“Energy Now Number One Problem”

Posted by phulbarinews on September 22, 2008

Mollah M Amzad Hossain

INTERVIEW

Direct cancellation of an agreement signed by a sovereign government creates an environment of mistrust about the country. “It’s not comfortable at al for a country for its image abroad,” said Annisul Huq, the President of Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), the apex body of the countries cham Direct cancellation of an agreement signed by a sovereign government creates an environment of mistrust about the country.

“It’s not comfortable at al for a country for its image abroad,” said Annisul Huq, the President of Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), the apex body of the countries chambers and trade bodies.

“I think the government should sit with the people who are demanding to scrap the agreements. At the same time the government should also sit with the parties with whom it signed the agreements,” he said adding “it will pave the way for an amicable solution for all. If there is any clause, which is against the interest of the country, he said, it will be detected in the discussion table. “And I think we’ll be able to resolve it with consensus,” said Annisul Huq. “People in the government responsible for this shouldn’t linger the process and reach consensus through discussions,” said the FBCCI President in an interview with the Energy & Power. The EP Editor Mollah Amzad Hossain took the interview. Following are the excerpts:

EP: How do you evaluate the infrastructure of the country, specially the energy infrastructure?

AH: If we talk about infrastructure, supply of energy is now the biggest problem in Bangladesh. In meetings of the Better Business Forum we categorically said that industrial and business development will come to a standstill if we fail to ensure energy supply. You know the Better Business Forum has five working groups. They made 260 recommendations as urgent tasks. Of these, the infrastructure development group made 90 suggestions. The key aspect of the recommendations is that the main obstacle towards economic development is lack in energy supply. How do you expect industrial development if you can’t give electricity. The number one problem is now energy. Here the question comes up… where the electricity will come from if there is lack in gas supply. We know the present generation capacity is 5,300 megawatt, but our demand is higher. On the other hand, the actual generation is 3,500-3,750 megawatt. One of the reason is gas crisis. Also, there are some units which are 40 years old and some were not maintained properly. As a result, now the main problem now emerged as not getting electricity for industries. There is no alternative to ensure power supply. We categorically told the government that neither domestic nor foreign investment will take place if electricity supply is not ensured.

EP: Board of Investment is a very important body for investment in the country. Don’t you think energy sector investment is also involved with the BOI?

AH: You must know we proposed the government to restructure the BOI for making it an effective organization. Before that we visited Australia, New Zealand, Hong Kong, Thailand and Malaysia and witnessed their works. At present 14-15 first class officers work in the BOI. We proposed to take the number to 135. At the same time, we approached to go for a competitive higher salary structure for them instead of government structure. If our proposal is implemented, the BOI will really work as a one-stop service. There will be a cell named Invest Bangladesh which will bring investment. But, you know there will be no use of bringing investment if there is no energy. Here I want to mention that the BEPZA now has all kinds of infrastructure. They have plots, have power supply facilities. But the BEPZA will not be able to supply electricity if the present state of gas supply continued. Now the number one priority should be ensuring energy supply.

EP: What’s your suggestion for increasing electricity generation in shortest possible time?

AH: We already gave some recommendations as urgent tasks for the government. One suggestion is rehabilitating the public sector old and unskilled power plants through private investment. The government started works on that. A policy is being drafted by the Power Division. I’m mentioning this as there is gas supply for those plants. If the units are rehabilitated we can get more electricity from the plants. Also, we approached that the small units in the private sector can be expanded as there is also assurance of gas supply to those areas.

EP: We saw in newspapers that you in the meeting of the Better Business Forum recommended to go for coal production to overcome the electricity crisis.

AH: Yes. We told the government that there is gas crisis in the country. But there is scope to go for coal-based power plants. So, we don’t have apprehension of primary energy. But, we have to produce coal at first. Many countries in the world are utilizing coal resources by managing the environmental and social problems. You know coal plays the leading role in power generation in India, China, USA, South Africa and many other countries. If they can manage the environmental problems and utilize coal for power generation why not we? It’s true there are challenges relating to environment and local people if we go for coal exploration. But, this is not a unique problem for Bangladesh. There are similar problems for all the countries who have coal resources. I think the problems should be resolved through discussion, timely decision and their implementation. And this is the main challenge now. What will happen if we sit idle and don’t take decision? It will ensure more and more power crisis for lack in primary energy and finally stop the investment and industrialization. In that case there will be no scope of economic development. I think we shouldn�t waste a single day. The government has to take pragmatic decision with discussions in the top level. Our back is on the walls.

EP: We have coal that can meet the country’s primary energy demand. But, reality is that we are debating years after years. A coal policy couldn’t be finalized in last couple of years.

AH: It’s really a concerning matter. The government shouldn’t sitting idle without resolving the questions raised about the foreign investment. But, you know producing coal is not the only answer. The coal-based electricity will be costlier, can be double than that of present tariff. But, also we can’t waste time and resources only because that the price will be higher. Whatever the price is we need electricity. The price of coal-based can be seven taka per unit, but it’ll be 10 taka if we generate power from imported oils. The coal policy has become a sensitive issue. If we can’t make it transparently there will be new bureaucratic complex. I doubt that the government which will come to power after the election will be able to do this overcoming all kinds of vested interests. Also, the present government is also in the last stage. I don’t think they will be able to finalize the coal policy at this stage. On the other hand, the intellectuals and experts are not in consensus. Also, we can say their opinion is influenced in different ways. So, it’s really a tough job, specially taking a right decision. Still we have to produce coal and we have to take decision right now.

EP: Chittagong is now at the most vulnerable stage in terms of energy crisis. However, the problem prevails across the country. Are you satisfied with the government assurance?

AH: The government is concerned about the energy crisis. They are also working on it. But, it will be a very tough for the next government if the decision is taken by the present government. So, now we are in dilemma.

EP: Some groups in the country have been demanding cancellation of agreements with international oil companies and ouster of the IOCs. How do you consider the demand?

AH: Direct cancellation of an agreement signed by a sovereign government creates an environment of mistrust about the country. It’s not comfortable at al for a country for its image abroad. I think the government should sit with the people who are demanding to scrap the agreements. At the same time the government should also sit with the parties with whom it signed the agreements. It will pave the way for an amicable solution for all. If there is any clause which is against the interest of the country, it will be detected in the discussion table. And I think we’ll be able to resolve it with consensus. People in the government responsible for this shouldn’t linger the process and reach consensus through discussions.

EP: Better Business Forum discussed about another aspect… If you want uninterrupted energy supply, the price must be marked-based. What’s your opinion?

AH: As a consumer I’ll never want that the price of gas and power is increased. But as a businessman and a conscious citizen I must consider the amount of subsidy being given by the government and how long the government can continue it. The previous governments had talks about price hike and the present government has also been discussing about it. If we want energy supply for overall development of the country we have to pay the actual price that it should be. A time will come when we’ll have no alternative but to fix the market-oriented price.

EP: How do you look into the regional cooperation in the energy sector as well as proposed tri-nation gas pipeline?

AH: The days of keeping ourselves isolation are over. There is no alternative to regional cooperation. If we are benefited from a tri-nation gas pipeline, if our energy demand is fulfilled why not we’ll go for it. Any project in the energy sector if it’s beneficial for the nation must be welcomed. You know economic development is not possible without cooperating each other.

