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Bangladesh Cabinet approves 4-year extension of special law for energy, power projects

Highlights

Bangladesh's Cabinet Monday, August 25, approved the four-year extension of a law giving the government sweeping authority to bypass existing legislation in the energy and power sectors, so that it can implement projects quickly, a senior energy and power ministry official told Platts Wednesday.

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The Cabinet, led by Prime Minister Sheikh Hasina, approved the extension of the 'Speedy Supply of Power and Energy (Special Provision) (Amendment) Act, 2010', extending it till October 11, 2018, said the official who declined to be named.

The law was first enacted in October 2010, and was extended for the first time by two years until October 11, 2014.

The four-year extension will be formally approved by Parliament when it is in session again, starting September 1, he said.


Under the law, all types of power and energy projects, including the import of natural gas, coal, LNG and petroleum products, as well as the extraction of mineral resources, can be implemented quickly -- without the usual tendering process.

Electricity generation, transmission and distribution projects are also covered under the Act.

The legislation states that any activity which comes under its purview, or any official or employee implementing such activities cannot be subject to any legal challenge.

The law allows parties interested in power and energy projects to enter into contracts through negotiations with a "special committee", Cabinet Secretary M Musharraf Hossain Bhuiyan said after the Cabinet meeting Monday, according to local media reports.

The committee comprises top government officials at the energy ministry, and officials from state-owned power end energy entities.

This lets the government speedily conclude contracts by putting out newspaper notices, online advertisements and carrying on negotiations through email, he said.

Under the special law, the government has already approved and implemented a number of power and energy projects, including setting up a couple of dozen oil-fired power plants, awarding Russian gas giant Gazprom a license to drill 10 onshore gas wells and awarding contracts for three major gas transmission pipeline projects, the ministry official told Platts.

The government also plans to award a final contract to build the country's first floating LNG terminal at Moheshkhali island in the Bay of Bengal to a US consortium of Excelerate and Astra Oil under the special law, Petrobangla Chairman Hussain Monsur said Wednesday.

The awarding of contracts for another dozen oil-fired power plants under the special law is in pipeline, an official with the power division in the Ministry of Power, Energy and Mineral Resources said Wednesday.

Local energy industry experts, however, expressed concern over the extension of the special law, saying it could encourage corruption and non-transparency in the energy and power sectors.

"I think the country's existing power and energy situation does not permit further extension of the special law," said Professor M. Tamim, who was special assistant to the country's Chief Adviser during the 2007-2008 caretaker government and looked into energy issues.

He said that the law, enacted in 2010, was initially necessary to improve the country's then nagging energy crisis urgently.

"Currently the country has stable power and energy supplies, compared to the past," he said.

Besides, the government, which is only in the first year of its second five-year term, has enough time to plan and implement projects over the next few years, he added.

BD Rahmatullah, the former Director General of Power Cell, a state-owned entity under the energy and power ministry, said the extension was a way for "money-making" by unscrupulous people, noting that corruption was possible due to the bypassing of the usual tendering process.

State Minister Nasrul Hamid at the energy and power ministry, however, told local media Tuesday that the extension was necessary to carry out major power and energy projects over the next four years.

Bangladesh has been facing an acute energy and power crisis since 2006, which has affected economic and industrial growth in the country.

Currently, electricity generation in the country hovers at around 6.5 GW/day compared with demand of over 7.5 GW/day, while gas supply is around 2.31 Bcf/day compared with demand of 3.0 Bcf/day.

--M Azizur Rahman, newsdesk@platts.com
--Edited by Deepa Vijiyasingam, deepa.vijiyasingam@platts.com