Energy security: In the Context of Reserve Natural Gas of Bangladesh

Introduction

Energy Strategy is one of the challenging issues for Bangladesh. Energy Strategy is to be

seen in the light of the Government's overarching goal of poverty reduction, and to provide

energy to all in the country within a specific time, to meet the challenges of the PRSP, and to

make Bangladesh a growing nation. This paper attempts to highlight the problems now being

faced in the energy sector of the country in proving reliable energy for its overall

development. The various issues and options for framing an Energy Strategy are examined

and their benefits assessed.

Energy is a factor of the well being of the people and is a production factor of the commercial

and industrial sectors. As a result, energy is a prime mover of the country’s economic

development in the long and short term. In order to attain continuous and sustainable

economic development, it is essential that energy supplies be adequate and secure, at

reasonable prices, and that due consideration be given to maintain the country’s environment.

Bangladesh does not possess adequate and varied conventional sources of energy. The most

significant source of commercial energy in Bangladesh is natural gas. Other sources of

energy in the country are coal, oil and electricity. One of the greatest impediments to

development is the low availability of energy. The GOB should ensure maximum utilization

of natural gas and use it to generate electricity to boost development and in the agricultural

sector in an effort to have surplus in food grain production.

Developing the natural gas sector in Bangladesh will have positive economical and social

impacts as long as obstacles such as corruption and environmental pollution are minimized. It

is most urgent that the GOB decide how to develop and utilize our natural gas endowment

most efficiently in power generation to boost the overall economic development of

Bangladesh and in the agricultural sector to achieve self-sufficiency in food grain production.

The GOB should try to overcome the major impediments to growth which include inefficient

enterprises, inefficient use of natural gas and corruption. The GOB should also take

appropriate and stern measures to eradicate corruption in the energy sector. National interest

should get priority over personal or political gains.

Methodology

In this paper as research tool for data collecting and analyzing secondary literature review has

used. Due to the reality and lack of resources it was not possible to obtain for primary data

collection like taking interviews of the resource persons. As a matter of fact for preparing this

paper, lack of availability of relevant academic books and journals was also a great

impediment. Due to these limitations for collecting data and resource this paper as heavily

dependent on websites.

Natural Gas: Formation and Exploration of Natural Gas in Bangladesh

Natural Gas is a naturally occurring combustible mixture of hydrocarbon and non-

hydrocarbon gases found in porous geological formations beneath the earth’s surface. The

principal component is methane. It also contains ethane, propane, butane, and pentane.

Natural Gas is formed from fossils being subjected to compression under the surface of the

earth, at very high pressure over a long period of time. It is colorless, shapeless, and odorless

in its original form and it is combustible. The chemical reaction that takes place when

methane combines with oxygen, results in the emission of carbon dioxide, water and energy.

Natural gas is a more advantageous source of energy than gasoline or coal as it creates less

pollution and releases potentially less harmful byproducts when burnt. The GOB should

focus and monitor the exploration of natural gas for the best interests of the country.

The exploration of natural gas in Bangladesh is a direct outcome of oil exploration. People

had long suspected that oil might be abundant in this part of the world. As a result, in the

early 1900, the Burma Oil Company extended its exploration in to Bangladesh. The first well

ever to be drilled in Bengal was at Sitakund in 1914. It was a dry well (a dry well is any

exploratory or development well that does not find commercial quantity of gas). Later in

1923-33 Burma Oil drilled two wells at Patharia in Sylhet. One of those wells reportedly

flowed oil but its commercial viability could not be ascertained and the project was

abandoned. The World Wars and other factors marked the end of oil and gas explorations for

a long time in this part of Asia, then known as British India and later East Pakistan. Since the

first discovery of natural gas at Haripur in May 1955, exploration of oil and gas resources has

led to the drilling of 138 wells and discovery of 24 gas fields and one oil field. At present, 59

wells operating at an average volume of 1490 millions midday. Chatak gas field was the first

field in Bangladesh to begin production. In 1960 it began supplying gas to a cement factory

and the pulp and paper mill. Out of 22 gas fields, 12 fields are now in production. Shell Oil

Company, a British-Dutch joint company, discovered large gas reserves at Rashidpur (1960),

Titas (1962), Kailashtila (1962), Habiganj (1963) and Bakhrabad (1969). The discoveries of

these reserves put Bangladesh on the world map as a prospective gas region.