EP: What’s your opinion about the present debate on offshore exploration?

AH: I think we don’t have time to waste for offshore oil and gas exploration. We need new gas discoveries. For this we need new exploration. I believe we�ll find new gas reserves if we go for exploration in the Bay of Bengal. if there is any opposition from our neighbors we can resolve it through diplomatic channel. Also, we have to work to determine our maritime area. But, for this excuse we can’t suspend our exploration. Not only in the sea, we also need onshore exploration. The BAPEX has been strengthened. Alongside BAPEX, we have to bring foreign investment in a transparent manner. It has no alternative. This will also help to build our own resources and develop human resources. Time has come to take decision. If we don’t decide and waste time our economic development will come to a halt. Everyone has to understand it. You know the result in the energy sector is belated, it takes time.

EP: It’s said that the private sector of the engine of development. That’s why the conception of public-private partnership has emerged. How can we go for result oriented such partnership?

AH: Look, the energy is an investment-intensive sector. Also, skills technical capacity is very important. The government has to create opportunities to develop the capability. Specially the government has to initiate special steps so that local companies can come forward. There can be one option that a foreign company will get incentive if it has local companies as partners. Also, there should be options so that domestic companies can work with government companies on the basis of partnership. This will help development of local private sector in the energy sector. I think, there are opportunities to build public-private partnership keeping the BAPEX in the center of the projects.

Finally, I think the government has to formulate policy for flourishing the local private sector by increasing their skills and capacity and creating an environment for flourishment of their capital. It will ensure participation of local private sector in the energy field of the country.

Source: http://www.ep-bd.com/news.php?cat_id=5&archive=9&namee=INTERVIEW

Date: 16 September 2008, Bangladesh

The Carbon Conspiracy

Posted by phulbarinews on September 22, 2008

In the name of carbon trading, developed countries are offering developing countries paltry handouts to keep development in check while they go ahead in leaps and bounds

A PROBE report

Climate change is on us. Ardent environmentalists and hardened skeptics alike are ready to admit this. It is a reality that has caught global attention and which is causing concern among developed and developing countries alike. We are, after all, under one sky. Given the magnitude of the issue, climate change is now one of the most important social, economic and political issues of all time. Atmospheric gases responsible for causing global warming and climate change have increased by 25% since large scale industrialisation began a century and a half ago. World carbon dioxide (CO2) was expected to increase by 1.8% annually between 2004 and 2030. Other greenhouse gases (GHGs) are methane, nitrous oxide and some which are less significant.

Global bodies have taken up the climate change issue in all earnest. There is the Inter-Governmental Panel of Climate Change (IPCC), the Asian Development Bank, the World Bank, UN bodies, the European Union bodies and others all making a loud clamour about climate change. It is commonly acknowledged that it is the industrialised nations which are the main cause of global warming, what with their excessive carbon emissions and other forms of industry-related pollution. And the developed world is bearing the brunt. However, as has been the propensity, it is the wealthy developed nations which are now drawing up rules and regulations, imposing restrictions, and the developing countries, with exceptions, that are acquiescing with characteristic complacency, bordering on fatalism.

A study reveals that where annual carbon emissions are concerned, USA and Canada take the lead. This region, in 2000, was spewing out nearly 1800 million metric tonnes of carbon annually. This has increased manifold since. This region is followed by Western Europe. Bangladesh, given its insignificant industrialisation, is nowhere on the carbon emission map. Yet Bangladesh is having to pay the price. If the Asian Development Bank is to be believed, this region is particularly vulnerable to climate change, threatened with freshwater shortages by 2020. Crop yields could drop by half within 2050. And Bangladesh in particular will be vulnerable to flooding. Even if all this is taken with a pinch of salt, the fact remains that the spectre of climate change looms large in our horizon.

Kyoto Protocol

As one of the mechanisms to address this problem, the Kyoto Protocol was drawn up in 1997. This is linked to the UN Framework Convention on Climate Change (UNFCCC) and sets binding targets for 37 industrialised countries for reduction of 5.2% GHG emissions against the 1990 level over its commitment period until 2012. For EU the target is 8%. In short, countries are to cut down on carbon emissions. The industrial and other sectors of these countries must take measures to this end, to curtail their contribution to global warming. Ironically, USA is not a signatory to this protocol despite being the highest on the carbon emission charts.

The big industrial players invariably find a way of wriggling out of paying the price for their “sins”. Since 2005, about 12,000 energy intensive plants of EU have been able to buy and sell permits to allow them emit carbon dioxide. There are three flexible mechanisms to enable countries with quantified emission limitation and reduction commitments to acquire GHG reduction credits: International Emission Trading (IET), Clean Development Mechanism (CDM) and Joint Implementation (JI). There is even consideration for a Stock Exchange for carbon credits!

The second category, CDM, applies to Bangladesh. Under this, a developed country can tie up GHG reduction project activity in a developing country. The developed country would be given credits for meeting its emission reduction targets, while the developing country would receive the capital and clean technology to implement the project. This is, in plain language, carbon trading. The developed country continues at its own pace of carbon emissions, while paying a country like Bangladesh to cut down on their’s, thus earning carbon credits. Outside the Kyoto Protocol compliance regime, an alternative carbon trading market is emerging. This is the Voluntary Emission Reduction (VER) framework. It has no internationally recognised central body.

What has Bangladesh done so far?

So far Bangladesh has set up a National CDM Board and CDM committees for approval of CDM projects. The Board has approved two CDM projects so far with a few in the pipeline. In comparison, India has approved 360 projects and Sri Lanka 105. There are plenty of CDM opportunities in Bangladesh: Afforestation and conservation of forests as tree tissue stores significant amounts of CO2; methane tapping and better use of methane waste; use of electrical vehicles; advanced rice production technology; electricity cogeneration from sugarcane; solar home systems; wind turbine; energy saving cooking stoves, CFL lamps, etc.

There is a garbage disposal project in Matwail where biodegradable waste is being converted into compost fertiliser and so the methane emissions are being reduced. The project could earn points but is still tied up with the local CDM committee. It will have to go to the CDM executive board under UNFCC for approval. The irony of it all is that while Bangladesh is still not a carbon producing country in any sense of the term, the government has already made carbon commitments on par with the countries which produce high amounts of carbon annually. The bottom line is, while the industrialised countries continue in their industrialisation and development, countries like Bangladesh will adopt a carbon neutral development strategy, keeping tangible industrialisation at bay. In other words, Bangladesh cannot get wealthy. It will accept a few token handouts to keep its carbon output in check and hand the carbon credits to the wealthy world so it can get wealthier.

“Bangladesh must not settle for any aid funds or loan packages in this connection. Bangladesh must demand hard compensation in no uncertain terms,” says an analyst of global politics. “It’s like telling a rich guy in Europe that he can drive his SUV while we ride on cows, as long as he hands us a few euros — then too he’ll tell us to change our cow’s diet so it doesn’t belch out methane gas into the air!” says an irate industrialist in Bangladesh.  It’s like the developed world is buying permits to pollute. “Poor countries smell money in the climate-change negotiations,” reads an article in The Economist.

