6 JUNE 2014, Gateway House
The Indian prime minister’s overtures to SAARC countries are an opportunity for India and Bangladesh to enhance an energy partnership. Intensified exchanges will benefit both: India’s North East, rich in energy sources, will get investments while Bangladesh, a ready market, can improve its energy security
Prime Minister Narendra Modi’s initiative of inviting SAARC heads of state for his swearing-in ceremony on May 26 is an opportunity to deepen India’s ties with its closest neighbours. But it is especially an opportunity to expand the growing engagement with Bangladesh in the energy sector.
Both the countries can gain in the process—Bangladesh can address its growing energy and fuel needs as well as lower its energy costs. In turn, India will gain from increased economic activity in the north eastern states, which are rich in reserves of coal, oil, gas and hydropower and can become an energy source for Bangladesh.
Bangladesh relies on domestically produced natural gas to meet almost 75% of its energy consumption. The rest is made up by approximately 20% oil and 5% coal.1 However, the country is now facing a shortage of domestically produced natural gas.2 As a result, it has set up power plants that run on imported furnace oil and diesel, both of which are very expensive options.3
Domestic oil production is minimal and petroleum products are almost entirely imported. The country has its own coal deposits, estimated to be 3.3 billion tonnes spread over five reserves. But it produces only 1 million tonnes of coal per annum because not all of the coal can be mined in a commercially viable manner.4
Only one of the five reserves has been brought into production so far, where the coal seams are closest to the surface, at approximately 118-509 metres. The other reserves are at much greater depths, starting at 300 metres. The largest of these, with approximately 1 billion tonnes, is at a depth of over 600 metres, which makes it unviable to mine.
Derated capacity of BPDB plants, June 2014
|Capacity (mw)||% of total|
|Heavy fuel oil||1,926||19.69|
|High speed diesel||661||6.76|
Therefore, Bangladesh has its task cut out on the energy front. It must produce more gas and this requires more efforts in exploration. It will also have to shift from expensive furnace oil and diesel to the relatively cheaper coal-burning power plants. Until then, it wil