The decision to attract foreign oil companies and investors was made by 1974, two years after

the liberation of Bangladesh. The Government signed production sharing contracts (PSC)

with 6 reputed oil companies. The companies were Union Oil, Arco, Ashland of USA, Nippol

Oil of Japan and Ina Naptaplin of Yugoslavia. In the next three years nine exploration wells

were drilled. A small-size gas field discovery off-shore of Kutubdia was found but the

companies abandoned the project as they failed to find it commercially viable.

In 1988, the GOB formulated a new model Production Sharing Contract (PSC) to accelerate

natural gas exploration and the country was divided into 23 gas exploring blocks. The first

round bidding for petroleum exploration by International Oil Companies (IOC) in

Bangladesh was announced in September 1993. PSCs were signed for most of the 23 blocks

on offer on a first come first serve basis. Of the eight blocks then under contract two UK

companies Cairn and Shell were assigned to explore Blocks 15 and 16 in Chittagong. The US

companies Occidental Oil (Blocks 12, 13 and 14 in Sylhet),Rexwood Oakland (Blocks 17

and 18 in Cox’s Bazar) and United Meridian Corporation (Block 22 in the Chittagong Hill

Tracts) also contributed immensely to the history of gas production in Bangladesh. The

blocks are land divisions leased out by the government for oil/gas exploration and extractive

activities by multinational companies. After a company obtains the rights to explore a

prospect, it sends geologists and geophysicists to the assigned blocks of Bangladesh and tries

to locate gas deposits. They search for commercially exploitable volumes of natural gas

reservoirs to develop and produce. Once a potential natural gas deposit has been located by a

team of exploration geologists and geophysicists, it is up to a team of drilling experts to

actually dig down to where the natural gas is thought to exist. The drilling process is

expensive even though modern technology has improved. The decision to invest is a risky

one because an exploratory well might be unsuccessful or marginally viable. Drilling a well

is a highly mechanized process. Progress toward the payoff zone, the formation beneath the

surface where hydrocarbon materials exist, will proceed at varying rates depending on the

pressure of the formations where drilling is planned. It can take between seven and thirty

days to complete the drilling process alone. The experts have to drill carefully to avoid

blowouts, which is the uncontrolled flow of gas, oil or other fluids from a well, due to gas

leakage.

Obstacles to the Natural Gas Industry

In Bangladesh the natural gas extraction process has marked environmental, economical and

social effects. Blowouts and irresponsible dumping of waste from the explorative wells are

the main causes of environmental pollution, disruption of social life and economical losses.

Blowouts can have several serious negative impacts. The blowouts at the natural gas fields at

Magurchara in 1997 and at Tengratila in 2005 clearly show the environmental damage and

disruption of normal social life. The damage to the environment and economical losses

caused by the blowouts was due to irresponsible and inefficient management by Occidental

and NIKO. The GOB should concentrate more on minimizing the negative impacts on the

environment and the disruption of normal life due to inefficient management. A massive

blowout took place at Magurchara under Moulavibazar District on June 15, 1997, when

Occidental started drilling its first well. The blowout severely damaged the environmental,

economical and social life of Bangladesh. The main question coming rising from this blowout

is whether Bangladesh is entitled to claim compensation from the contractors for the damage.

The blaze caused by the blowout was as high as 91meters and damaged the surrounding 700-

acres of reserved forest, rich in flora and fauna, cropland and villages. Well Flow Dynamics

Company engaged in the relief well drilling admitted damage to tea plantations, surrounding

forests, roads and the main rail road track in the Northeast corner of Bangladesh. The

Investigation Committee formed by the GOB reported that negligence on the part of

Occidental was responsible for the disaster.

The blowout caused a serious imbalance in the ecosystems of the surrounding area by

destroying the natural forests. The soil of the region had been ruined by the explosion and it

not only lost its fertility but also became unsuitable for any heavy constructions. According to

some renowned soil scientists of Bangladesh, the land will be useless for the growth of plant

life for the next fifty years. Environmentalists say a massive loss of green life and extinction

of wildlife species in that region. Unocal suggested that the Ministry of Environment and

Forest, GOB, use internationally recognized experts to assess the environmental damage. The

GOB’s claim of 105 million US dollars as compensation for the environmental damage still

remains unsettled.

The Magurchara disaster also caused severe damage to habitats. The tribal group "khasi

Punji" became the worst victim of the disaster. Although the disaster left them homeless, no

effective measures were taken to rehabilitate the natives. Their suffering continues. The Niko

scandal is an example of how an incompetent company damages the ecological setting,

disrupts social life and incurs huge economical loss during exploration of natural gas.