Such carbon trading can be suicidal for the developing countries in the long run. Myopic policies can stunt a poor country’s growth and keep it in the poverty rut forever. “Such international negotiations have the distinct stench of conspiracy” says an observer of the energy scene in Bangladesh, “It’s a conspiracy to ensure the poor countries remain poor while the rich get richer.” “It’s like the myths being propagated that Bangladesh will soon be completely submerged under the sea, when in actuality, a satellite map will show you how the country is growing by 20 sq km a year,” he continues. “Such negative reports fed into the media serve to weaken the national psyche.”

And it is because of such weakened national psyche that Bangladesh jumps into non-conclusive agreements. Rather than getting entwined in such one-sided negotiations, Bangladesh needs to build a robust economy. It must exploit its existing resources to this end, whether gas, coal or whatever.

CONSPIRACY AGAINST COAL

One must always be on the watch out for the furtive do-gooders who do more harm than good in the name of the environment, public interest, etc. They change colours quicker than a chameleon. For example, years ago when talk was on about a nuclear power plant at Rooppur, there was a hue and cry about the health hazards and dangers of such a plant. Now in this critical hour of need where power is concerned, coal has been discovered at Phulbari. This coal mine is being equated with a gold mine in the sense it can fire a much needed power plant, providing electricity to the electricity-starved country. It can provide fuel to the innumerable brick fields leading to the infrasructural development of the country. It can contribute more than substantially to the country’s economy. Environmental and social concerns about the project are also being taken care of in the way of tree-planting, water management, rehabilitation and other projects. The tree-huggers now decide to welcome the nuclear power plant deal with China and turn their vitriolic attention towards the Phulbari coal mine.

Certain vested quarters are loud and vocal against the mining of coal at Phulbari and the establishment a coal-fired power plant. They see carbon spewing into the air, covering the world in a cloud of black smoke, all in contravention to those conventions and protocols being touted around the globe. Yet this very same righteous bunch remains mysteriously and absolutely silent about the coal coming in from India across the border. This substandard coal is so high in sulphur content that it is not even being used in India itself. The Bangladesh government is sanctioning import of this hazardous coal even though it exceeds permissible levels of sulphur. Yet it is dragging its feet on approving the Phulbari coal mine where the coal is of such low sulphur content and of such a high standard that it is almost on par which the coal of Newcastle. When the chimneys of the brick fields churn out the sulphur-infested pollution into the air, where are GHG concerns then?

Delay in starting up the Phulbari coal mine is extremely harmful in more ways than one. Not only are we delaying in the production of electricity and wasting money on inferior quality imported coal, we are missing out on the deadline for carbon emissions. The carbon trading policy has a dateline until the year 2012. The year 2012 is vital because after that, rather than carbon trading, there will be carbon capture and storage. Carbon offsetting will no longer be in the scheme of things. Bangladesh is simply not prepared for this.

While polluters tend to make millions from the European carbon permit scheme, Bangladesh sits back twiddling its thumbs. That is nothing short of a travesty. Bangladesh must make hay while the sun shines. If the development of the coal sector is slowed down, Bangladesh will lose its CO2 emission rights. At these crossroads, Bangladesh faces a dilemma. In the name of internationalism, quarters urge it to reduce global warming by sacrificing industrialisation in Bangladesh; to move towards low-carbon economy; and to depend on international carbon funds and aid. However, nationalism dictates that Bangladesh maximise carbon emission rights. It must maximise economic growth and industrialisation.

The bottom line is, if Bangladesh wants to survive in this dog-eat-dog system of global economy, the coal sector should be developed as fast as possible to justify higher emission rights. And Bangladesh should not bear the burden of global warming by suppressing coal sector development. It is ironical that coal and other industries in the developed world are flourishing and injecting more carbon into the air and growth into their economies, while we are expected to sit back and put a cap on our coal so a balance can be struck. They are emitting excess carbon into the air and we are  helping out by emitting less. Oh, and in the process we’ll earn a few Brownie points.

Source: http://www.probenewsmagazine.com/index.php?index=2&contentId=4376

Date: 19-25 September 2008, Bangladesh

Coal for Regional Energy Security

Posted by phulbarinews on September 9, 2008

Khondkar Abdus Saleque

 

The 15th SAARC Summit held in the Sri Lankan capital Colombo in early August unfortunately did not achieve much headway towards progressing meaningfully on regional energy cooperation. It is a popular belief that regional energy grid, power polling are essential in attempting to achieve the sustainable energy security for one-fifth of the population of the world most of whom are living under poverty level in the region. The author has just received the Energy Security Quarterly report of USAID SARI/Energy prepared by Centre for Energy Economics of The University of Texas at Austin. The report has been available at a very critical time when the countries of the region are getting increasingly anxious for their long-term energy security. Some countries of the region especially Bangladesh is suffering from serious energy crisis. Not that it has any basic energy resource. It has substantial unexplored coal; it still has substantial unexplored Natural Gas. But for various constraints and impediments it cannot economically exploit its own resources for energy generation. Indian booming economic development also needs huge resource or access to secure and sustainable regional energy supply. So is the case with Pakistan. Bhutan and Nepal have enormous hydropower generation potential. Next-door neighbour Myanmar, breakaway Russian republics and Iran can be potential suppliers to the region. The geo-political regional tensions and lack of mutual respect of equal sovereign rights are among major deterrents. Lack of smooth and secured supply of energy is causing serious impediment in all countries of the region. Not that there are dearth of resources or technical capabilities. Somehow or other the strong political will and commitment to achieve the regional cooperation are missing. At this critical stage the report of USAID may act as guiding beacon for the countries of the region. The report may be accessible for fortunate few. For the general enthusiasts of the region the salient features of the report are discussed here with specific reference to Bangladesh situation.

 

Bangladesh desperately needs to generate at least 4000MW new power generation by 2012 and set up required transmission and distribution infrastructures to overcome the present deficit and retrieve the security of supply in power grid. With the uncertain mono-fuel gas based generation the only other feasible option is to go for coal-fired generation to get some large base load power plants to take the pressure away from natural gas. The leading coal using countries of the region India and Pakistan can be the example in this situation. Cooperation among the SAARC nations to explore and exploit the coal resources of the region may help overcome many unnecessary myths. Combined technical and financial capacity of the SAARC countries will be extremely useful in developing resources and infrastructures to share and exploit those in the most economic way.

 

Bangladesh despite of its miserable energy supply situation so far failed to explore and exploit its significant coal resource due to absence of appropriate strategy, lack of in-house expertise both technical and managerial and for aggressive attitude of ill motivated theoreticians. For its mere survival in the very competitive energy market Bangladesh will have to start coal mining in the most economic way in not too distant future. The just published USAID Quarterly report can be a useful guide to Bangladeshi policy makers.

