Tricky to decide, easy to keep hanging
Asia Energy's proposal to develop open-pit coal mine in Phulbari has neither been rejected nor accepted in the last eight years as the government is uncertain about the environmental impact of the project.
According to high officials, the Phulbari project may not get any green signal until the government gathers experience from a pilot open-pit mine in north Barapukuria, part of the country's lone producing underground mine in Dinajpur.
However, there is no visible progress regarding this pilot scheme.
The Phulbari mine project stalled back in August 2006 following a local protest that resulted in the deaths of six people in police firing.
Since then the government had shelved the deal primarily to avert local protests.
But the government did not cancel Asia Energy's multi-billion dollar three-decade investment proposal to tap 572 million tonnes of high quality coal because it was not sure of a victory in case the company turned to any international court.
“We are now examining all aspects of developing the local coal sector, not just the Phulbari mine project,” said the prime minister's energy adviser Tawfiq-e-Elahi Chowdhury, Bir Bikram, adding, “Underground water is a major issue that we must understand first before going for further coal sector development.”
The Institute of Water Modelling has been studying the underground water table of the northern region where all known discovered coal deposits have been found. Its report is expected to be completed within a few months.
Tawfiq added that even if the nation went for coal sector development, it had to address the challenge of installing coal fired power plants at places close to rivers.
Neither Phulbari nor Barapukuria has adjacent rivers. Therefore, the government was reviewing if coal power plants, based on locally produced coal, could be built near Sirajganj and what the impediments were to that.
Tawfiq said by undertaking a pilot open-pit mining project in the northern part of Barapukuria coal mine, the government wanted to get experience that would help it understand the realities of large-scale coal production.
Gary Lye, Asia Energy Executive Director in Bangladesh, on the other hand sees no reason for the government's indecision.
“The government's power system master plan 2010 emphasises coal usage to diversify energy sources. But the government did not do anything to diversify, except on paper [building several thousand megawatts of coal plants based on imported coal],” said Lye, adding, “Till today, the challenges of coal supply and shipping remain unaddressed.”
Lye believes that the government's plans to import coal for power plants did not consider various issues of coal import. “At present, coal price is cheaper due to surplus stock, hovering around $80 per tonne for coal of Phulbari quality in Indonesia, Australia, Colombia, etc. This price is projected to go up from next year. Then there is transportation cost,” he said, arguing why the Phulbari mining proposal should get a go-ahead.
The government's plan for building 10,000MW coal power plant in phases by 2030 will annually need 30 million tonnes of coal through the sea and rivers, which is a huge challenge as very large ships cannot anchor in Bangladeshi waters due to low draft.
“The Phulbari mine alone could supply 15 million tonnes of coal each year, and address half of the concern,” he said.
He also suggested that Baghabari in the northern region could become a power hub for coal plants. Baghabari has rail links to help transport coal regularly and it was close to the Jamuna river.
If the combined coal resource of Phulbari and Barapukuria was tapped by open-pit mining methods, these could sustainably generate over 6,000MW of electricity for 50 years, he added.
He added that he had been seeking appointments with government high officials to discuss the approval of its project but was not getting any response.
Back in 2006, Asia Energy, a British company, conducted all required studies for the project and projected that the Phulbari scheme would generate more than $21 billion (based on $50 per tonne coal price) in economic benefits to Bangladesh over its 30 year life and add one percent a year to the Gross Domestic Product (GDP).
The direct effect on GDP is expected to be $7.8 billion over the life of the project, according to a study conducted by the international professional services company GHD on behalf of Asia Energy.
“The indirect or multiplier effects are expected to be $13.7 billion. This gives a total GDP increase of $21.4 billion.”
Over the life of the project, Asia Energy intends to spend an estimated $3 billion in capital on the mine and power plant and an additional $10.4 billion in operating costs.
Asia Energy will earn $7 billion while the government will earn a royalty of $1.2 billion, another $2.8 billion as corporate tax.
Bangladesh railway, the Mongla port authority, the income tax division and the customs department will make another $3 billion, it says.
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