Proposals by Niko Resources, a small Canadian company, was rejected on both technical and

financial grounds in 1997 by official experts, almost a decade later however, Niko entered in

the Bangladesh gas sector. Niko’s plan to enter the country’s energy sector in a joint venture

with BAPEX was blocked by protests from experts of Petrobangla and newspaper reports. So

the government of Sheikh Hasina did not approve the deal. But after the change in

government, BAPEX signed a Joint Venture Agreement (JVA) with Niko in 2003. (Khan)

The first blowout at Tengratila, which occurred in January 2005, left thousands of people

homeless. Toxic gas emission forced local residents to abandon their homes and live like

destitute in safe areas. The immense pressure underneath the surface caused tremors in the

surrounding areas. Niko did not have the technical expertise to extinguish the fire. The GOB

neither published the investigation committee’s report on the loss incurred, nor did it claim

compensation for the environmental damage caused by this blowout. Niko, however,

compensated the locals who were affected by fixing their water wells and paid them cash to

rebuild the houses.

After a long delay Niko started drilling a relief well at that site again and proved their lack of

skill with due to a more severe blowout on 24th June 2005. This second blowout triggered

wide spread protests from most conscious citizens as well as from the major political parties,

demanding cancellation of the deal with Niko. The GOB then justified that the relief well

must be drilled and cancellation of the deal will make it difficult to find another company to

finish the job.

The other factor contributing to environmental pollution and health hazard is the irresponsible

and inefficient handling of waste during the drilling process. When well-drilling begins, the

process uses “drilling mud” that may contain water, oil, heavy metals and toxic chemicals.

This mud, containing toxic levels of benzene, a known carcinogen, and lead, which can

impede mental development in children, is dumped by the workers into areas near drinking

wells. A second type of waste, brine called “produced water,” is dumped into nearby streams.

Produced water is considered dangerous primarily because it normally contains high levels of

salt that can kill flora and fauna.

Utilization of Natural Gas in Bangladesh

The GOB has the opportunity and necessity for using natural gas in various ways.

Natural gas can be either used as fuel or used as a raw material for producing electricity,

fertilizer or any other industrial goods. At present, power takes a major share of gas, and

fertilizer comes next. Industry takes third position. In domestic fuel use, only a small

percentage of people have access to the piped gas. The demand for gas is rapidly rising in the

country as it moves towards industrialization. It has been estimated by Petrobangla that over

80% is consumed by the power and fertilizer sectors while the remaining 20% is mainly

consumed by industry and households.

Although natural gas is used in many sectors here in Bangladesh, the GOB could target two

sectors, electricity and fertilizer, to increase efficiency and production. The country's annual

fertilizer production of more than two million tons and annual power generation of 3,500

MW (megawatts) would have been very difficult and expensive without natural gas. Both

sectors play an important role in the growth of different industries within small cities, urban

areas, and rural villages which in turn could provide the momentum needed for national

development.

Because of the fast population growth, the amount of per capita cultivable land is declining

very fast. In order to survive as a nation, and to thrive in the future, Bangladesh will have to

shift from an agricultural based economy to an industrial economy. Consequently, the power

generation will have to increase significantly to achieve that goal. Electrification of the whole

country should be taken as the top most priority.

Electricity, which is an essential requirement for economic and social development, plays an

important role in the development of the Bangladesh economy. It is a main part in the efforts

to reduce poverty. The prospect of using natural gas to generate electricity is looking bright

for Bangladesh.

The GOB has permitted the installation of power plants to meet the growing demand in the

power sector of Bangladesh. The cost of power production can be reduced if the power plants

use gas instead of oil. Natural gas burns cleaner than oil and causes less damage to the

environment. Jobs and development associated with such a mega-project are extras. The

amount of electricity production will have to increase significantly, should Bangladesh decide

to increase industrial activities and to bring all her citizens under a national electricity grid.

New England Power Company (NEPC), which has set up a power plant in Haripur near

Naraynganj, Dhaka, had estimated that the cost of power generation could be reduced by

almost 25% if it uses natural gas to generate power. However, there is a huge economic

involvement. A compressor worth 6.17 million USD is needed to convert the existing gas

pressure of 600 PSIG (per square inch gas) to 375 PSIG which is needed to operate the

Haripur plant smoothly. Although the conversion process is a matter of 3 months, the plant is

yet to receive gas due to inefficient management by the energy sector of the GOB.