 

Coal as major source of Energy Generation

There is no denial that fossil fuels will continue to dominate energy sectors of the world although the environmentalists consider fossil fuel is the major culprit for greenhouse gas emissions causing global warming. Coal as the most abundantly available a widely preferred fuel for power generation it is perhaps at the centre of the balancing act. Coal-fired power plants are the largest source of GHG emissions. South Asia like other region of the world has the same situation. The largest Country of the region India still generates 50% of its power from coal. Other countries like Pakistan and Bangladesh have significant coal resource also. These together can contribute significantly for the regional energy security if developed commercially. Integrating electricity grids in the region can further mitigate risk associated with depending on a single fuel or imported fuels, while balancing various generation sources in the region, including coal, hydro, natural gas, wind and other renewable. The report indicate that the coal sector in the region has very limited private sector investment, lacks certain regulations an standards, and presents environmental challenges. The report also considered that new investment along coal value chain as well as the best practice mitigation of environmental impacts is urgently required in order for coal to meet growing demand of electricity in the region.

 

Coal Industry Trends

28% of primary energy needs are met from coal. Electricity sector alone accounts for about two thirds of total coal consumption, generating more than 40% of electricity consumed in the world. Remaining coal consumption is mainly in other industrial sector such as steel production. It has however very limited domestic and commercial use.

 

Coal for Energy Security

Coal is the major contributor for energy generation even in countries which have significant other resources. Canada and Mexico generates about 15-20% of its electricity from coal. In OECD Europe the share in fuel mix is about 30%. The most industrially developed USA Coal contributes about 50%. The recent global surge of oil and natural gas price underline the critical contribution of coal in generation portfolio. Japan having very limited coal resources of its own relies mostly on imported coal for generation of about 25% of its power demand. In Europe even there has been renewed interest in coal despite of efforts to control Green House Gas Emissions. Italy will increase its reliance from 14% to 33 % over the next 5 years. German Government is setting up 26 new coal plants abandoning nuclear power. USA however had to abandon 75 of its planned 150 new coal plants failing to get regulatory approval. USA is more inclined to nuclear plant while it opposes such moves in other countries a double standard.

USAID report identified three major reasons for resurgence of coal. These are

1. Coal resources are relatively abundant and distributed around the world.

2. Coal fired power plants meet base load requirements of electricity system.

3. Coal prices have relatively low and stable.

 

Coal resources are relatively abundant and distributed around the world: World’s recoverable coal reserve now is about a trillion tons. It is expected to last about 150 years compared to 40years for oil and 60 years for natural gas. Most of the countries have some coal reserves but 70 countries have recoverable reserve with ongoing production.

 

The following table shows the top 10 producers and exporters in 2006. China is expected to become net importer soon. Experts feel that if this transition follows a path similar to China’s transition into a net oil importer, international coal trade will increase significantly along with price of coal, until exporters catch up with increased demand.

 

Coal fired power plants meet base load requirements of electricity systems: Coal plants cannot be ramped up and own much, which means it cannot follow electricity load. The capital costs are relatively high but the operation costs are very low. Coal plants produce the cheapest and most reliable electricity. They can run constantly at high capacity to meet the base load needs of electricity systems. The coal plants may loose some competitive edge in future when regulation may add carbon emissions costs.

 

Levelised Costs of Different Generation Technology at 10% discount.
Coal	Natural Gas	Nuclear	Wind	Micro Hydro	Solar	CHP
$35-60	$40-63	$35-50	$45-100	$65-100	$200 (24%availability)
Inv 50%	Inv 20%	Inv 70%
O&M 15%	O&M 7%	O&M 20%	O&M 13-40%			$30-70per MWh
Fuel 35%	Fuel 73%	Fuel 10%

 

Coal prices have relatively low and stable: Since early 2007, the price of Coal caught up with that of oil and surpassed that of natural gas. But the recent surge probably reflects a temporary adjustment in the coal market as the supply infrastructure (mines, railroads, ports and ships) tries to keep up with rapidly rising demand and perhaps more importantly, the impact of some natural disasters (flooding in the mines of Australia in early 2008). Even then coal remains cheaper than oil and natural gas on a heat content basis, even when adjusted efficiency differences between coals fired and combine cycle gas–fired generation. Russian gas to Europe reached $11-12/MMBtu while Japan paid more for LNG since the price is linked to that of oil. In 2006 & 2007, Spain and South Korea paid $15-20 /MMBtu for LNG cargoes on spot basis.

 

Major Producers	Production (Mt)	Exports (Mt)	Export %	Major Importers	Imports (Mt)
China	2482	63	3%	China	38
USA	990	45	5%
India	427			India	41
Australia	309	231	75%	Japan	178
South Africa	244	69	28%	Korea	80
Russia	233	92	39%	Taiwan	64
Indonesia	169	129	76 %	UK	51
Poland	95			Germany	41
Colombia	64	60	94%

 

Coal Scenario of South Asia

India is the major producer and user of coal. It ranks fourth with 10% of worlds total reserve after USA (27%), Russia (17%) and China (12%). Present prove reserve of Pakistan, Bangladesh, Afghanistan and Nepal are very negligible in the context of world’s reserve together representing only 1%. But the production also is negligible. India has mostly anthracite and bituminous coal, Pakistan has mostly lignite. Bangladesh mines small quantity of bituminous coal from the lone underground Barapukuria mine and use it for mine mouth power plant while lower quality coal is imported from India for brickfields and use in steel re-rolling mills. All coal-consuming countries in South Asia are net importers as the following table will evidence.

 

In South Asia exploration activities are mostly done by state owned companies. Coal resources have not been appraised independently. The resources should be reassessed and reserve classification system at par with international practise must be done. Geological Survey of Bangladesh is working on establishing a detailed reserve classification approach, which may require international support. Such a resource assessment will also help identify the potential for Coal Bed Methane production.

 

Despite of present uncertainty about the reserves coal resources of Bangladesh, Pakistan and Afghanistan can be significant and could substantially add to power generation fuel mix if necessary investments are made in exploration and development. Low mine mouth cost of coal in the region (less than $10/ton in Sindh in Pakistan an $13-20/ton in India compared to about $25/ton in Indonesia) renders domestic coal very attractive compared to imported coal for power generation. Bangladeshi policy makers must note this. Indonesia has higher royalty compared to India and Pakistan that makes Indonesian coal more expensive even in their own country.

 

Domestic coal use for power generation in India costs $36 to $48/ton while imported coal can be as high as $ 160/ton including Cost, Insurance and Freight (CIF). Most coals now mine in the region has a calorific value of about 16MMBtus per ton while imported coal typically has 20-24 MMBtus per ton. Even after adjusting for heat content, imported steam coal is much more expensive than domestic coal.

 

Afghanistan, Bhutan and Nepal produce coal of higher heat content, similar to imports, but much lower in quantity than the total regional needs. Bangladesh is believed to have higher heat content and lower ash coal. Transportation from Bhutan, Nepal and Afghanistan to Pakistan and India due to transportation constraints may offset the price advantage.

 

Trade Infrastructure

Coal accounts for about 28% of the world’s primary energy needs. It is second to oil, which supplies over one third of the worlds energy needs. But coal trade is not in similar proportions. Natural Gas trading due to rising activity of LNG is trading higher than coal now. Coal trading is now about 16% compared to about 29% of natural gas and 60% of oil. These reflect the historical preference of producing countries using coal domestically and the smaller need for importing or exporting coal as many countries have some production. As bulk commodity, transportation of coal over long distance is relatively more costly. Railways, barges, ports and ships necessary to complete coal supply chain are capital intensive investments require long term certainty about market viability.

