demand of the emerging tiger has appeared as a big challenge for the developing economy of Bangladesh. Keeping continuity in pro- viding dependable energy at affordable price is the major test for survival in the competitive market due to free global access, which is the biggest problem for a resource constraint country like Bangladesh and this has influenced & slowed down the development of the country. Indigenous natural gas is the main pillar of commercial energy of Bangladesh and its remaining recover- able reserve is inadequate. If signifi- cantly large proven reserve is not added to this immediately then it will not be possible to supply gas as per demand by the existing reserve onward from 2012. Alternative fuel supply will take time, require high investment and the price of electricity produced with these will be several times higher than the prevailing rate. Secondly, any option other than local coal is fraught with import dependency and unreliable avail- ability. Therefore, to be self-sufficient, the best way will be the elec- tricity generation sys- tem based on indige- nous fuel & local resources than the same based on import dependent fuel. Generating electricity from eight million tons of rice husk available from 40 million tons of rice produced annually in the country may be a realistic step towards the golden dream for solution of electricity crisis. Instead of unidi- rectional utilization of this husk for electricity generation, if multiple benefits as well as economic elements like Silica, There is no doubt; if the related project is con- sidered as Green Project under CDM then cumulative results will make the project commercially profitable. So, instead of ignoring the rice husk, let us take steps to keep the pace of economy of the country by harnessing financial benefits from this gold mine for the bet- terment of people. Rice husk is consid- ered to be an environmentally friendly fuel because it can mitigate CO2, SOx and NOx emissions when compared with coal. Background Database with Historical Rice Production Trend: Technology with time has improved and progressed so much so that it has reduced the labour, produced more, increased quality & its conservation status and that has lead towards ensur- ing food security. This is equally true for Bangladesh also. In every sphere the technology is becoming dynamic & lively and needs more application, investment and commitment. Our pop- ulation is increasing and conversely the productive acreage is decreasing but still due to the innovative and tireless efforts of the farmers and agriculturists we are more or less at par with our demand. But food production will pose a serious challenge in the coming days because of the rapid depletion of the productive land & water though rice is the staple food for us and feed nearly half of the world population. In the past three decades the steadily increased rice production reduced the food short- age. If the past patterns continue, area, production, yield, and pesticides of coarse rice for the World, Asia (includ- ing Bangladesh), America, Europe, Africa and Oceania would increase at constant annual growth rates. Description of the Project & its Multi Dimensional Economic Output Rice harvested from the paddy fields consists of paddy rice and rice straw. During the threshing operation, the straw is separated from the paddy rice. Paddy rice is sent to the rice mills where the rice is first parboiled, then dried & sent to the milling machines to produce rough and polished rice, rice husk & rice bran. From the rice husk, heat energy, ash & greenhouse gas emit when the husk is burnt in the power plant. The heat energy is used to generate steam to run the steam turbines, which in turn run the generators that will produce electricity. Rice husk ash will be Electricity from Rise Husk Engr. Emdadul Haque 22 ARTI CLE processed into high-quality ash for the cement industry, steel forging mills and of other specialized industry. The demand for high-quali- ty, rice husk-derived silica for the specialized industry will increase substantially in the years to come as new developments in the special industries have discovered that rice husk ash is an excellent source of raw material for the manufac- ture of high-value products. Rice bran is used as raw material for the manufac- ture of high-quality, exportable & local rice bran cooking oil for health-con- scious people, pellets for poultry, fish and other ani- mal feeds & special pellets for power plant fuel use. In summary, the following is a color-coded flow chart of the component-wise description as mentioned above: 1. Rice Harvest From Paddy Fields -> Paddy Rice + Rice Straw 2. Rice Paddy -> Coarse / Polished Rice + Rice Husk + Rice Bran 3. Rice Husk -> Electricity + Rice Ash + Greenhouse Gases 4. Rice Ash -> Cement Manufacture Additive + Steel Forging Mills + Specialized Industry Raw Materials 5. Rice Bran -> Cooking Oil + Poultry Feed + Fuel Pellets Project Financing Modality Obtaining finance for biomass and biogas projects was a major problem until 2000. But today, the situation is completely different. There are so many equity funds, investors, banks, financial institu- tions and venture funds available in the market, looking for good projects to finance. CDM is also one of the major reasons for this sudden change. Several compa- nies and big corporations are interested for the green image. Today, biomass and biogas projects offer decent return on investments, especially with the CDM revenue. These investors are mainly looking for credible, trust- worthy project owners who are fair with their dealings. They also prefer to join hands where project devel- opment is done in a profes- sional way. Some investors also join hands from the early stage itself bearing the cost of initial assessment and feasibility study. Equity investors expect higher rate of return than the lenders. As a start, project owners can conduct a quality feasi- bility study (done by a neu- tral party) and then try to join hands with equity investors to take the projects to the next stages. It is better to look at the project in an open minded way, creating trust between parties, to maximize the benefit so that fair sharing agreements can be reached. Any break in partner- ship in the middle of discussion is often costly for the investors, so they normal- ly follow cautious approach in select- ing the projects to invest. Normally financing can be obtained from commercial banks, multilateral financing institutions, develop- ment financing institu- tions and export credit agencies. Generally, it is easy to get corporate loans from the banks against acceptable col- lateral. Though it is easy, project owners can take extra care to check the projects thor- oughly, conducting necessary due dili- gence, as banks may not give adequate attention, as their risk is already covered by the security given by the Oryza Maps and Statistics (Aug 27, 2004) Statistics shows that Bangladesh produces on an average 40 Million tons of rice yearly and that in turn will give 8 Million tons of rice husk. If one forth of it is used to generate electricity that can produce about 100-200 MW electricity. 23 company. In Southeast Asia and India there is a growing trend for p r o j e c t f i nanci ng. Compar ed to corporate f i nanci ng, p r o j e c t financing is a bit difficult to get. But, the projects are general- ly of low risk, as banks will also ensure that all security arrangements are in place by conducting proper due diligence, before granting the loan. Lenders normally expect information such as, general & legal description of borrower and principal partners, description of the business concept, description of products, customers, competitors, suppliers, corporate man- agement, detailed technical analysis, operation, raw materials, consumption, output levels, financial data including operating costs, projected cash flows, working capital projections, financial statements, financing plan, securities and environmental aspects. Export Credit Agencies provide insur- ance (political, country risk and com- mercial risk) or guarantee. The politi- cal, country risk includes natural disas- ters, war like conditions or legislative measures implemented after the con- clusion of the export agreement. Normal coverage of risk is about 95% but in some special cases 100% of the risk is also covered. Commercial risk includes insolvency and protracted default. About 85-90% of the risk is covered normally but in some special cases, it can go up to 100% coverage. In Bangladesh scenario, rice husk power plants can be financed either by PPP, private or 100% GOB financing. Possible Location of the Project Theoretically and ideally, the rice husk power plants should be constructed and installed in the same locality where abundant supply of rice husks from rice mills that can be procured within an acceptable distance to avoid costly transportation expenses when purchas- ing the said raw materials. This trans- port cost has a huge impact on the unit cost of electricity produced and sold. Major rice-producing areas such as cer- tain districts in Rajshahi, Rangpur, Khulna, Sylhet, Dhaka & Chittagong divisions would be the most suitable locations for the rice husk power plants. Plant generating capacities will be based on the amount of rice husk avail- able in those particular locations. Those capable of producing large amounts of rice husk will be able to generate more electricity and more rice husk ash. Minimum rice husk commercial power plant unit for continuous supply to the overhead electricity transmission & dis- tribution grid may be in the range of 3 5 Megawatts per unit. Each