Analysis the Role of Private Entities in the Energy Sector of Bangladesh

: In the context of globalization and open market economy, there is no alternative to the discovery of energy and mineral resources of Bangladesh and its proper management and planned use. Besides, Bangladesh is committed to the implementation of the Sustainable Development Goals (SDGs) 2030 announced by the United Nations and the government is setting the targets for the implementation of the SDGs in the light of the 8th Five-Year Plan. That is why uninterrupted fuel supply is required. The present government has identified the energy sector as a priority sector, realizing the necessity of energy sector development. The role of private companies is essential to meet the country's growing energy demands as well as to move from a mid-income country to a developed country. Therefore, this study analyzes the role of private entities in the energy sector of Bangladesh The research focuses on the following points: (i) Economic rebound through Covid-19 scenario in Bangladesh; (ii) Contribution of private entities to the energy sector of Bangladesh (iii) Challenges faced by private entities in energy sector of Bangladesh (iv) Prospects of private entities in energy sector of Bangladesh (v) private entities to enhance energy security.


Introduction
The Present government has identified the energy sector as a priority sector realizing the importance of energy sector development. Energy and Mineral Resources Division and its subordinate organization have undertaken various constructive and fruitful activities to achieve full security in the energy sector by achieving the Sustainable Development Goals (SDGs) 2030, Vision-2021 (Middle income Country) and Vision-2041 (Status of a developed Country) working diligently.
The energy sector is a capital-intensive sector. The development of this sector requires a lot of investment. Since development in the public sector along is a difficult task, the Energy and Mineral Resources Division has formulated various policies to involve the private sector in the development of the sector. Notable among these: At present 25 (Twenty-five) companies including Bashundhara LP Gas company Ltd, Jamuna LP Gas company Ltd, Omera LP Gas company Ltd, TK LP Gas company Ltd, Orion LP Gas company Ltd, Promita LP Gas company Ltd, Navana LP Gas company Ltd, Sena LP Gas company Ltd, Beximco LP Gas company Ltd, etc. marketing the Liquid petroleum gas (LPG).
Among the top five companies in the lubricants market in Bangladesh are MJL Bangladesh, British Petroleum PLC (including Castrol), Total, Caltex and Royal Dutch Shell.
The two companies involved in LNG imports are Summit LNG Terminal Company Limited and Accelerate Energy Bangladesh Limited.
Their combined efforts will play an important role in ensuring energy security of the country

Bangladesh Economic Performance in COVID-19
Economic performance GDP growth increased to 8.15% in FY2018-2019 from 7.86% in the previous year on robust growth in industry and services Growth in industry rose from 12.1% in FY 2018 to 12.7% in FY 2019, reflecting brisk growth in manufacturing output to supply markedly higher export demand, notably to the US and some previously unpenetrated markets. Growth in services increased from 6.4% to 6.8% mainly on improvements in wholesale and retail trade, transport, education, and health and social services. Agriculture growth moderated from 4.2% to 3.9%. On the demand side, growth in FY 2019 was buoyed by robust growth in exports. Private investment expanded, though at a slower pace than a year earlier, while public investment remained steady. Total investment increased from the equivalent of 31.2% of GDP in FY 2018 to 31.6% as private investment increased from 23.3% of GDP to 23.5% and public investment remained unchanged at 8.0%. Inflation moderated from 5.8% in the previous year to average 5.5% in FY 2019 with lower domestic rice prices following a good harvest and lower food prices on the international market (While food inflation eased, nonfood inflation moved a bit higher owing to upward adjustments in natural gas prices and currency depreciation. Growth in broad money accelerated from 9.2% in FY 2018 to 9.9% but remained well below the FY 2019 monetary [2].
After years of steady advances, GDP growth declined in fiscal year 2019-2020 as the COVID-19 pandemic upended economic activity globally. Disruption to supply chains pushed inflation slightly higher but remained under control, and the current account deficit narrowed. Assuming prudent macroeconomic management and proper implementation of timely announced stimulus packages to mitigate the impact of COVID-19, GDP growth is expected to pick up, inflation to moderate, and current account deficit to narrow further in FY 2021 [1].

A Resilient Economy with Strong Recovery
GDP grew by 5.47% in FY 2020-21, according to preliminary official estimates. This is significantly less than the ADO 2020 projection published in April and down from 8.15% growth achieved in FY2018-2019. The spread of COVID-19 globally, especially in major trade partners, affect the Bangladesh economy in the final quarter of FY 2019-2020. Containment measures enforced by the government from 26 March limited the movement of people and goods within the country and across borders, further impairing economic performance. Exports and imports contracted significantly, and remittances, which grew by more than 20% in the first 8 months, were hit hard in March-May 2020. Moreover, mobility constraints substantially cut back consumer demand. Consumers' uncertainty and lack of confidence scuttled plans for business expansion and investment, further constraining domestic demand [1].