The 400MW Combined Cycle gas-fired power station, built by the US-based Allied Energy

Systems Corporation, is now in operation at Meghnaghat in Bangladesh. Bangladesh Power

Development Board (BPDB) made a 22-year Power Purchase Agreement (PPA) with the new

owner of the plant, the British company CDC Globeleq. The deal secured the world’s lowest

rate for BPDB. The success of the project has prompted PDB to consider a second

constructing phase Meghnaghat Phase-2 to solve power shortage in the country to some

extent. PDB also plans to establish more plants to meet the country‘s demand in the power

sector by 2007. To attract Independent Power Producers (IPP), the Power Sector Reform

Policy approved by the GOB offered incentive packages. The IPP were offered exemption of

Tax and Value Added Tax (VAT) on imported capital machinery and equipment.

By the end of 2002, there were nine major power plants using natural gas to produce

electricity under PDB. Some Independent Power Producers (IPP) was also active in the

electric power generation. A 360-MW gas-fired combined-cycle plant at Haripur, which

began operation in October 2001, and a 450-MW gas-fired combined-cycle plant at

Meghnaghat, which began operation in November 2002 were among the first IPPs to operate

in Bangladesh.

In 1998, the GOB adopted a Small Power Generation Policy to encourage Development of

small local generation projects of up to 10-MW in capacity in remote areas. In 2003, the

Asian Development Bank (ADB) committed to financially help the rural electrification

program. All these projects aim to increase power generation and to reduce the country's

power shortage.

Ammonia and Urea Fertilizer

One of the best ways of utilizing natural gas is perhaps in the production of fertilizers. The

advanced production technology and the vast experience the country has in operating urea

fertilizer plants has accounted for approximately 22% usage of the natural gas now produced

in fertilizer production. Natural Gas Fertilizer Factory (NGFF), the first ammonia-urea

complex, used natural gas as fuel from the Sylhet gas Field in the early 1960’s. Bangladesh

has now seven ammonia-urea complexes with a total installed capacity of 2,895.700 tons (t)

of urea and 1, 886,700 t of ammonia per year. In 1972, the country had only two such

complexes. The seven urea complexes have a connected gas load of 8.18 million standard

cubic meters and the annual consumption of all these plants is approximately 2.55 billion

cubic meters.

The agriculture sector is the single largest contributor to income and employment generation

and a essential element in the country’s challenge to achieve self-sufficiency in food

production. The GOB and the private sector should work jointly to modernize the agricultural

sector. The fertilizer sector based on natural gas has drastically changed the social life of the

people and has ensured self-sufficiency in food grain production.

The Government has therefore given highest priority to this sector to enable the country to

meet these challenges and to make this sector commercially profitable. Since Bangladesh is

ideally located near India and China, the two largest urea consuming countries in the world,

together with the fact that the south east and far east Asian countries have a shortage of urea

and ammonia, Bangladesh has the potential to attract foreign investment in the fertilizer

sector. The continual use of nitrogen based chemical fertilizers (urea/ammonia) reduces the

fertility of the soil. This problem of soil depletion can be solved using organics compounds or

alternate fertilizers as potash or phosphate fertilizers.

Compressed Natural Gas (CNG)

The GOB has given emphasis to the use of environmental friendly fuel CNG in the transport

sector in an attempt to reduce the air pollution in Dhaka and other cities. The GOB has a plan

to convert vehicles used by government and semi-government office by the end of 2005. To

encourage the use of CNG in the transport sector, equipments imported for conversion of

vehicles, has been exempted from taxes. Local as well as foreign private resources are

encouraged to invest in all phases of the CNG industry.

The use of CNG as a transport fuel is beneficial to the country in many ways. First; toxic

emission from CNG run vehicles is lower than that of either gasoline or diesel-fueled

engines. Secondly, the country would save a lot of money that it would have otherwise spent

on importing oil. The people of Bangladesh also benefit from this low cost fuel. The cost of

driving a gasoline fueled vehicle is 5 times more than a CNG fueled engine over the same

distance.

Domestic Fuel Use

The use of firewood is increasing at an alarming rate because of the population boom,

resulting in ecological imbalance. 73.1% of the total energy consumption comes from

biomass fuel, for example manure and fire wood. The use of biomass has reduced the forest

cover in Bangladesh from 15.6% in 1973 to less than 9% at present. One of the adverse

affects of deforestation is an increase in flooding propensity.

