Before discussing the interview it is worth reflecting on Russia's sorry state of affairs in the last few years and its remarkable turn-around in more recent times. Putin's predecessor Boris Yeltsin in many ways epitomized Russia's woes; an irresolute man, he led a government manipulated by corrupt oligarchs; Russia was in the league of about-to-fail states.

It was on the dole and stern sermons from the World Bank, European Bank, and other donors filled the headlines on what Russia should do. I remember, on a business trip to Singapore, the clerk in a money-changer's counter gladly accepted a 500 taka note and told me he deals in any currency except the ruble! Not any more: today Russia has paid off its foreign debt and the ruble is a hard currency and freely convertible.

One of the very first questions posed to President Putin was on Russia's gas policy and its pricing. He somberly repeated his nation's commitment to long-term gas supplies to Europe and then cheerfully asserted: "But not for peanuts!" This was Putin's Russia speaking and the rest of the world was listening; the former bankrupt state was not only a member of the world's most exclusive club but befittingly hosting it in Russia's former imperial capital, St. Petersburg. This is the story of gas and leadership!

The world energy market, especially oil and gas, is riding on the crest of a huge demand wave, fueled in part by the galloping economic growth in India and China and in the oil-exporting countries as well. There are promising new oil and gas deposits throughout the world, but both oil and gas are finite natural resources and will eventually run out. There are two ways to use such a resource: to burn it slowly as we are doing now or to use it as an investment to generate a surplus for building renewable energy infrastructure.

Before proceeding further it is worth reflecting on some cold statistics to debunk the dangerous myth of abundance of natural gas deposits in Bangladesh and the mind-boggling investments needed to sustain demand for oil and gas in the coming decades.

I have relied on three authoritative sources: the CIA country fact book and the Department of Energy (DOE) are official US government web sites and in the public domain. The third source is the International Energy Agency (IEA) the top energy policy-making body and think-tank of the industrialized countries.

Some of the far-reaching conclusions from the IEA report are worth mentioning:

• In the next three decades the global demand for energy will increase by 60 per cent, which will need an investment of 16 trillion dollars, which is a mind boggling 532 billion dollars a year.
• The developing world will need 5 trillion dollars worth of investment in the electricity generation sector alone.
• This will mean rising energy prices; oil at $100 a barrel is already forecasted this winter.
• In the long term, oil and gas prices are deemed to rise inexorably due to rising demand, dwindling reserves in currently productive wells, and massive investment needed to develop greenfield sites.

The Department of Energy, a US government agency, reveals only 20 per cent of the Bangladesh population has access to electricity. More alarmingly, it says more than 50 per cent of the population depends on non-commercial sources of energy such as crop residues, forest wood, municipal rubbish, and animal wastes for their energy needs. The environmental consequence of this cruel dependence is already visible in most parts of rural Bangladesh.

In the CIA's global ranking of the top 100 proven reserves of natural gas, Bangladesh is ranked 41st. To put things in perspective, India is ranked 27th and Pakistan is in the 30th position. To make the situation even more clear, in the CIA's global ranking of proven oil reserves we are in the 78th position while, amongst our neighbours, Myanmar is in the 41st position, India is in the 23rd position, and Pakistan is ranked 55th.

If we consider coal as yet another parameter in the energy equation, India has the 3rd largest coal infrastructure in the world; electric power generation is entirely coal based in India. According to the IEA, gas has emerged as the most dynamic and fastest growing segment in India's energy sector. It is currently laying more then 9,000 kilometers of pipeline.

In the face of such hard evidence, why is Bangladesh being touted as a country with abundance of natural gas? Why is our government eager to export coal when more than one-half of our population is deprived from basic energy needs? Why did Tata not apply to GAIL (Gas Authority of India Ltd.) for gas at prices it is asking from Bangladesh? Surely, by any standards, India is better placed to supply gas to any gas-based industry than Bangladesh! But, certainly not for peanuts! These are school-boy questions, but did our Board of Investment do this elementary home-work in accepting Tata's investment proposal? Do we have either an investment policy or an energy policy?

It is amusing that institutions such as the World Bank and Asian Development Bank do not hesitate to deliver sermons to Bangladesh on the virtues of a market economy; yet exhort us to accept investment proposals where gas prices are tied to no market forces at all! The BoI is beholden to the Prime Minister's Office and its chairman serves as the cheerleader of the ruling party. It has no analytical ability to speak of, and it's chairman's most notable achievement was to launch scathing personal attacks on the country's most distinguished citizens and to dismiss the National Committee for the Protection of Ports, Gas, and Coal Resources as the handiwork of extreme left-leaning politicians.

