Rationing energy use, Bangladesh seeks to be investor-friendly

It’s 2 pm here and there is a queue of cars leading up to the gas station. Unsurprising. It’s the last hour during the day when vehicle owners will get to fill gas.

The Bangladesh government has recently banned compressed natural gas stations from selling between 3 pm and 9 pm. An exponential growth of gas stations — apparently at 500 in Dhaka now — and vehicles, due to the policy of the previous government, is now stretching the natural gas resources of the country.

Not just vehicles, in some areas, industrial use is also being rationed, Centre for Policy Dialogue Bangladesh Executive Director, Mustafizur Rahman, said.

Shops and malls must close at 8 pm, two hours before their previous schedule. The government is now carrying out load-shedding in alternate hours, augmenting the use of renewable energy and encouraging efficient use of energy.

According to a Platts report, more than 87 per cent of national electricity output is currently generated from gas, whose production is already dwindling. The capacity of coal-fired plant currently stands at 4,000 Mw, but the peak demand is more than 6,000 Mw.

But for Bangladesh’s energy problem, the $3 billion steel, power and fertiliser proposal from the Tata group, would have probably been on the ground by now.

“We couldn’t give Tatas the 25-year sovereign guarantee. It would have invited conflict, as we don’t have enough gas to support our own industries. Our companies cannot expand organically,” Rahman explained.

Prime Minister Sheikh Hasina has laid out a roadmap to mitigate the shortage. By 2015, more than 9,400 Mw would be added. Over the past one and a half years, around 1,000 Mw has been added.

“We have already signed a number of deals, linking our grids together. We would like to have access to hydro electric power,” Bangladesh Enterprise Institute President Farooq Sobhan said.

The way out: Some of the companies are going for captive power plants. “It’s feasible for industries that are not power intensive. If they get power from grid it will cost 2 taka (per unit), while captive will be around 14 taka,” Rahman said.

But there are long-term plans, where India will play its role. The current commitment on India’s part is to provide 250 Mw, of which 100 Mw is likely to come from Tripura. “Mizoram and Meghalaya can be tapped for small hydro power projects,” said Abdul Matlub Ahmad, chairman of the Nitol-Niloy group, and president of the Indian-Bangladesh Chamber of Commerce & Industry.

The bigger project is, of course, NTPC’s two plants of 1,320 Mw each.

We have a problem, which is being addressed, Sobhan said. “We know, we have the reserves. All evidence indicates to it. We have high quality coal as well that can meet our requirements over the next 50 years,” he added.

The energy issue, however, is not deterring Bangladesh from showcasing the nation as an investment destination.

“A new image is being presented,” Sobhan said. It was in London and the next could be New York.

The makeover: A nation growing at six per cent, seeking to be investor-friendly, vis-à-vis a country subjected to floods and cyclones.