Export

The GOB is in a dilemma, as exporting substantial amounts of gas will reduce the amount

available to domestic industry and possibly hinder the sustainability of future industrial

growth, making it vulnerable to international gas prices. On one hand, the GOB needs foreign

exchange for immediate investment in the energy sector. If new exploration and production

of natural gas is not ensured now, Bangladesh might have to import gas in the near future.

Lack of funding has brought Petrobangla to a stop and no recent exploration projects are in

effect. Since such exploration projects are costly, exporting natural gas to neighboring India

is a recommended solution. The major drawbacks in exporting natural gas are the proven

reserve, which is insufficient to meet the country’s mid-term domestic demand. At the same

time, the IOCs, Asian Development Bank, World Bank and other foreign aid donors are

exerting pressure on the GOB to export gas to neighboring India.

The IOCs are investing a major share of the country’s total foreign direct investment (FDIs)

in the energy sector. Petrobangla has signed a PSC with the IOCs to buy gas at cost recovery

price. Since Bangladesh has financial limitations, the GOB cannot pay the IOCs. As a result,

the pressure from the IOCs to export gas is gaining momentum. Although a provision in the

PSC allows gas export in liquid natural gas (LNG) form, the IOCs have now raised the issue

of exporting gas through pipelines to India. The U.S.’s Energy Information Administration

estimated Bangladesh’s net proven natural gas reserve at 15.3 trillion cubic feet (Tcf) and the

country’s probable reserve at 32.1 Tcf. The US government is exerting pressure on the GOB

to give concessions to US based oil companies to export natural gas from Bangladesh. The

IOC’s will not be interested in further exploration and are threatening to leave the country if

no concrete decision on the export issue is taken by the GOB soon. Bangladesh like most

underdeveloped countries is to a great extent dependant on foreign assistance and therefore

Bangladesh is not in a position to go against their interest. Chevron, a US based corporation,

involved in natural gas production in Bangladesh, has already proposed that a pipeline be

constructed to facilitate the export of natural gas to India.

On the other hand, the majority of the people in Bangladesh consider exporting gas to be

against the interest of the people and the nation. The general public and opposition political

parties have threatened to obstruct the construction of the proposed pipeline. The GOB

should bear in mind that the per capita energy consumption of Bangladesh is one of the

lowest in the world.

There have been lots of talks in the press in the recent past about the possibility of gas export

from Bangladesh to India. Apparently, some foreign companies and donor organizations are

keen on the idea of exporting gas from Bangladesh. Although the domestic use of natural gas

is preferred to by the majority, some politicians and bureaucrats are also in favor of exporting

gas to neighboring India without thinking about the gas based industries and power plants

which will be bound to shut down should gas reserves exhaust. As exact measuring of the

existing gas reserve is not possible right now, it is not wise to export for the sake of earning

only. The major opposition political party the Awami League (AL) officially is committed to

considering natural gas exports only if Bangladesh's proven reserves will cover 50 years of

domestic demand. The GOB has not yet taken any decision in favor of gas export. It cannot

afford to irritate the public feelings now that the general elections are impending. Most

people expect no decision on the export issue of natural gas before the next general elections

in 2006.

Recommendations

Investments in the energy sector often have long time horizons. Infrastructure and production

installations have long lifetimes, and it takes time to introduce new technologies. It is,

therefore, necessary to think in the long term when setting energy policies. In the long term,

there would be four major challenges:

(a) Security of supply. Rapidly rising energy consumption around the world puts greater

pressure on global resources. Most of oil imported by Bangladesh would be from

politically unstable regions.

(b) Growth and economic development. Globalization has lead to increased international

competition, and Bangladesh would face new commercial challenges.

(c) Government’s vision of the sector. It is the intent of the government to provide electricity

to all by 2020. Export of gas would be considered only if there would be surplus after

meeting the country’s need for fifty years.

(d) Use of alternative and renewable energy resources. Development of alternative energy

resources such as coal is of prime importance, and for ensuring energy security. A

Renewable Energy Program would have the mission of fulfilling basic electricity

requirements in the rural areas by supplementing the government’s vision of electrifying

the whole of Bangladesh by 2020. New technologies are reducing the costs and increasing

the possibilities of renewable energy sources. The Government would have to meet these

challenges with an energy strategy, which ensures a balance between security of supply,

respect for the environment and economic growth in the challenging world. The energy

strategy should be seen in the light of the government's overall strategy to achieve the

overarching goal of poverty reduction, and bringing poverty down by 50 percent by the

year 2015.