I am not aware of the political leanings of the committee, but I am proud of their selfless service to the nation which they showed by speaking out against corrupt and iniquitous deals.

The country faces a formidable challenge on two fronts. First, in a debilitating depletion of precious foreign exchange spent on ever-rising cost of imported oil. Next, in the oil, gas, coal, and power generation sector, it has to compete globally for investments with other developing nations of the world and some of the fastest growing economies in the world such as India and China.

Successive governments have failed to evolve a coherent energy policy and the energy sector of the country has so far failed to generate a surplus even though it was endowed with plenty of natural gas. Gas companies such as Titas, Jalalabad, and Bakhrabad should, in theory, be sitting on a pile of surplus cash, and be in a position to renew its infrastructure and make new investments.

In reality the coffers are empty! In contrast, the GAIL, nearly 50 per cent of which is owned by the Indian government, paid out Rs.3.6 billion in dividends to shareholders and Rs.13.86 billion in taxes to the Indian government in 2005. As a public limited company, its annual report is on the web.

Since we have been producing gas from the mid 60s, and if the savings for imported petroleum fuel are calculated for the last 40 years, the surplus should be in tens of billions of dollars. Revenue from gas sales over the years and the savings in foreign exchange should have made it the richest corporate entity in the country. With all its earnings siphoned off by the state, Petrobangla is nearly a bankrupt organization, in sharp contrast to the petroleum corporations in India and Malaysia.

A national energy security and development policy should plan for the day when the meager gas and coal resources of the country will be exhausted. It is meager by any standards. We do not stand any where near the reserves of Russia, Iran, or Canada, or even India. It is even more meager if one considers the fact that we have a population the size of Russia with not even 1 per cent of its gas reserve.

Bangladesh is the world's most densely populated nation with no worthwhile manufacturing base to employ its vast pool of unemployed, but willing labour force. The most promising way to employ the gas and coal resource of the country is to harness it to generate electricity to power a manufacturing industry which will have the greatest multiplier effect.

The power and manufacturing sector combined can turn Bangladesh into an export based manufacturing power-house. The other use would be converting petrol and diesel-fired vehicles to compressed natural gas, which could have been accomplished long time ago if our political elite had a minimum of decency and patriotism. It is utterly shameful and a national disgrace to see the prime minister and the leader of the opposition ride 4-wheel drive vehicles, fueled by imported petroleum.

A workable business model would be to float a public limited company with the government of Bangladesh holding a 30 per cent share in it. A reputed international oil and gas company could be invited to invest 30 per cent and provide the management and technological know-how, and the balance 40 per cent can be offered to the general public, institutional investors both local and foreign. The company can be modeled on India's GAIL or Petronas of Malaysia. The company should have a sovereign charter to explore, develop, and distribute gas in Bangladesh.

This way it can leverage Bangladesh gas reserves to raise money in the global debt and equity market. A similar company can be formed to explore and develop the coal fields in northern Bangladesh. Both the resources have a huge and ready market in Bangladesh, there is no need to export any of it. In fact, with no compulsion to export the distribution cost will be much lower, as no expensive port handling facilities have to be built.

Finally, I would like to touch on the topic of my opening remarks of this article, the necessity of a resolute, informed, and clean political leadership, which has the courage to undertake far-reaching and speedy and very transparent reforms in the petroleum and power sectors of the nation. The heart of the Phulbari tragedy was an opaque deal concluded away from public sight and without the participation of the affected people. A publicly held company could have better negotiated a deal with the inhabitants of Phulbari, by building an alternative township, offers of jobs and business and even stock options.

Energy and mineral resources are at the heart of some of the most enduring insurgencies and conflicts in the world. In our neighbourhood, Ulfa in Assam with its rich oilfields and the Baluchistan Liberation Army in Pakistan's gas-rich region are prime examples. We are extremely lucky to be a homogenous nation with no serious ethnic or religious grievances, but the widespread public perception of corruption in energy deals is a serious problem.

In the space of a newspaper article it is not possible to spell out the breadth of a national energy policy, nor do I claim to have the expertise to do so, but there are plenty of examples in our neighbourhood alone to serve as excellent models. I have mentioned GAIL and Petronas, which as publicly held and professionally managed corporate entities, with state shareholdings, have collected record revenues for the government and efficiently delivered energy services to consumers. Such corporations are not a burden on tax-payers, as they can garner the technology and finance from the global market.

M. Firoze is a senior executive in the country's largest steel manufacturing company, BSRM.