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Last Updated: Tuesday, 19 September 2006, 09:45 GMT 10:45 UK
Bangladesh faces energy dilemma
By Afsan Chowdhury, Dhaka

Bangladesh gasworks
Bangladesh needs more energy for its growing population
This year has seen large-scale and often violent demonstrations in different parts of Bangladesh over the thorny issue of power and energy supply.

Across the country, the picture appears to be the same.

At Kansat, a village in northern Bangladesh, hundreds of demonstrators agitating over power shortages fought pitched battles with the police. Several people were killed in the violence.

In Shonir Akhra, a suburb of the capital Dhaka, thousands took to the streets, fought law enforcers and attacked the local MP to demand improved electricity and water supplies.

Livelihoods affected

In Phulbari, a small town in northern Bangladesh, police fired on protesters worried that that an open pit coal project would eat up their land and destroy their homes and livelihood.

At least five people were killed.

Protesters clash with police in Dhaka
Many people were opposed to the Phulbari project

Property belonging to Asia Energy - the London based company operating the project - was torched and the authorities have now indicated they will not allow the project to go ahead.

But over this and other energy questions, the government faces a dilemma.

The country has acute energy shortages, with hardly any office or factory not being affected by power cuts, sometimes lasting several hours.

The benefits of more energy are obvious: offices with air conditioning, homes with lights for children, and farms with irrigation pumps.

But on the other hand, open pit coal projects - and other forms of energy development - are not environmentally friendly. They eat up scarce land resources and destroy homes.

It is by no means certain that the authorities will keep their promise not to go ahead with the Phulbari project, a promise made in the face of large-scale agitation.

Choking bureaucracy

That is because there will not be enough energy for power generation to go around unless more resources are made available.

About a decade ago, Bangladesh was supposed to be awash in energy - with its own supplies of natural gas - and attracted a large number of foreign investors.

People standing against anti-mine graffiti in Phulbari in Bangladesh
Graffiti in the town of Phulbari expressed opposition to the mine

But for various reasons that did not result in a power surge. Many reasons are cited for this, including choking bureaucracy, corruption, dirty deals and misinformation.

The experiences earlier this year of the Indian multinational company, Tata Steel, seemed to exemplify many of these problems.

The company proposed the construction of $2bn steel plant, which would have been Bangladesh's largest ever foreign investment. But ongoing haggling over the price for gas supply became the chief stumbling block.

In the end nobody in the government wanted to give the go-ahead to so controversial an issue - such as the sale of gas to a foreign company - in a bitter election year.

Pipeline explosion

All this does not add to the image the government would like to portray of Bangladesh being a reliable foreign investment destination.

While the government seems almost paranoid about any kind of energy deal, critics say the companies themselves do not come out with flying colours either - especially when it comes to good management or transparency.

The American company, Occidental, had a major pipeline explosion in 1997, and even now critics say the matter of compensation for environmental damage has not been fully resolved.

Matters have been made more confusing by the fact that Occidental pulled out of Bangladesh several years ago, leaving the wrangling over compensation to be dealt with by Unocal, which took over their interests.

Woman gathering hay in Phulbari - Bangladesh
Villagers have rioted because energy is diverted to towns

There were two incidents last year at facilities run by the Canadian company, Niko Resources. There is confusion over what is happening about related compensation claims.

A multi-million dollar power plant set up by the Chinese recently shut down causing huge losses and national supply shortages.

Exactly what energy reserves Bangladesh has seems a question that is hard to answer.

Some analysts say Bangladesh has enough energy reserves to last 50 years, others say they will have dried up within 20 years. Officials say gas and coal supplies will last for 30 years if they are properly exploited.


Given this confusion, no decision will be popular. But everyone knows that energy without the raw material of power is useless. Who will marry the two?

Bangladeshi boy taking grass to market in Dhaka
Bangladesh faces equally strong demand for land and energy

The pressure group, the Oil and Gas Protection Committee (OGPC) - run by an alliance of leftists and greens - is resisting all the major proposed energy deals, arguing that they are sell-outs.

The OGPC's message is popular, but the group is better known for its protests than its concrete solutions to Bangladesh's energy problems.

Bangladesh seems to be learning the hard way that energy is not just about selling, investing, and consuming but is also about people's livelihoods and environmental protection.

It is a difficult balancing act, one which so far the country does not seem capable of performing.

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