           

	Coal in South Asia (thousand tons) 2005/06
	Afghanistan	Bangladesh	Bhutan	India	Nepal	Pakistan	Sri Lanka
Production.	109	1000	90	427,000	13	5,907	–
Net Import	–	<7000	–	41,000	362	3,477	117
Reserve (% of world)	neg	neg	neg	neg	10%	neg	–
Production (% of world)	neg	neg	neg	neg	7%	neg
R/P (years)	733	2 x 700	NA	215	91	626	NA
Imports (% of cons)	–	29-88%	22%	12%	97%	37%	100%

 

Global coal trade is projected to increase from 815Mt in 2006 to more than 1,150Mt in 2030. In South Asia strategic investments in rail and barge capacity within and across countries can encourage investment in coal exploration and development across the region. Traditionally, interstate trade in South Asia is limited to export of rather insignificant volumes of coal from India to Bangladesh. Nepal, Bhutan, Pakistan and India import coking coal via marine terminals from abroad primarily for metallurgical sector. India has decentralised export of coal, Nepal imports coal strictly through the Royal Government. India levied a hefty 26.33% export duty; Afghanistan has banned coal imports from Pakistan.

 

Coal Trade

Asian countries import about 55% of worlds steam coal .It may still climb to 61% in 2030.China which used to be self sufficient may soon become net importer mainly from Australia. Indian demand is projected to shoot double between 2005-2030. Australia and Indonesia would export most of the coal for China and India. Indonesia exports three quarters of its 129Mt production. Its unique location and existence of a large number of experienced competitive mine operators make the country a perfect source of coal for neighbouring Asian Countries. Bangladeshi think tank often brings Indonesia as reference when they talk about coal exploration and exploitation. Will Bangladesh ever attain the situation of Indonesia? Can Bangladesh be compared with it in any way? So any reference to Indonesia while discussing the coal mining issues is not only irrelevant and but also is intellectual dishonesty. But Bangladesh may learn lesson how Indonesia managed to attract major coal mining companies to invest in mining there.

 

Japan, Korea, Malaysia and the Philippines are long time customer of Indonesia and soon India will also be its major importer. So obviously export is a major incentive. As Indonesian export potential is expected to grow further companies of different countries are taking position in the country. Tata Power Company bought stakes in Indonesian companies, Aumin Kaltim Prima Coal for $1.3 billion in early 2007.

 

On the other hand Tata proposed US$3 billion investment in power, steel, and Fertilizer and coal sector of Bangladesh hibernated for many years for Government indecision before being withdrawn. In not too distant future Bangladesh may need to import coal from Tata was allow to own Coal mine in Indonesia while Bangladesh found all possible excuses to frustrate Tata investment . Who knows whether Bangladesh deliberately kept gas exploration suspended over the last 5 years so that it does not prove enough gas facilitating commitment for Tata proposed industries?

 

Tata also proposed for open cut mining of Barapukuria mine and use the coal for power generation in their proposed power plant and steel mill in Bangladesh. Now Bangladesh is caught in its own trap. It does not have enough gas available in national grid to meet its own requirement. Proper utilization of coal still remains matter well into the future. In Bangla there is a proverb which means, “Stoping someone’s beginning cutting ones own nose”

 

Sri Lanka and Pakistan will also rely on coal from Indonesia.

 

Australia is also major player in the world coal trading. It exported 231 Mt in 2006.In 2006-07 India alone imported 21Mt coal from Australia. Many private companies operate mines and export from Australia.BHP billion has formed alliance with Arutmin in Indonesia to market Artumin’s production internationally, and owns operation in South Africa, South America and North America. BHP Billiton Energy Coal South Africa Ltd, one of the largest energy coal exporters in the world. BHP Billiton, Anglo Coal, Xstra and Rio Tinto are the four large companies which lea coal export operations from Australia and South Africa, two largest source of coal for South Asia other than Indonesia.

 

Coal and Environment

Environmental impact of coal mining operations has become a serious concern in South Asia. In Bangladesh, the development of Phulbari coal mine having an estimated coal reserve of 572Mt, using open-pit mining method is facing opposition from a section of civil society groups on the grounds of resettlement issues and negative environmental impacts. Artisan mines in the region lack proper maintenance, often operate unofficially without control of authorities, and damage the surrounding water and ecological resources.

 

On the other hand increased availability of high quality coal could have net positive environmental impacts if it replaces fuels that are more damaging to the environment. Brick manufacturers in the region use wood or used tires as fuel whenever coal is unavailable or prices are uneconomic, leading to deforestation and increased emissions. Brick kilns equipped with higher performance furnace s, scrubbers and good quality coal would not only prevent further deforestation but also reduce emissions. Brick kilns around the world have successfully transformed from burning wood, tires and other products with efficient technology to cleaner burning fuels and furnaces. Bangladesh has been pursuing a strategy of replacing other fuels with natural gas in kilns but limitation on pipeline networks, gas demand supply imbalance and requirement of gas for other users has hindered this effort. Bangladesh now imports inferior quality coal from India. There have been allegations of smuggling of substantial quantity of poor quality of coal also from across the border. This coal syndicate is extremely influential. Utilisation of this coal in uncontrolled way is also contributing to environmental degradation in Bangladesh.

 

Coal mine, brick kiln and similar energy intensive operations must be properly monitored The Government may mandated coal mine operators to submit environmental performance mitigation bonds that would be gradually paid back throughout the development of a project. Bhutan introduced such measure in 2002, Indian Bureau of Mines has recently developed liability bonds – a legal guarantee of a mine operator to comply with the approved mine closure plans. More efforts of similar kind should help improve environmental stewardship is well monitored.

 

In addition, best environmental practices in pre-combustion, combustion and post-combustion periods can reduce environmental impacts significantly. Pre-combustion, coal may need to be cleaned of impurities, which will not only increase market value of coal but also improve its combustion efficiency and hence reduce emissions. This is called coal beneficiation, targeting sulphur and ash reduction. In addition to conventional method of physical and chemical cleaning, biological cleaning is now emerging. Organic sulphur is removed by chemical cleaning techniques such as molten – caustic leaching. Biological cleaning uses bacteria that “eat” the sulphur out of coal. Scientists are experimenting with fungi and are trying to duplicate the enzyme inside of the bacteria that eat the sulphur. If successful, these enzymes can speed the cleaning process when injected into coal directly.

 

During and post-combustion, there are two basic approaches to using coal in a more environmentally friendly manner.

 

·      To reduce emissions by either reducing the formation of pollutants such as nitrous oxides (NOx) or cleaning the flue gases or both;

·      To increase the thermal efficiency of generation facilities (either by using a higher grade coal or technology & design improvements) so that les coal is used to generate the same amount of power.

 

Combined approach would yield better results. Some of the technologies include pulverized coal combustion, atmospheric pressure fluidized bed combustion, cyclone fired wet bottom boilers, and integrated gasification combined cycle (IGCC) with carbon capture and storage. Many other methods are more regulatory in nature such as requiring sorbent injection for sulphur oxide (SO2) emissions reduction and particulates removal from flue gases; yet others require combining power generation with heat uses such as cogeneration in industrial facilities or for district heating.

