Bangladesh Sinks in Crisis Acting on Japan’s Fossil-fuel-based Master Plans [Op-Ed]

Over the last one and a half decades, influential global players invested heavily in Bangladesh, particularly in the power and energy sector, supporting an almost seven-fold fossil fuel expansion promising sustained economic growth. The promise, however, was never fulfilled. At the same time, the investments contributed to establishing a power and energy system that pushed the South Asian nation into a myriad of crises, including the worst inflation in decades. Of all the global players who put Bangladesh into its current political, social and economic turmoil, one name is worth mentioning: Japan. 

Power and Energy Sector’s Predatory Expenses 

The average per unit power production cost during the last fiscal year was 330% higher than in 2009, while the LNG import increased the per unit gas cost by more than 400%. The power sector loss increased by about 1,300% over the same period. 

While power and energy sector loss inflated, largely because of growing overcapacity and capacity payment, energy imports drained the foreign currency reserve, which about halved over the last several years. It all happened within the protection of an indemnity law. 

The consequence of energy imports is well reflected in gas prices. Bangladesh’s consumers paid Tk 22.87 for purchasing a unit of gas during the last fiscal year, though about 70% of the gas was produced domestically, spending a maximum of Tk 4.5 per unit. The cost of meeting the remaining 30% of the demand through LNG import increased the overall gas price by fivefold. 

Bangladesh’s outstanding bill to the LNG importers and the power producers stood at Tk 1,787 crore and over Tk 44,000 crore, respectively, early this fiscal year. 

Bangladesh has spent Tk 1.73 lakh crore on importing LNG in the last seven years. In the 14 years since 2009, Bangladesh has paid Tk 1.04 lakh crore in capacity payments.

All these figures made no sense considering Bangladesh’s current energy security status which matches that of some conflict-torn African countries. 

Scores of power plants are now out of operation due to the energy crisis. Power cuts persisted through summer and winter, CNG-filling stations operate partially, and industrialists are running business temporarily at reduced capacity. 

How Japan Influenced It 

Japan was the first among the Organisation for Economic Cooperation and Development countries to recognise Bangladesh’s independence in 1972. Over the decades, Japan won Bangladesh’s trust by investing in rural, infrastructure, and power sectors, often with loans offering debt cancellation programs. Japan even provided Bangladesh with quota-free access to its market and gave emergency support, such as the one given during the COVID-19 outbreak.

“Japan is Bangladesh’s largest bilateral development partner who over the years invested in strategic areas such as the power and energy sector,” said Khondaker Golam Moazzem, the research director at the Center for Policy Dialogue, a private think-tank.

Japan provided money and technical support in formulating Bangladesh’s last four power sector master plans since 2005. Each plan invariably locked Bangladesh into fossil fuels, mainly gas and coal, while undermining renewable energy potential.

“Power sector master plans required taking steps that were not consistent with reality and opposed Bangladesh’s interest and global climate commitments,” said Moazzem. 

The power sector master plan, formulated in 2005, covered the period until 2025. At the time of the master plan’s formulation, the installed power generation capacity was about 4,000MW, with gas accounting for 85% of the capacity, imported oil accounting for 10% of the capacity and hydro for 5%. The master plan saw the future of energy security in domestic gas and coal expansions.  

The 2010 power sector master plan is concerned with ensuring a power supply through 2030, depending on imports of 50% of primary energy. Coal is especially recommended for what the plan said about the fuel’s price stability. Clean coal technology was described in the plan as a proven means to reduce carbon emissions. The plan accommodated 80% of fossil fuel in the power generation energy mix by promoting a rapid increase in reserve margin—the plan emphasised increasing energy prices.

The 2016 power sector master plan was formulated for up to 2041. The plan painted a grim picture of renewable energy potential based on the misleading assumption of land scarcity. The plan recommended shifting dependence on imported energies. The plan targets setting up 60,000MW by 2041, 70% of which will be generated from gas and coal.

The latest 2023 plan, the Integrated Energy and Power Master Plan, is valid for up to 2050.  The IEPMP recommended growing power capacity in 2050 to 90,000MW, 60% of which is generated by fossil fuels. In one of its three scenarios, the plan said renewable energy will account for 9% and 12% of the power generation energy mix in 2041 and 2050, respectively, undermining the Mujib Climate Prosperity Plan objective of achieving 40% renewable energy by 2041 and 100% by 2050. The plan called gas the friendliest fossil fuel and shifted focus from renewable energy to clean energy by introducing ammonia and hydrogen co-firing in thermal power plants and carbon capture and storage technology, though regarding them costlier than renewable energies. 

The net-zero goals were delayed until 2070.

Independent reports revealed Japan’s dominance in the global fossil fuel business. Between 2020 and 2022 Japan was the world’s largest provider of international public finance for gas. Japan also accounted for 50% of global international public finance for LNG export capacity. 

A report revealed in March that Japan’s LNG buyers, who are among the world’s largest players, are facing an oversupply problem and are looking for places to dump fossil fuels.

Compromised Goals

Bangladesh’s per capita carbon emission doubled to 0.6 tonnes in 2022 from 0.3t in 2009. In 2022, Bangladesh emitted the highest carbon ever, 102.10 million tons. 

In its first NDC in 2021, Bangladesh, one of the worst victims of climate change, targeted to reduce carbon dioxide by 89.47 Mt conditionally and 27.56 Mt unconditionally. 

After enduring the worst-ever heat wave between March and April, Bangladesh recorded nine flash floods over the last five months.

“The beginning of the destruction of Bangladesh is the beginning of the end of the world as well due to climate change impacts,” said Sharif Jamil, coordinator of Waterkeepers Bangladesh.

“The world cannot be saved if countries like Japan are not transparent and honest in their actions,” he said.

Energy experts demand immediate revision of the IEPMP, citing six reasons. The revision is required to relieve Bangladesh of its mounting burden. If the current IEPMP is implemented, Bangladesh will have 100% excessive electricity and 37% excessive energy supply by 2041. 

‘The IEPMP accommodates in its energy mix 40% clean energy using advanced technology not commercially viable for Bangladesh,’ said Moazzem. 

They said the IEPMP also promotes coal and LNG use while undermining domestic gas potentials, urging that policy documents such as the IEPMP be drafted with local experts. 

‘The revision is needed to harmonise the IEPMP with the Mujib Climate Prosperity Plan to achieve the goal of 40% renewable energy in 2014,’ said Moazzem.

Emran Hossain  is a journalist based in Dhaka, Bangladesh, with twenty years of experience reporting on issues related to human rights, the environment, energy sector and ethnic and religious minorities. He was conferred the 2013 Daniel Peral Fellowship for promoting mutual respect and understanding among diverse cultures through journalism.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Energy Tracker Asia.