Annual Economic Growth ($ Billion)
Due to the effective measures undertaken by the government of Bangladesh under the dynamic leadership of Honorable Prime Minister Sheikh Hasina: 1) the economy is on track towards making a sharp rebound. 2) industries have been able to achieve 70-80% recovery despite COVID impact 3) Bangladesh's export earnings have reached USD 33.67 billion despite its initial decline, it is reached USD 38.76 billion in 2020-2021 4) the flow of credit to the private sector is slow but it is growing consistently 5) After a long time, Bangladesh's capital market has returned to a bullish trend. aside from the gains in the key index, trading in the country's premier bourse has also seen an upturn, buoyed by renewed optimism among investors 1) The inflow of remittance, which was expected to drop, is now on an upward trajectory 2) Bangladesh bank's foreign currency reserve has crossed $42 billion for the first time 3) Bangladesh is currently posting a surplus in its balance of payments resulting low inflation despite huge public spending on infrastructure projects Above Figure shows that the economic growth in all the South Asian countries slumped in 2020; while the economic growth remained positive for most of the countries including Bangladesh, Nepal, Pakistan and Sri Lanka are the two countries that experienced negative economic growth. This erratic fluctuation in economic growth indicates that almost all macroeconomic variables have been affected due to COVID-19 [11].

Natural Gas
Since first discovery in 1955 as of today 26 gas fields, 24 in the onshore and 2 in the offshore have been discovered in the country [7]. Of them 20 gas fields are in production, one offshore gas field have depilated after 14 years of production while other offshore field has not been viable for production due to small reserve. The estimated GIIP (Proven plus Probable) recoverable reserve was 40.09 Tcf. Of them recoverable (Proven plus Probable) 30.06 Tcf [8]. As of June 2021, a total of 18.69 Tcf gas has already been produced leaving only 11.37 TCF recoverable reserve in proven plus probable category [9]. Some key information about the historical natural gas production 2009-2021 sector is presented in below: Although natural gas was introduced as commercial fuel in early 1960s, [7] its consumption got real momentum in eighties marking the beginning of the industrialization in the country. As can be seen from the Table above, Private companies produced 60%-66% of the total Natural Gas in Bangladesh every year. Therefore, the role of private companies in Natural Gas production is very important in the energy sector of Bangladesh.

Liquefied Natural Gas (LNG)
To meet the growing energy demand of the country, the government initiated the import of LNG from abroad. At present, a total of 1000 MMCFD LNG is added to the national grid [12].
Floating   Therefore, the role of private companies in Liquefied Natural Gas (LNG) import is very important in the energy sector of Bangladesh

Liquefied Petroleum Gas (LPG)
Liquefied Petroleum Gas (LPG) is a burning fuel derived from condensates or crude oil (gas fields/ refineries) widely used as a green fuel for cooking, heating, industrial applications, automotive sector & plastic production etc. LPG is an alternative to burning wood & kerosene, this promotes afforestation & clean kitchens safer to use than natural gas, CNG or kerosene.            As can be seen from the Figure and Table above, Private companies imported 82% per annum with a Capacity 84.59% of the total Lubricating Oil and the Public Companies imported 18% per annum with a capacity 15.41% Therefore, the role of private companies in the import of Lubricating Oil is very important in the energy sector of Bangladesh.

Furnace Oil
Bangladesh High Sulphur furnace oil (HSFO), 180/380 CST furnace oil is imported. The major users of imported furnace oil consume 43% of total furnace oil imports from HSFO fired power plants (5,724 MW). The Eastern Refinery limited (ERL) also produce furnace oil private power producers are allowed to import fuel oil for their own power plant consumption since 2011 & the consumption is increasing gradually.

