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GAS EXPLORATION AND ROLE OF IOCs

Bad deals make Bangladesh vulnerable

Anu Muhammad
THE government of Bangladesh seems determined to carry out the big projects and stick to the decisions that were criticised and opposed by a significant number of people from different sections of the society, including independent experts. The government is not only ignoring expert opinion and popular protest against NTPC-India sponsored Rampal coal-based power plant, but also adding another power plant proposed by Bangladesh business group Orion closer to Sundarbans, a world heritage site. Showing complete indifference to the issues of safety, security and environment the government is going ahead with Rooppur nuclear power plant by Russian company, with their experts and loans. By promoting oilbased rental and quick rental power plants the government created huge fiscal burden and public debts and caused 6 times increase in power tariff.
Instead of fixing irregularities and corruption, the government is expanding the authority of local and foreign companies to control energy and power sector, causing more drainage of public money and vulnerability of the country.
The people behind bad deals continue to look for new areas. On May 8, a nine-member delegation of the Foreign Investors' Chamber of Commerce & Industry (FICCI) led by Geoffrey Strong president of Chevron Bangladesh, met the state minister for power and energy and made some demands, including a hike in the tariff for offshore oil and gas exploration under the model production sharing contract (PSC) and also sought permission for exploration in the onshore blocks.
In fact, major resource-rich blocks have already been leased out to IOCs. It seems that the government is now trying to find a rationale for giving more onshore blocks to IOCs when Bapex has proved its ability to perform complicated works including 3D seismic survey, and when Chevron has expressed interest in hiring Bapex for exploration work. Why is the government agreeing to the wish list of Chevron and other IOCs, who have a record of deception and are responsible for public resource drainage?
It is true that Chevron is now supplying nearly 55% of total gas produced in the country. This information is enough for one to believe that the US company is making huge contribution to the Bangladesh economy and it would be impossible for the country to survive without it. It has always been argued that, since Bangladesh does not have the capability and capital, companies like Chevron would help the country to develop. But the reality is the opposite.
Chevron is now controlling major part of gas supply of the country not because of lack of capability of national agencies, but, on the contrary, national agencies were crippled and kept without funds, and opportunities to expand were squeezed to rationalise entry and expansion of the IOCs in the sector. Achieving capability needs comprehensive planning, allocation of necessary funds for research and development, education and training to have the necessary human resource. Policy prescription has always been the opposite.
Following the standard lobbying practices of the World Bank et al for promoting global capital, Bangladesh began signing PSCs for gas blocks since 1993-4. Gas- rich blocks in the eastern side were awarded for IOCs. Facts and figures show that not only was there no reduction of public expenditure, as claimed by the World Bank, privatisation of energy sector increased public money drainage significantly. Moreover, Magurchara and Tengratila blowouts proved that the energy resources in the hands of profit hungry companies are totally insecure.
Chevron's blocks were initially allotted to Occidental, another US oil company. There was a huge blowout on June 14,1997, in one of the Occidental gas fields in Magurchara. After a lot of dillydallying, the inquiry committee finally published its report, where it was recognised that nearly 250 billion eft gas was destroyed along with environmental and other damages. The amount of gas destroyed in the blowout equals that used to generate power in the last 18 months. Occidental left Bangladesh two years after the blowout after selling its business to Unocal, another US company, and without settling the compensation issue. After taking over, Unocal started pushing for gas export from Bangladesh to India.
Along with US embassy and the World Bank office, a group of local ministers, bureaucrats and Unocal started a synchronised campaign to export gas from Bibyana, the largest gas supplier now. They failed because of national resistance - from academic challenge to public protest. Otherwise, Bangladesh would have faced a bigger crisis today. After this failure, Unocal sold its business to Chevron, which is supplying gas at 10 times the price than national agencies. The compensation money has still not been realised. The cost of the lost gas resources is nearly $2.5 billion at current value, which must be realised from Chevron.
Chevron has done more to be made accountable. One study by Dr. Tanzim Khan revealed the unholy
nexus of environmental project of USAID and environment destructive activities of Chevron. The seismic survey done by Chevron in the Lawachhara National Park, including the detonation of explosives, was conducted in violation of Article 23 (3) of the Wild Life Preservation Act 1974 (Amended) of Bangladesh. The role of Nishorgo Support Project of USAID raised questions whether their aim was 'forest conservation' or 'energy procurement' in Bangladesh?
How could these things happen for decades when a government is supposed to look after national interest? Here, experiences of people like Han Cox or John Perkins become relevant, who confessed their crime as corporate lobbyist or 'economic hit man.' The work of people like them was to buy policy makers, consultants, media and business leaders with appropriate prices in order to ensure selling of mega projects. According to Perkins' definition, “economic hit men (EHM) are highly paid professionals who cheat countries around the globe out of trillions of dollars. They funnel money from the World Bank, the US Agency for International Development (USAID), and other foreign 'aid' organisations into the coffers of huge corporations and the pockets of a few wealthy families who control the planet's natural resources. Their tools include fraudulent financial reports, rigged elections, payoffs, extortion, sex, and murder. They play a game as old as empire, but one that has taken on new and terrifying dimensions during this time of globalisation." (John Perkins, Confessions of an Economic Hit Man)
This explains why countries like Bangladesh are pushed to more expensive, more unreliable paths when they have options to have more secure and dignified development.
Therefore, 'resource-curse' theory is relevant for analysing Bangladesh's case. Studies on different countries clearly show that corruption and wrong policies may turn resources into a curse for the people. It is evident that militarisation, war, violence, political instability and conflicts have been closely linked to the corporate hunger for energy resources. In that, corruption, poverty, inequality, and repression go hand in hand with exploitation of natural resources.
Bad deals, some of which have been discussed, indicate rising corruption and increasing influence of corporate lobbyists. These are increasing the risk of long-term vulnerability of Bangladesh.
The writer is Professor of Economics,
Jahangimagar University. E-mail: anu@juniv.edu