gas for Khulna 210 MW scheme but it may be able to supply it to Khulna and Sirajganj peaking power plants of 150 MW capacity each in 2012-13.

Unless a new gas field is discovered, Petrobangla says, it would not be able to supply gas to Bheramara scheme, Konabari 350 MW or Chandpur 20 MW schemes.

As Petrobangla is unable to ensure gas supply, power project implementing authorities like the PDB or Electricity Generation Company of Bangladesh (EGCB) have been asked to revise their projects.

Power Secretary M Fouzul Kabir Khan told The Daily Star that tender for Sirajganj project would have been cancelled anyway due to lack of competition. Only one out of four shortlisted bidders purchased the bid document. The bidding process was initiated last year.

He noted that gas crisis was a basic impediment to power sector’s growth. In such a situation, there was no alternative but to stagger the power projects.

“We have opened the power sector to all for investment in the form of merchant power plant (where the developer will take all risks including arranging energy resources and buyers),” Kabir said.

Merchant power schemes will not however solve the main problem of energy resources, he said. “Ultimately we will have to tap our coal resources to overcome the gas shortfall.”