Asia Energy wants to renegotiate deal | The Daily Star
12:00 AM, October 04, 2007 / LAST MODIFIED: 12:00 AM, October 04, 2007

Asia Energy wants to renegotiate deal

Finance Adviser Mirza Azizul Islam yesterday said coal mining company Asia Energy has expressed its willingness to re-negotiate terms of its contract with the government.
"Before this re-negotiation, the government must decide which contractual terms should be revised," the adviser told the press following a meeting at his planning ministry office with the visiting Asian Development Bank (ADB) mission led by Kunio Senga.
At the meeting, the ADB expressed its concern that the government's indecision about the investment proposals of Asia Energy and Tata was giving 'investors a wrong signal.'
"It will be difficult for me to express the government position regarding both these deals because the projects involve not only the finance ministry but also other ministries," the adviser said. Till date, the council of advisers has not discussed any of the projects, he added.
Mirza Aziz said the government had signed the Asia Energy deal in the past.
Amid much controversy about the deal over Asia Energy's proposal for open-pit coal mining in Phulbari, a positive thing came out -- the company is now willing to re-negotiate the terms, he noted.
"To revise the contractual terms, the ministries concerned will have to converge on some decisions. But the coal policy has not yet been finalised. I personally believe that after the coal policy is finalised, we may renegotiate the contract in the light of that policy to get more benefits," the adviser said.
On Tata's $2.5 billion proposal on gas-based steel industry and power plant, he said, "A significant issue here is allocation of natural gas for Tata's project. We have to guarantee gas supply to Tata. Before that we must ensure that we have adequate gas for the guarantee period. Then we have to be sure about our own reserve and immediate gas and power demands, and how much gas we should keep for our own use. "
"Before assessing the gas situation, we cannot give guarantee," Mirza Aziz pointed out. When reminded that the past government had the gas issue analysed by experts, he said, "different experts have different assessments. A local expert has one version while a foreign expert has another version."
Both Asia Energy and Tata proposals are awaiting government nod from 2005. The Asia Energy proposal triggered violent protests in Phulbari in August last year. The protest was calmed down through an announcement that the deal will be cancelled. On the other hand, the Tata proposal became uncertain as it demanded gas supply guarantee for 10 years, and Tata made a gas tariff offer which Petrobangla refused to accept.
Meanwhile, ADB mission chief Kunio Senga told the press that his team discussed, among other things, ADB's assistance for regional cooperation, and a project on building an information superhighway.
"Access to technology is very important. If Bangladesh and its neighbours get together, there will be a multiplier effect of having joint access to information. This will be very helpful for Bangladesh and other neighbours and we'll finalise the other technical scope of the project," he said.
"We talked about energy cooperation. Last year, we invested in the power sector to make it sustainable in terms of providing essential services to the people and the progress of this project is very good. I appreciate the government efforts in this regard."
On coal development, Senga said, "The finance adviser and his team told us about ongoing preparation of the coal policy. We all agreed coal mining is going to give huge potential benefit for power generation. At this moment we rely on gas, which is limited. So, the government has to find alternative sources for power generation. Coal mining is very effective. To ensure coal-generated power, many technical, environmental, social and viability studies have to be undertaken."
He went on, "The mining methods -- open-pit and underground -- are being closely reviewed by experts, and we would be guided by the reviews of the advisory committee."

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