 

Bangladesh will definitely start exploration and exploitation in more appropriate way in not so distant future. Considering its already vulnerable state of adverse impact due to global heating from Green House Gas emission it must adopt very careful an calculative approach of coal burning.

 

Coal Potential in South Asia

India traditionally relied on domestic and imported coal for its energy generation. It has huge reserve and it is also the third largest producer and consumer of coal in the world. But recent surge of Indian economic development even coal cannot keep pace with its expanding energy demand. India does not have substantial oil and natural gas reserve. Bangladesh and Pakistan have also started considering giving more emphasis on the development of their own coal resource for long-term energy security.

 

Bangladesh however is caught in the quagmire of confusion and indecision. It has about 75 Tcf equivalent high quality coal in place. Some section of civil society consider that for ensuring 50 years energy security there is no scope of considering export of coal. Off course question of export can only come if there is enough surplus after meeting the country’s present and emerging demand. The country is suffering from chronic energy crisis. There is massive deficit of electricity. Bangladesh desperately need generation of at least 5000 MW new generation by 2012 and then on about 1000 MW must be added to fuel its growing economy. Bangladesh does not have oil. Its major resource natural gas resource is not huge. Moreover, years of non-action in exploration and development have brought proven gas resource to the verge of depletion. In this situation coal is the only viable option. Some of the coal reserve is also relatively shallow. Open pit mining can help recover 85-90% of the coal in place. But some people want government to ban the open pit mining. The other method underground mining is neither safe nor economic. More expensive mining wills yield only 20-25% of the coal in place. Bangladesh also does not have technical or financial capability to mine itself. It has to rely on foreign major coal mining companies. But some Bangladeshis do not welcome foreign investment. Off course certain FDI in energy sector in Bangladesh had bitter experience.

 

In this situation if Bangladesh cannot formulate investment friendly coal policy it cannot mine its coal for its energy security. It is relatively easy to deliver appealing statements and shed crocodiles’ tears for others. But real professional life is very different extremely challenging. The gentlemen who do not want economic method of coal mining and do not want Bangladesh explore its resources in the off shore are acting as agents of the foreign force who does not want Bangladesh to achieve financial autarky. Some people are playing with the sentiment of the people of the coal region. For the greater benefit of the nation government must remain very firm and do whatever is required to explore maximum coal economically adopting state of the art technology and off course maintaining strict control on environment and safety issues. The affected people must also be properly compensated, relocated and rehabilitated. Some evil motivated elements have misguide the innocent people of the region that coal mining will make them loose everything, they wont have place to live and the area will be turned into desert.

 

The Government of Bangladesh must make sure that these unnecessary panics are well taken care off. This present uncertain situation of energy cannot be overcome unless the government takes appropriate action to start coal mining. The cost of in action is far greater than the cost of action. In Bangladesh only the 250 MW mine mouth plant at Barapukuria is operating since January 2006.

 

Both Bangladesh and Pakistan relies mostly on natural gas for meeting growing energy demand. But delays in new exploration and development investment and depletion of existing fields limits the growth potential of natural gas. Until coal and natural gas reserves (including coal bed methane) are assessed and those found to be economically prospective are developed, coal imports using existing infrastructure offer a short-term panacea to the regions energy shortage.

 

India and China jointly account for 72% of the forecasted increase in worlds coal demand from 2004 to 2030.Almost 70% of the growth in India will be used for generating power. Both Pakistan and Bangladesh also project coal deficit in the mid-run, although primarily of coking coal which is used in metallurgical and cement sectors.

 

Coal to diminish power deficit: pricing of coal and electricity

Most of the countries in South Asia recognize the potentially crucial role for coal as relatively low – cost fuel for power generation. India has encouraged captive mining associated with power generation for decades. Bangladesh started production from its first coal fire power plant mine mouth of its lone active coal mine at Baprapukuria in 2006.A new mine at Phulbari may start development despite local an environmental opposition. The raft coal policy of Bangladesh among others provides export after meeting 50 years of meeting the domestic demand. Pakistan has started to pay increase attention for accelerated development and utilization of coal resources. Further investment in coal sector in these countries may depend on changes in administered pricing mechanisms for coal and electricity.

 

Coal pricing policies in the region has undergone some changes in recent years. Coal India Ltd is allowed to set prices of coal for all power generators and 75% of other industries – 25% of coal use by the industrial sector can be acquired through auctions, tenders and imports. Only coking coal is allowed to follow an import parity pricing regime. The raft Bangladesh Coal Policy provides a pricing regime linked to international price for export purposes as well as domestic consumption except for mandatory mine mouth power generation.

 

Electricity tariffs in most of the South Asian countries are set of approved by authorities after a competitive biding process. In Pakistan, the National Power Regulatory Authority has recently set the levelized tariff for domestic coal fire generation based in Sind province at $0.078055 per kWh for long term energy supplies, while in India the latest domestic coal plant was approve with the levelized tariff of $0.0498882 per kWh. The difference between the two tariffs is large and could possibly be use to the disparity between the administered price of coal in India and the market price of coal from private mines in Pakistan.

 

The tariff in India is competitive with gas fired plants. Central Electricity Regulatory Authority of India has recently reconfirmed a tariff of $0.05745 per kWh for Agartala Gas Power Station, commissioned in 1999. In contrast a levelized tariff of $0.0574772 per kWh was approved for 4,000 –MW supercritical power plant in the Gujarat province develops by Tata Power Company Ltd. The higher tariff is considered justified because the project is to be fuelled by imported coal and has higher capital costs due to use of modern and efficient technology.

 

Infrastructure constraints

Railroad system is the major means of coal transportation in South Asia. Intrastate and especially interstate railroad system require upgrades and expansions. Coal transportation in India by rail has been steadily decreasing over the last few years. The railroad system is overloaded and accommodation of additional coal freights might represent challenge. Already due to insufficient capacity at some parts, coal is being transported by the more time consuming and expensive rail-cum-sea route. Bangladesh Rail, while moving approximately 3.5 Mt of freight per year over its entire network has significant spare capacity. With certain improvements necessary for coal transportation and rehabilitation of certain parts of the rail system of the country could import more coal or when situation will permit transport domestic coal into different parts of the country.

 

River systems in India and Bangladesh are conducive to extensive coal transportation. Bangladesh when the situation will arise may barge all its coal for export to marine terminals without straining rail system. Bangladesh recognized the challenge and proposed a comprehensive coal relate infrastructure study and plans to develop a Coal Zone in the northern part of the country. In Bangladesh, the lack of sufficient domestic production and absence of marine coal terminal made government rely on the only available import route, which is by rail from India. Some coal is also imported by road. Coal imported from India, contains significantly higher level of sulphur than that allowed by government. This is ridiculous that Bangladeshi environmentalists never raised any objection against it. Coal mafias must be very smart.

 

Bringing in “new blood”

State owned companies dominate the coal industry in South Asia.CIL is the major player in India with almost82% of the total domestic production. Another SOE Singareni Collieries Company Ltd accounts for 8% another public company, NLC is responsible for about 3%. Despite partial liberalization of the coal sector from the mid-1970s, there was no significant private participation until recently. The share of private sector increase from 3% in 1996 to about 6%.Private coal developments are primarily captive, that is , tied back to back legal and commercial obligations by the end user with priority given to power and steel sectors.

