AEC is not mining the coal commercially -- the infrastructure for doing so is completely absent. It is engaged in pre-mining operations and, according to its own website, awaiting the completion of a Definitive Feasibility Study. Whether or not the scope of its activities is in conjunction or in conflict with its license is something that's not known. Nowhere in all the internet posts or field reports or newspaper articles have we seen an analysis or factual characterization of what AEC has done wrong. That is not to say that AEC has not exceeded its charter -- but one would feel a lot better if the experts and the reports actually cite and reference their case and/or violations.

Open-pit mining is not a novel concept. It is practiced successfully in many parts of the world. However, like most other forms of resource extraction, it can have severe environmental as well as social consequences. Modern mining techniques and regulations attempt, usually successfully, to minimize such impact. However, it is right for us to worry whether such would be the case in Phulbari. It would be easy for an insidious entity to take advantage of a corrupt government and wreak environmental havoc without fear of consequences. The principal issues at Phulbari are as follows:

1. Is it economically feasible to mitigate the impact of the proposed open-pit mining? If No, STOP. If yes,2. Does Asia Energy's proposal adequately cover such mitigation? If no, can the proposal be changed to cover such mitigation? If no, STOP. If yes,3. Can we depend on Asia Energy to follow through and complete such mitigation? If No, can we provide for "reserves" or other mechanisms to ensure compliance? If No, STOP. If yes,4. Can we depend on existing governmental institutions to monitor and enforce compliance? If no, can a new or additional governance structures be set up to do so? If no, STOP.

There are many other issues: The issue of fair compensation to the affected people, the issue of a fair royalty and many more. As an aside, 6% royalty is not, prima facie, low or unreasonable. Nor is it unreasonable for a requirement that the proposed power plant purchase the coal at market prices. However, are they customary terms for a project of this nature? We do not know -- and nothing we have read has attempted to analyze or compare the terms with other, similar deals. If the terms are not customary, then we should definitely consider the option of voiding the contract (or threatening to do so) and renegotiate for more favorable terms. For example, the GOB could enter into a long-term contract for coal purchase based upon a combination of cost of production index and current long-term contract rates (including renewal options). Perhaps that is how it is already set-up -- does anyone know? Does anyone care? But these are not insurmountable issues. Each issue ought to be factually analyzed and evaluated. A case in point, AEC always refers to the number of people affected (needing to be relocated) being 40,000 and much of the opposition states a number to be ten times greater. Who is right? What is the factual basis?

Please, less politics, more science!

Equally relevant are the qualifications of an entity such as AEC to embark upon and successfully complete a multi-billion dollar project. What were the preliminary as well as ongoing requirements for financial as well as technical and operating competence before the project was originally awarded? What are/were the limitations on transferring the project from one entity to another? Did the Bangladesh government review the qualifications of AEC before allowing the project to be transferred? What are the qualifications of the entities engaged to study and report on the environmental impact and the proposed mitigation? Is there [going to be] an environmental bond (guarantee) put forth that ensures compliance with all applicable laws and regulations? What are the penalty clauses and provisions for remedies? Which agency/entity is ultimately responsible for administering compliance and overseeing mitigation? These questions are not rocket science! Even relatively small developments in small communities ask these questions and make public the offered responses. And a responsible press manages a debate of the issues raised based on facts and science. Why is that so difficult? Instead, we have reports of dancing in the streets!

The fact is that there are significant high quality coal reserves in Phulbari and Bangladesh has few other sources of fuel and power and is a poor country to boot. We can ill afford to sit still and just shake our fists at foreign investors.

• What is the environmental and economic cost of importing and burning low quality (high sulfur) coal from India as is the current practice?
• What is the environmental and economic cost of the fuel shortages that lead to the indiscriminate cutting down of forests for firewood?
• What is the economic cost of the chronic electricity shortages that plague our industry?

However, if we are to claim a rational basis for our stance against the deal, we must seek out rational analysis and avoid piling on rumours, innuendos, and political agendas. There is no doubt that a great many of the participants in the Phulbari protests have agendas that are far more political than should be. It would not be surprising if many of these political leaders are secretly thrilled with the deaths at Phulbari because of the enormous political and media dividends that resulted from them. It would not be the first (or the last) time that we have seen callous disregard for ordinary lives on part of politicians. But would they care to engage on real debates related to the nature and role of the future foreign investments in the country? Would they care to engage on the more fundamental issue of establishing factual analysis in policy discussions? We won't hold our breath waiting for a positive answer.

Even though to justify the stand against AEC, some have given the example of Unocal and Niko as cases of multi-nationals-gone-wild that cared little in safeguarding the interest of the average citizen, the truth of the matter is that these are just mere examples of our government's incompetence, corruption and lack of sensitivity in safeguarding the interest of our citizens. Corporations will do what they do best i.e. safeguard the interest of their shareholders. But who will look out for the shareholders of the average citizens of Bangladesh when their government fails to do so? A foreign shareholder of AEC recently made the following comment at a website which was debating this case:

"For me as a foreigner it looks that Bangladesh rejects development and wants to remain poor forever: how good is it to have over 500 million tons of coal underground if it is never going to be mined and the government doesn't get the royalties and taxes it could get and it doesn't provide the country with a new source of foreign currency and it doesn't help to reduce the shortage of electricity the country has been suffering for so long."While we know that it is not entirely true, records of repeated failed foreign investments (Ekushe TV, Tata, AEC) and the events of the last few weeks, combined with our penchant for hartals (which another Bengali economist calls economic terrorism), will make any potential investor re-think their intentions. No one wants to find themselves stuck between a corrupt government on one side and a violent mob on the other. The premium for risk just went up. And through all of this, the sufferers will be the people of Bangladesh. We have neither the technology nor the economic resources to develop the Phulbari coal fields on our own. If we are not careful, the result of a homegrown (or government-led) effort could be corruption and environmental devastation on a scale far greater and unprecedented than currently imagined.

Muhit Rahman and Asif Saleh are two expatriate Bangladeshis, living in Cincinnati, US and London, UK respectively.

For more discussion on this, visit:

http://www.drishtipat.org/blog/2006/08/31/phulbari-asia-energy-less-politics-more-science