Bangladesh to raise coal lifting amid energy crisis
Bangladesh has decided to increase coal lifting in the coming years as the persisting energy crisis that has continued to plague life and business is unlikely to ease anytime soon.
The decision came as Japan, the world’s leading LNG importer, announced that long-term Liquefied Natural Gas contracts until 2026 have been sold out.
However, the decision to lift coal from newly-opened mines will take time to impact the country’s energy supply, as new coal mines need several years to be developed, officials said.
With only two long-term LNG supply contracts, Bangladesh saw dozens of its power plants go out of operation and production to halve at factories because of a gas shortage after being priced out of the LNG spot market.
‘We need energy. We have to survive,’ Nazmul Ahsan, chairman, Petrobangla, the government-owned national oil company, told New Age, after sharing their decision to lift coal from the Dighipara coal mine in Dinajpur.
‘We will opt for underground mining,’ he said, adding that coal lifting from the mine might take six years to start.
The Dighipara coal mine is expected to produce 3,500 tonnes of coal daily.
Energy and power state minister Nasrul Hamid said that coal could have minimised the energy crisis had they developed coal capacity earlier and green activists not opposed its expansion.
‘International energy prices might start coming down by the time we get coal from the new coal mine,’ he said.
Located in Dinajpur’s Nawabganj, the Dighipara coal mine is still considered shelved by the San Francisco-based Global Energy Monitor, a non-government organisation tracking fossil-fuel projects globally.
In 2020, a feasibility study found 70.60 crore tonnes of reserves in the coal mine.
Bangladesh currently operates one coal mine with an average daily production of 3,000 tonnes despite sitting on a proven and probable gas reserve of 12.26tcf.
Densely populated Bangladesh is strongly opposed to coal mining, particularly open-pit coal mining, for its potential economic, environmental, and health consequences.
Coal mining was not an option to meet Bangladesh’s energy demand until the latest energy crisis struck the country, especially after a 2006 protest against open-pit coal mining saw several people get killed at Phulbari, Dinajpur.
Still, coal is set to dominate Bangladesh’s energy mix through 2026 after about 4000MW worth of power plants relying on imported coal will come into operation in a month.
Rising coal prices cast doubt on increased coal capacity resolving Bangladesh’s energy crisis.
Coal currently accounts for only 10 per cent of Bangladesh’s primary energy demand, and its contribution is set to double in a year.
Bangladesh met 90 per cent of its annual coal demand of over 76.36 lakh tonnes in 2019–20 through imports, mainly from Indonesia.
Bangladesh’s proven coal reserve is some 313.9 crore tonnes, with roughly one million tonnes extracted underground annually, about 65 per cent of which is used for electricity generation while the rest goes to brick fields and other uses.
Natural gas meets 60 per cent of the primary energy needs.
With infrastructure primarily designed to use cheap domestic gas, Bangladesh sought to meet rising demand by importing LNG beginning in 2018 and diversifying its energy sources by increasing reliance on coal.
According to a November 8 analysis by BloombergNEF, a strategic research provider covering global commodity markets, economies such as Bangladesh and Pakistan cannot compete on price with Europe, and Europe’s LNG imports may increase by 60 per cent through 2026.
The analysis warned that power shortages, factory closures and social unrest in Pakistan and Bangladesh might extend into the next decade.
Given that Bangladesh plans to add 600 mmcfd from domestic sources by 2026, the country will still have a deficit of 1,000 mmcfd against a projected demand of 4,207 mmcfd.
Energy expert Mohammad Tamim is optimistic about the global energy crisis easing after 2026, with Russian energy finding its way to the Asian market in some way or another.
‘Still, this is just an assumption. Nobody knows the course the Russia-Ukraine war is going to take,’ he said, adding that a lot also depends on how the current dollar crisis turns out.
Studies have exposed how coal poisoning affects the environment, polluting water, air, soil, and eventually the food chain.
‘To think that fossil fuel use offers the only exit out of the current problem is sheer stupidity,’ said economist Anu Muhammad.
‘Coal mining expansion will have unimaginable impacts, further enhancing Bangladesh’s financial burden and health and environmental risks,’ he said.
Fossil fuel projects were never feasible and always marked by irregularities and corruption, benefiting only a small group of people, explained Anu Muhammad.
‘Expanding the fossil fuel footprint will be suicidal. Bangladesh should tap its gas resources and invest in renewable energy,’ he said.
Authorities said domestic gas also offers no immediate solution as gas fields take at least eight years to be developed.