 

In Bangladesh, the state owned Petrobangla’s coal subsidiary dominates the sector, operating the major Barapukuria underground mine with annual production of about one Mt per year. While encouraging new coal development, the raft coal policy in Bangladesh contemplates export only after 50 years of supplies have been guaranteed for the country. International developers are not very keen to risk investment in Bangladesh for many reasons. Bangladesh has not demonstrated any skill so far in organising and managing coal exploration and operation so far. It is very unlikely that any major international coal mining company will be interested to risk investment in Bangladesh if there are no attractive incentives for them in the coal policy.

Pakistan coal sector is forme mostly by private companies although the public sector is involved through federal and regional development corporations. The state owned Pakistan Mineral Development Corporation accounts for about 10% of coal production in the country but block 1 of Thar coal field, the largest coal field in the country is to be developed by Hasan Associates of Karachi, while exploration license for block 2 was granted to Associated Group of Lahore. Pakistan Government recently decided to unbundle coal mining and power generation in the Thar basin creating the Coal Mining Company. In Afghanistan, about 20% of coal production falls on state -controlled North Coal Department. Coal Industry in Bhutan is privatised. In the above scenario the proposed draft policy provision of creating a new Khonibangla to take up all future coal mining having joint venture with private company may not be the correct strategy. Bangladesh does not have any in-house mining capacity. No major coal mining will be interested to form joint venture with a new company in a country having no mining tradition but having too many theoreticians to crate impediments and confusions.

 

Technological challenges

Indian coal sector in the recent past has increasingly relied on open pit mining due to certain set backs in underground mining. Low productivity and reserve recovery in production of coal from underground mines can be explained by the �inadequate exploration and geotechnical investigations of coal horizons, roof and floor rocks and partly due to the foreign equipment supplier not matching the equipment with ground conditions”.

 

The raft coal policy of Bangladesh allows for open-pit mining but spells out prerequirements before operations can start including environmental and socio- economic impact assessment and mitigation strategies. Open pit mining is generally more cost effective, reduces health and safety risks to mine personnel and carries fewer technical risks. In Afghanistan, the large number of small artisanal mines that use primitive technologies and equipment due to lack of adequate investment and regulation reduces productivity and increases environmental impact of coal mining operations.

 

Limited exploration efforts

Pakistan has plans to increase coal production from less than 4 Mt to 20Mt by 2015.Bangladesh must also increase production from current about one Mt to 20Mt within the next decade. But if the present confusion and inaction persists and it can not adopt an investment friendly workable exploration strategy Bangladesh energy crisis may further deepen. In India, exploration has been almost exclusively carried out by the Central Mine Planning & Design Institute Limited (CMPDI), an affiliate of CIL. Private companies have been denied any participation in exploration efforts .As such private sector coal exploration experience is absent. The Geological Survey of Bangladesh has ha limited success in exploration efforts. Like India Bangladesh does not have any private sector experience of exploration. But India has very strong public sector with very strong professional groups. Bangladesh does not have that capacity even. Although Pakistan allowed private companies to operate, its coal resource remains underdeveloped. Afghanistan registered some success with development of coal resources, with international aid.

 

Countries of the region realized the impediments. There has been recent push for policy change. Newly rafted coal legislations in the region recognize the nee to attract international companies not only in terms of financial resources but also for skilled and experienced manpower, modern technologies and environmental best practices they can offer. India allows 100% foreign equity in captive coal mining but restricts participation of foreign companies in non–captive projects. Recently CMPDI was approved to provide exploration services to private companies on contract basis.

 

A new Mineral Policy in India was recently approved and a Commercial mining bill was introduced to the parliament to amend the Coal Mines (Nationalization) Act of 1973. The new legislation provides for auctioning of the coal fields instead of current practice of allotting them to companies. In 2006, 15 blocks with total reserves of 3.6 billion tons have been allocated to private parties in power sector and 23 more blocks with total reserves of 3.6 billion tons to private parties in other sectors.

 

Bangladesh is also currently reviewing draft coal policy that allows for open cast mining and coal exports. New provisions, such as mandatory requirement for coalmine operators to build mine mouth power plants, are aimed at mitigating the electricity deficit in the country. A flexible approach can be recommended as mine operators are not traditionally in business of building and running power plants; associated frameworks for coal–fired generation investment may be needed.

 

In Pakistan, the National Minerals Policy was introduced in 1995, which contains favourable fiscal conditions for potential investors. The government has also established a Mineral Investment Facilitation Board and established provincial Departments of Mines and Minerals in order to facilitate license issuance and lease granting. Private sector is already operating largest fields in Pakistan.

 

Regional Electricity Trade

Increasing coal fired generation capacity in South Asia, along with generation based on natural gas, hydro, and renewable such as wind and solar would contribute significantly to meeting growing energy demands in the region and improving the quality of life of the citizens of South Asian Countries. These benefits can be enhanced via increased trade of electricity through an integrated grid, or power pooling. Coal as relatively cheap base load generating fuel, can provide an anchor for regional electricity trade over this integrated grid relatively.

 

Power Pooling

Power pooling is coordination of activities of neighbouring power grid operators in order to increase reliability of power supply and reduce costs. The degree of grid integration and the number and type of players in power sector will determine how deep a pool will be. Power pool usually evolve from infrequent bilateral exchanges of electricity between utilities via few interconnecting transmission lines to central exchanges where many players (generators, consumers and traders) schedule power at varying prices throughout the day benefiting from a highly integrated grid that facilitates flow of electricity from and to many points on the system. Typically open access to the grid is required for enhancing trade and a regional regulator can ensure access and monitor other pool activities for fair and efficient operations.

 

The first power pool was created in North America in 1927. The North America now has three major reliability regions (highly integrate grids) covering multiple states in the U.S. and provinces in Canada as well as some trade with Mexico. The North American Electric Reliability Corporation (NERC) is responsible for ensuring reliable operation of the transmission system in North America in close cooperation with utilities and regulators.

 

Another major regional initiative is the NordPool which was established in 1993, the first multinational exchange for trading electric power. Currently , there are several other regional other regional initiatives including the following ; Southern and West African Power Pools ( SAPP and WAPP), Energy Community of South East Europe, Greater Mekong Subregion Power Trade Organization in Southeast Asia, Central American Electrical Inter Connection System ( Known with its Spanish acronym, SIEPAC), South American Regional Energy Integration Commission.

 

Benefits of Power Pooling

Fundamentally, power pools offer several interrelate and mutually reinforcing benefits;

 

·      Increasing reliability (sharing reserves, emergency assistance, joint planning of generation mix and transmission expansion).

·      Increasing efficiency and hence reducing costs (reducing the nee for individual reserve margins, balancing peak loads across regions, relating transmission and distribution losses).

·      Investment costs and hence the long term price of electricity (economies of scale with access to larger market, lower reserve margin needs).