power plant location may have as much as 2 5 units and in a cluster system cumula- tively will generate up to 100 200 Megawatts. Initially it will be wise to start with a small pilot project plant to see its finan- cial, technical, environmental and other impact (positive & negative). Based on the experience of this pilot project plant b r o a d e n e x t e n s i v e program can be under taken. Candidate for CDM Rice husk to power is not a new tech- n o l o g y , a l t h o u g h rice husk is a difficult biomass fuel c ompa r e d with wood and bagasse. A power plant in Thailand is in continuous operation for the past 26 years. In Southeast Asia, the growth in rice husk power plant projects started in mid 90's. Two rice husk power projects implemented in Thailand changed the whole outlook of industry. Project developers in Southeast Asia gained confidence by visiting these projects. Today, there are several projects under various stages of development and implementation. From the technological perspective, for the last 10 years, good improvements have been achieved and today the plants are fully automated. These days, for well designed plants the efficiency of the boiler and the overall efficiency of the power plant are very good. From the commercial angle, there was a considerable reduction in the total investment cost. It is mainly due to the competition of about 10 boiler suppli- ers around the world, who have mas- tered the technology. Using the CDM revenue, in most of the cases, it is worth going in for rice husk power generation, as the project IRR is attractive. However, you need to have a good control over long term supply of rice husk. In some project situations, the projects are viable even without CDM. The most commonly used technology in Southeast Asia is traveling grate and 24 reciprocating step grate system. However, in Thailand and India, FBC system is widely used along with other technologies. Most common plant size ranges from 2 MW to 10 MW and today 22 MW size capacities are also available in Thailand. Efforts were made to develop 50 -75 MW size plant. A 30 MW power plant was studied and operated in Philippines and it materialized for sometime but due to fuel collection and transportation issues the plant was shut down. The rice husk price is very high (up to 40 USD/ton) in several parts of Asia. Still it is dumped in several places. These places are ideal for installation of power plants due to low rice husk price and additional CDM revenues from decay. Encouraging situations are pre- vailing in several parts of Philippines, Laos, Cambodia, Africa and other Asian countries. With advancement in technology, some of the projects produce high quality ash and it is export to Europe, Japan, Korea and other countries (price as high as 400 USD/ton). It is very com- mon practice, where the focus is more on rice husk ash than power. This solves the ash disposal problem, as rice husk contains up to 80% silica. These days, ultra modern power plants are being installed in Southeast Asia with a lot of environmental protection measures, which are at par with devel- oped countries. Several rice husk projects around the globe with sizes ranging from 450 kilo- watts to 75 Megawatts abound. Conclusion It is apparent from the above fact that there is a valuable and interrupted source of energy hidden in our locally available rice husk that can be judi- ciously used to extract multiple value addition and can solve our power shortage partially but reliably and locally. Furthermore useful & meaning- ful extraction of various advantages leaving no wastage can pave the way for changing the mindset in other areas like extraction of power & fertilizer from the human waste, cow dung and cow urine, domestic waste etc. It is always the true strength of the develop- ment if all the elements on which the current mechanized dynamic civiliza- tion evolve from the local root. It is right time that Bangladesh should build its own rice husk based power plant to augment the power generation along with other fuel source (CNG, furnace oil, LNG, Diesel & Coal). Based on its present rice producing capacity, it should be worth mentioning that around 100-200 MW of power can be generated from available rice husk in various part of the country. (Note: The view expressed in this article are author's personal view and do not necessarily reflect that of the Bangladesh Energy Regulatory Commission.) Engr. Emdadul Haque Member, Bangladesh Energy Regulatory Commission ...being strengthened to meet people's expectation, support economic development of the country Bangladesh Petroleum Exploration & Production Company Limited (A Company of Petrobangla) BAPEX, Shahjalal Tower (4th Floor), 80/A-B Siddeshwari, Circular Road, Dhaka-1217. PABX : 880-2-9360119-20, 9359582, Fax: 88-02-9355704 www.bapex.com.bd EP 25