The long-term energy strategy is to meet demand at least cost to the economy through a

competitive energy industry - with a minimum of government intervention. But there is no

“perfect” model, so each country has to adopt its own approach. However, even in countries

that have gone ahead with adopting their energy strategy, modifications are still being

introduced in light of experience. This is due to a sharper appreciation of the segments of the

industry that can be competitive remaining natural monopolies.

It is necessary to adopt a pragmatic strategy

• recognizing that “natural monopolies” could be rendered competitive;

• appreciating the fact that state owned utilities are poor managers of commercial businesses,

resulting in inefficient operations;

• acknowledging that national development budget cannot accommodate financing all the

investment requirements of the energy sector and that alternative funding has to mobilized;

• recognizing that use of less energy more efficiently, programs to improve performance and

shift consumption from peak periods are usually a good investment for both the consumer

and the producer. They also benefit the environment;

• accepting the fact that donor support for large energy projects is shrinking; and

• raising funds through privatization.

In fulfillment of covenants of multilateral donor agencies, the government started taking

reform initiatives in the energy sector, but, again, without a strategy. Some measures have

already been taken to address the issues of the energy sector. A Hydrocarbon Unit has been

set up at Energy & Mineral Resources Division, and Power Cell has been established under

the Power Division, both to facilitate the reform process. Further, an Energy Regulatory

Commission (ERC) Act has since been passed, and a Commission has been set up, though

not fully, and it is still not operative in the real sense of the term. Thus the sector is in a

transition phase. However, there is no single approach to reform – in Bangladesh case, a

strategy has to be designed taking into account the socio-political environment, the

immediate sector constraints, as well as the macro-economic realities. Important measures

that need to be taken on a priority basis for the energy sector would be

• adoption of a sector strategy for ensuring long term national energy security;

• separation of policy formulation from operations and regulation;

• adoption of transparent rules for network operations and dispatch;

• adoption of a short-term, medium-term and long-term policy framework and measures for

making reliable, adequate and reasonably priced energy available to all;

• adoption of rules for risk sharing by public and private sector operators; and

• making the Energy Regulatory Commission fully active to ensure level playing field for

public and private sector operators, and to effectively deal with legitimate consumer issues.

It would be in fitness of things if a high level steering committee with Power Cell and

Hydrocarbon Unit would be created with adequate powers to take the lead to address issues

and options of the sector, and advise the ministry on policy matters to develop an Energy

Strategy. The Energy Strategy would be like a roadmap of major highways to give the

direction to the most significant places. It would show a clear picture of the landscape for the

government to make sure that the country has the best energy development plan designed to

be realistic and flexible with respect to future events and time frames for achieving economic

and social benefits. The success of the steering committee would, however, lie in the

commitment to adopt a strategy at the highest political level.

Concluding Remarks

Bangladesh ranks as one of the most underdeveloped overpopulated and corrupt nations in

the world. Although the country’s development is hindered by frequent natural disasters,

inefficient management, unemployment, inefficient use of energy resources, power supplies,

political infighting and corruption, Bangladesh has made significant progress in most sectors

in recent years. The World Bank considers poor governance and weak public institutions as

the major drawbacks to development in Bangladesh. The natural gas sector in Bangladesh

lacks good governance, private sector participation and effective guidelines. An improved gas

sector will boost up the economic development of Bangladesh.

The optimal domestic utilization of natural gas in Bangladesh in diversified productive

purposes will assist to a great extent the economic development of Bangladesh. The GOB

should ensure the most efficient usage of this invaluable natural resource and consider

exporting it as a last option.

The GOB should consider allocating more funds to local oil companies and encourage

exploration and production from newly discovered fields. The country could benefit in many

ways if it could efficiently utilize its natural gas resource in the power and fertilizer sectors.

Both these sectors play an important role in the overall economic development of this

poverty-stricken country. Since use of gas to generate power has multiplier effect, the return

from gas based electricity cannot be measured only by estimating the cost of installing power

plants and return from the cash revenue out of it. It should include the many benefits it

creates by developing situations for industrialization, employment, low cost irrigation and

low cost business as well as low-cost household gas for cooking and water heating.

Without a firm commitment to improve governance and rule of law, the growth of the private

sector and foreign investment will continue to be seriously constrained, and there will be little

hope of achieving poverty reduction goals. The GOB should focus on institutional reforms to

promote private investment for the exploration of natural gas, improve the transparency,

efficiency and consistency of government corporations, ministries and agencies. The

challenge in the future is to make optimum use of its natural and human resources to build

lasting rural and urban prosperity.

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