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Gas : A Question of Prioritisation

by Syed Muhammad Hussain
***On the basis of a rosy picture, we might be in a great hurry, for reasons anyone can guess, to start the process of a draw-down of our existing reserves, ivhich as we earlier noted, on no account is considered adequate for even the short term requirements of our own. It is probable that we land up in a situation to buy back the finished product i.e., power, across the border, at the monopolistic supplier's price for a captive market.***URING a long stint abroad since 1984. while my swelling pride in my motherland did get some beating from time to time, my love for her increased over time nevertheless. As they say, distance lends enchantment. But In my view, living away from one's hearth and home also presents opportunity for an objective evaluation of the events, policies and trends in the country. One could not but agree that living abroad In various frameworks of socio-economic, gov-ernment policy paradigms provided a scale of comparison as to how we are faring back home. One of the assets that we always boasted about is Bangladesh's gas resource and the fairly significant volume of proven reserve. We were always nappy that at least gas supply for local consumers, domestic and commercial, has been stable and remarkably inexpensive. This does provide an enormous relief to domestic users as well as a kind of subsidy Incentive for commercial utilisation — in power generation, brick manufacturing and so on. We all are also looking forward to the prospects of setting up and expanding gasbased Industrial and commercial enterprises. But all these would require us to explore and conserve this very crucial nonrenewable source of energy in the country.
Gas demand forecast (with 96-97 as benchmark) is projected to increase from 1 100 MMCFD (400 BCF) to 535 BCF in 1999-00 and to 619 BCF in
2001 -02. Compared to this peak demand data, average demand is expected to rise from 328 BCF in 1996-97 to 437 BCF and 495 BCF during the same period. Taking annual production capacity and gas supply data Into account, these show 292 and 285 BCF (96-97 benchmark) and 506 and 438 BCF in 1999-00 and 500 and 495 BCF In 2001-02 respectively. The whole scenario above exhibits a precarious balance between peak and average demand and annual production and supply capacities, even under the Plan option (all data computed from Fifth FYP document) Any Increase In demand. wlilch is more than probable due to massive domestic and Industrial expansion over the coming years and any shortfall in production and supply, which again would be more likely than not. would create a most undesirable instability in the gas-based sector, having an adverse multiplier effect throughout the economy. Already Plan forecast of augmentation in the reserve “very shortly" has not come to pass. The Fifth-FYP document stated that "with a success ratio of 3:1 (in gas exploration), it will not
be a surprise if we experience a doubling or tripling of the existing reserve very shortly". Prepared in March 1998, this should have happened by now -some 27 months later’ Unless of course, Plan authorities put only a philosophic interpretation of the phrase "very shortly". Even If we Ignore this time reference due to misconceived enthusiasm, the moot question still remains by how much, and when, the protected increase in reserve shall take place!
It Is to be noted that the peak and average demand as estimated moved up by 55 per cent over a 5-year period. With a much more Intensive and extensive gas utilisation in power, fertiliser, domestic. Industrial and commercial sectors beyond 2002. the consumption rate annually could logically be more than 15-16 per cent. Keeping that in view and estimating our own internal consumption requirements of gas plus leaving a comfortable margin In reserve for this non - renewable source ol energy (only one to speak apart from some encouraging indications on probable coal deposits in the country), shall
we have enough surplus to make any significant export commitment at this stage? As a layman and as a concerned citizen. I. along with most of my compatriots, have the right to ask this question and the authorities concerned have the obligation to respond Io the same.
Last 2/3 years have shown a frenzied demand albeit in the shape of friendly advice from some of our important donors, the World Bank, and the neighbour. that we start export of gas — It will ease our balance of payments position, foreign private Investment will stream In ami so on and so forth. In a classical set up. this apparently non-motivated technical advice was soon followed by the International Oil Companies' (IOCs) demands "to allow them access to bigger gas market in India" arguing that the "Bangladesh's own gas market is not expanding fast enough to allow them to Invest more In exploring oil and gas." (quoted from The Dally Star report “USGS to train local experts to assess gas reserves ". 08 July 2000). The report goes on to add that “the country's proven gas reserve of
10 trillion cubic feet ( TCF) was too Inadequate to meet its own needs " A clear clarification to the query raised earlier In this article is. hence, all the more necessary and urgent in this crucial matter.
We may further enquire, as to a) how IOCs are demanding export facilities when they have not come up with a firm estimate of proven reserves that should ensure meeting the country's prime responsibility to her own citizens and thereafter. allow a significant commitment of a substantial proven surplus for exports: b) whether it would be possible for us to obtain participation in exploration from other, more sympathetic, less aggressively commercial, sources, and c) the reasons for our inability to keep the decision on export of gas on hold till Independent, non subjective studies and assessment are completed.
We also feel that those countries, whose obvious commercial interests have been expressed, should not be the ones who assess the gas reserve. One could in all certainty forecast here and now that their reports would not. to put it in the
mildest of expressions, be objective. On the basis of a rosy picture. we might be in a great hurry, for reasons anyone can guess, to start the process of a draw-down of our existing reserves. which as we earlier noted, on no account is considered adequate for even the short term requirements of our own. It is probable that we land up in a situation to buy back the finished product I e., power, across the border, at the monopolistic supplier's price for a captive market Nepal's experience In the trade, energy, water and other sectors need to be closely studied in our own interest. The energy consumption requirements in our neighbouring area In the 21 st century is so enormous that a small country like ours will be trampled all over to have that additional source of raw materials delivered as per their need.
Even if we are extremely careful In framing the right policy in preserving the country's own Interest, the possibility of being overwhelmed is very much there. And if we are not. the resultant political and economic scenario can very well be imagined! Our future generations shall in all probability be a hostage to an imposed poverty and dependence trap, with the water and gas resources disappearing fast across our borders.
The writer Is a retired Secretary to the Government and former Ambassador to Morocco, Nepal and Zimbabwe.