Private Entities Bitumen, Transformer Oil, Greases & Additives
Bitumen: Bangladesh is moving towards heavy development of industries & infrastructure for better road connectivity, new roads are under construction & the demand for good quality bitumen is increasing current annual demand of Bitumen is ~500,000 MT, out of which ~70,000 MT is supplied by ERL & rest of the amount is being imported by private companies in the year 2020, Bashundhara oil & gas, a private company, launched a Bitumen production plant, with an installed capacity of 900,000 MT per annum to meet country's growing demand of Bitumen, Transformer oil Private entities have also manifested their footprint in producing transformer oil locally that contribute exceedingly to the power sector of Bangladesh.
Grease Private entities of Bangladesh also produce greases of many grades to support automobile & industrial sector of Bangladesh.
Additives MJL also set up additives manufacturing facilities, the first of its kind in this country.   10.59% and 10.05%. Therefore, the role of private companies in the import of coal is very important in the energy sector of Bangladesh.  As can be seen from the Table above,

Opportunities of Investment in Natural Gas Sector in Bangladesh
Gas exploration activities need to be boosted both in onshore & offshore. Transmission & Distribution networks of natural gas are yet to cover entire Bangladesh so the natural gas transmission & distribution infrastructure will need overhauling & upgradation in next few years.

Opportunities of Investment of LNG in Bangladesh
The Bay of Bengal has rough seas during the monsoon period, this leads to interruption in supply of LNG from the present two FSRUS. also, the government incurs capacity charge during that time. Globally, FSRU units are expensive to operate & maintain. they are used as temporary infrastructure to bridge peak gas demand and to reduce cost & to ensure consistent supply of LNG over 365 days each year, a land based LNG terminal in deep sea port is required, However, proposed deep sea port is still in project phase & will not be operational before 2024. As a result of LNG retailing policy, private importers can import and market LNG by themselves. Private companies can find out suitable locations/lands (with riverine access) for setting up and operating small scale LNG terminals (SSLNG).
Based on capability of private companies, government should create and facilitate access to those lands. Petrobangla can buy the LNG & pass back to private companies for retailing which in turn creates revenue for Bangladesh government as well. However, the LNG import prices in different LNG terminals will not be the same (land based terminal, FSRUS & small scale). Government should address this issue while negotiating capacity cost of different LNG infrastructure proposals.

Opportunities of Investment in Petrochemical Industries in Bangladesh
Demand of industrial sectors such as automobile, electronics, construction, packing, consumer goods (cosmetic) are on the rise to produce the raw materials such as HDPE, LDPE, LLDPE, PVC, PP, BR etc., industries require various petrochemical products such as benzene, butadiene, ethylene, xylene, propylene etc. Considering the burgeoning demand of petrochemical products in Bangladesh, this industry has a strong prospect in the days to come. Therefore, setting up a petrochemical industry in deep-sea ports like matarbari and chattogram bay terminal will be a potential source of national revenue and augment the energy sector. Figure 13. Fuel-wise composition of power development Plan [6].

Challenges Faced by Private Entities in Energy Sector of Bangladesh
Counterfeit/adulterated products have been a big concern area for the lubricants industry

Conclusion
Bangladesh will have to take following steps with top priority to maintain its wheel of growth by creating adequate energy security: (i) The petroleum act 1974/ BPC ordinance needs to be unbundle/amendment; (ii) Investment at home & abroad will have to be building Hydrocarbon Reserve; (iii) Investment in infrastructure like development of deep-sea ports at matarbari (moheshkhali) & chattogram bay terminal these can be hubs for all types of liquid products import which will eventually make the product cost competitive; (iv) We need to be remain competitive in production & service sector; (v) Petrochemical import terminal need to be set up for the production of chemicals such acetone, phenol, xylene, toulene, methanol; (vi) Must allow import & distribution of petroleum products.

Future Recommendation
1) The minimum standard API grade should be set for: a. gasoline engine: SG/CD b. diesel engine: CF/SF & gradually upgrade it to the global standard 2) Strong enforcement of the law to stop counterfeit/adulteration through mobile court/regulatory control authority 3) Policy Reform of Lubricant Market 4) Policy is required on proper collection & disposal of used lubricants to protect the environment & counterfeit products 5) Recycled/used lubricants must be banned for use as a lubricating oil 6) Adulteration of Lube oil segment should be strictly regulated & used oil should be managed properly concerning environmental safety issues. 7) Import, blending & marketing of lubricating oil higher than SAE 50 viscosity engine oils must be fully prohibited 8) SPM (single point mooring) has to be set up to get imported crude oil without lighter age 9) In order to avail good prices in the market, government of Bangladesh can buy crude oil 50% through g2g & 50% through private entities by tender 10) Rehabilitation & expansion of our refinery to raise its production capacity 11) Currently, the BPC has a total storage capacity of 1.31 million tons of liquid petroleum products, which include diesel, furnace oil, petrol, octane, kerosene, bitumen, condensate, crude oil, etc. 12) Government should allow storage terminals to import finished products 13) Government should provide full policy support to LPG industry 14) High import cost of raw materials for LPG cylinders should be reviewed 15) Unhealthy practices such as cross filling of LPG cylinders should be regulated