·      Environmental benefits (increased efficiency reducing emissions, easier investment conditions for renewables)

 

Potential for Power Pooling in South Asia

South Asian Countries can also benefit from a regional electricity pool. Per capita consumption of electricity in the region is significantly below the world average of roughly 2,400kWh. Electricity shortage as demonstrated by frequent blackouts and load shedding are anaemic in the region. The Central Electricity Authority of India estimated energy deficits in 2007 at 9.6%. The situation is not different in Bangladesh and Pakistan, where load shedding is the only way the system can be balanced due to shortage of generation capacity. A significant handicap is the large amount of system losses, official transmission and distribution losses for Bangladesh, India and Pakistan are about 25% of generation as compared to 5-6% in civilized countries. Although investment in new generation capacity is needed to keep up with growing demand, reducing these losses will help increase access to electricity in the short run and reduce the need for new generation. Creating an integrated grid and operating efficiently would help reduction of losses.

 

Electricity South Asia

In most countries in South Asia, electricity electricity generation is predominantly mono fuel based. Bhutan and Nepal depends almost exclusively on hydro, Afghanistan also have same situation, Hydro also plays major role in Sri Lanka and Pakistan. Sri Lanka depends on oil for about 60% of its need , depending on seasonal availability of Hydro capacity. Bangladesh depends about 90% of its need on natural gas. India uses coal for almost 50% of its generation. Natural gas also plays a very important role in Pakistan.

 

Electricity is already traded in the region on bilateral basis. Afghanistan imported more than a quarter of its consumption from Iran, Turkmenistan, Uzbekistan and Tajikistan. India provide grant assistance to Bhutan for building 1416MW of hydro facilities, out of which it imported 5.7Twh.There is also two way trade between India an Nepal, the later importing 266Gwh and exporting 101GWh.

 

The trade can be enhanced further with regional grid. In addition to Bhutan and Nepal, neighbouring countries such as Tajikistan and Kyrgyzstan have hydro potentials that surpass their domestic needs significantly. India, Pakistan and Bangladesh can develop further thermal capacity, mostly based on natural gas, if more investment in domestic resources takes place, an international gas pipelines and LNG import terminals are built connecting resources in the region as well as other parts of the world with consumers. Regionally produced and imported high quality coal can further diversify fuel portfolio in the region. The hydro-thermal mix at regional level would enhance system reliability (balancing seasonal fluctuations in water levels), increase electricity availability, reduce the need for oil imports and generate revenues for Hydro exporting countries, Bhutan and Nepal.

 

	Electricity South Asia
	Afghanistan	Bangladesh	Bhutan	India	Maldives	Nepal	Pakistan	Srilanka
Annual Consumption per Capita (kWh)	38	165	1141	657	542	67	425	357
System Loss (%)	40%	23%	NA	24%	NA	NA	24%	NA
Net Imports	28%	……	1.3%	1%	……	5%	……	……

 

Role of Coal and Interregional Electricity Trade in Energy Security

Energy security in South Asia can be significantly enhance is domestic coal resources can be developed, coal imports can be increased and a regional power pool can facilitate electricity trade supported by a diverse generation portfolio of coal, hydro, natural gas and renewable. Coal will allow countries to diversify away from imported oil and natural gas, provide a power generation fuel, the price of which has historically been more stable. However, best environmental practices in coal mining, transportation and combustion should be adopted. A regional power pool, which can use cheap hydro resources and stable coal generation to meet the base load, would make power available to more consumers around South Asia in amore reliable way and at a lower cost.

 

The quarterly report of USAID most of which is included in this write up can be used as a guide for the policy makers to make comprehensive mid and long term plan for developing domestic resources in more economic and environment friendly way. Regional forum must more meaningfully work out power pool. Countries of the region must combine their technical expertise and skill to assist less fortunate countries to explore and exploit their resources, diversify fuel mix and finally countries must work together to set up power pool for energy security of the region.

 

Source: http://www.ep-bd.com/news.php?cat_id=2&archive=7&namee=COVER

Date: 01 September 2008, Bangladesh

Draft coal policy likely to get final seal in Oct

Posted by phulbarinews on September 8, 2008

Abir Mahmud

The much talked about national coal policy is set to be approved in early October as the energy ministry has planned to place the draft of the policy to the council of advisers again. “We are now working on incorporating observations over royalty rate, land reclamation and environmental issues, which were the much discussed about during a discussion of the council of advisers over the draft coal policy and,” energy secretary Mohammad Mohsin said.

He said the draft of the policy would be sent to the council of advisers by early October next for approval. The council of advisers last month sent back the draft coal policy to the energy ministry for further scrutiny of the issues related to royalty rate, mined land reclamation and environmental issues. During the meeting, headed by the chief adviser, Fakhruddin Ahmed, at the Chittagong circuit house, the advisors discussed the policy draft for hours and of the opinion for some changes to the draft policy. They were, however, unanimous over that a coal policy was needed to immediately develop the country’s coal reserves and mitigate the mounting energy crisis.

Sources said, investments worth several billion US dollars have long been hanging over the draft national coal policy that got its current shape following several changes carried by the previous successive governments, energy ministry officials said. UK-based Asia Energy, South Korean Luxon Global and US-based Global Vulcan Energy are among the foreign companies now eyeing closely over the national coal policy to initiate their project works of coalmine development and setting up coal-fired power plants, they said.

Indian business conglomerate Tata group, that had investment proposals worth US$ 3.0 billion including development of a coalmine and setting up a coal-fired power plant, recently pulled back after waiting for over two years due to indecisiveness of the government, it was alleged. The foreign investment proposals still pending with the Board of Investment (BoI) include include $2.5 billion from the Asia Energy, $ 1.6 billion from the Vulcan Energy, $1.5 billion from Luxon Global, a senior BoI official said.

In the draft national coal policy it was recommended that no foreign companies would be permitted to develop coalmine independently. Foreign companies would be allowed to develop country’s coalmines under a joint venture with local coalmining company, it noted. Like elsewhere in the world coalmines in Bangladesh can be developed by either open pit or underground method. But the mining method should be determined on the basis of geological structure and reserve potentials, draft policy suggested. A Coal Sector Development Committee comprising professionals from all walks would be constituted for smooth operation of coalmines and relevant activities.

The committee would fix the royalty rate of different coalmines considering mine-specific geological structures instead of the existing mining rules where the royalty rate has been fixed at 6.0 per cent for open-pit mines and 5 per cent for underground mines. Awarding of licences for coal explorations from any coalmines through open tenders, whereas the existing rules say that the licences would be awarded on first-come-first-served basis, the draft policy recommended.

The country’s existing Land Acquisition Act to acquire required land and compensate the displaced people from the mining sites to ensure smooth development of coalmines and its subsequent utilisation, it noted. The globally accepted guidelines of ‘equator principles,’ should be adopted to ensure adequate management of environmental and social issues relating to coalmines, the draft policy said. The draft policy said there would be no option of coal export other than ‘cocking coal’ in the coal policy. Setting up coal-fired power plant at the mine mouth would be made mandatory for developing any coalmine it recommended further.

During the meeting of the council of advisers some felt that there should have some guideline before the proposed committee for fixing royalty rate.Some also opined that mined land should be returned to owners while others felt returning the land to the owners would be a complex and huge task. They were also of the opinion to ensure environmental safeguard out of coalmining.

Source: http://www.weeklyeconomictimes.com/news-details.php?recordID=1953

Date: 07 September 2008, Bangladesh