Staff Correspondent: Bangladesh has projected to reach 34,000 megawatts (MW) electricity generation by 2030 and the government has plans to increase power generation beyond expected demand to help propel growth in the export-oriented economy and to meet the demands of a growing middle class.
Total investment in the sector over the next 15 years is estimated at $70 billion. While installed generation capacity including captive power (as of June 30, 2018) has increased to 18,753 MW, shortfalls exist due to poor distribution infrastructure and a mismatch between the types of energy plants and fuel mix available. Private power production units are approaching half of total installed capacity.
Only two-thirds of Bangladesh’s population is currently connected to the electricity grid. This indicates an untapped potential market of up to 60 million people connecting to the national grid in coming years as Bangladesh continues its growth trajectory.
The fuel mix of Bangladesh’s power plants is heavily based on natural gas. The government plans to reduce dependence on natural gas and move towards coal with plans to generate 50 percent of total electricity using coal-based power plants by 2030. Other solutions include importing electricity from neighboring countries, importing liquefied natural gas (LNG), and expanding use of renewable resources, including solar and wind.
US companies produce over 55 percent of Bangladesh’s domestic natural gas supply and are among the largest investors in power projects. U.S.-origin power turbines currently provide 80 percent of Bangladesh’s installed gas-fired power generation capacity.
There are also opportunities for offshore gas exploration. Currently, 18 offshore blocks exist in the Bay of Bengal, most of which remain available for allocation and exploration.
Power and Energy Ministry sources said, “Oil and gas firms can pursue exploration and production ventures through production sharing agreements with the state-owned oil and gas company, Petrobangla.”
Industry insider sources told Daily Industry that in March 2017, without public tender, the government and state-run Petrobangla signed a production sharing contract with POSCO Daewoo Corporation of South Korea for oil and gas exploration in deep sea block 12.
The government had previously indicated that the terms of production sharing contracts would be improved to attract greater international interest. According to press reports, Bangladesh’s new model production sharing contract (PSC) allows Daewoo to sell natural gas and other petroleum resources to a third party in the country or outside at negotiated prices if Petrobangla refuses to buy the gas.
The government processed the proposal of Daewoo under the “Prompt Power and Energy Supply (Special) Act-2010,” under which there was no open competitive bidding process in awarding the contract. This was the first time a PSC was signed under the special act, the sources added.
Bangladesh is turning to liquefied natural gas imports to help meet burgeoning fuel demands. As a result, the country is in the process of setting up its first floating storage and regasification units and is beginning discussions on LNG supply contracts. In addition, Bangladesh is planning several LNG-based power plants.
Bangladesh has successfully managed to implement a large-scale Solar Home System (SHS) project with over 4.12 million SHSs installed nationwide. Prime Minister Sheikh Hasina has publicly supported the expansion of renewable energy in Bangladesh, targeting 20,000 MW by 2021.
An US expert source told Bangladesh may have sizable reserves of untapped gas in its 18 offshore blocks in the Bay of Bengal. Exploration has been stymied by the government’s failure to offer attractive fiscal terms during the bidding process. The deep-water area of Bangladesh is virtually unexplored and Bangladesh plans to acquire 2D seismic survey data for the Bay of Bengal that will be made available to potential offshore exploration companies. Geologists have indicated that prospects are good for locating gas, but commercially viable reserves have yet to be confirmed, the source added.
In addition to offshore deep-water exploration, possibilities exist for reinvigorating aging brown fields, further developing onshore gas fields, overhauling roads, waterways and infrastructure to facilitate fuel transport, and building pipeline infrastructure to carry imported LNG and drilled natural gas to distribution hubs.
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