Thursday, October 25, 2007

The coal debate

By M Inamul Haque*, NewAge, October 25, 2007. Dhaka, Bangladesh

BANGLADESH has tremendous renewable energy sources in the form of wood (65 per cent of the total energy consumed), generated annually on its surface through the growth of vegetation. This is because of our fertile soil, regular rainfall and the energy of sunshine consumed by the plants together. The sunshine also consumed by the animals, directly and indirectly in many ways is difficult to quantify. The energy of wind and water currents in the rivers and seas consumed by the ecosystem supports our economy in many ways but is never quantified.

The non-renewable energy we have in the form of gas, oil and coal lies underground. These, if not extracted, remain stored for the next generation. However, the rate that we are consuming gas now, it will finish by the year 2014 unless new reserves are discovered. Discovery of oil has not been significant. The coal reserve is 2.7 billion tonnes, of which just about 1.4 billion tonnes is recoverable. However, the policy as regards how to extract and use it remains debatable.

Bangladesh has peat coal in the northeast haor and southwest beel areas, a few metres under the surface. There the poor people spend their days digging soil in the hope of extracting a chunk of coal and selling it for their living. This coal is not commercially feasible for extraction by companies who seek to make a pound spending a penny. These companies want shares, investments, contracts, markets and monopoly. They were in a similar action in Phulbari to dig a few hundred metres to extract our black gold.

Bangladesh is mostly a plain land of alluvial soil, deposited by the rivers since at least six million years past (the Late Miocene Age). From the groundwater model of Bangladesh shown in Figure 1, the layers over the Gondwana Hardrock basement are the Lower Dupi Tila, Upper Dupi Tila, Dhamrai Clay and the Barind Madhupur clay formations. These alluvial formations from the Permian to Holocene age of present time are about 300 metres deep in northwest Bangladesh, whereas in the coastal areas it is about 20 kilometres deep.

From the geological and hydrological sequence given in Chart 1, the Pre-Cambrian formation is the oldest igneous and metamorphic rock basement (570 million years past), upon which all the sediment formations of later ages lie. The Pre-Cambrian basement comprises of granite, granodiorite, gneiss and schist. This formation is accessible at Madhyyapara of Dinajpur at about 150 metres below the surface. The Permian Age (245 million years past) is next, when the Gondwana mudstone, coal and sandstone deposited. This formation is accessible near Barapukuria and Phulbari of Dinajpur at about 300 metres below the surface.

The secondary Permian Age Gondwana coal was discovered first in 1959 in Bogra at a depth of 2,381 metres. In 1961, the Jamalganj-Paharpur deposit of 1,050 million tonnes was found, but it is too deep to mine. In 1962, the Tertiary Age ligno-bituminous coal was found in Takerghat-Baglibazar area at a depth of 45m to 97m. The beds are 0.90m to 1.70m thick and reserves were estimated at 3 million tonnes. The Gondwana coal was found at Barapukuria in Dinajpur in 1985, Khalaspir in Rangpur in 1989 and Dighipara in Dinajpur in 1995. According to a feasibility study, the Barapukuria mine had a reserve of 390 million tonnes, 70 million tonnes of which is recoverable at depths ranging from 118m to 506m. Coals in Khalaspir and Dighipara (406m below surface) are at similar depths. In 1997, the Phulbari coal was found at about 150m below the surface (Banglapedia).

The mining at Barapukuria started with two 6m shafts of 280m depth to extract one million tonnes of coal a year, of which 80 per cent was to be consumed for a 300-megawatt power plant. By the time the Petrobangla/Power Development Board started the power plant, the Barapukuria mine was redesigned to a production capacity of 500,000 tonnes (50 per cent less than before) and the cost of coal production doubled (from $35 per tonne). It was found that the project had actual IRR 13 per cent. However, to make it viable, it was shown 39 per cent in the feasibility study by fictitious projections and investment that never took place. The project cost rose from Tk 887 crore to Tk 1,600 crore. According to the Daily Star report of September 15, 2006, the Barapukuria coalmine was made the nation’s liability.

The Barapukuria coalmine has become a quagmire where hundreds of crores of taka from the government exchequer is draining down (Tk 600 crore by August 2007), with little possibility of good return. According to its first project proposal, 60 per cent of the coal was extractable, but now it has come down to 20 per cent only (The Daily Star, September 7, 2007). It is the depth of the coal reserve (too deep underground) that makes it hard to be a profitable mine. However, the promoters of the coalmine project at Phulbari wanted ‘open pit’ excavation there, blaming the ‘shaft method’. The Phulbari coal lies at a lesser depth but not less than 300m on average.

Figure 2 shows the variable depths of Phulbari coal lying under the Dhupi Tila formations. Open pit mining shall have to remove tertiary age alluvial deposits of 150-300 metres depth, and then secondary age sandstone deposits of 100 meters depth to reach the coal seams. It shall be an unprecedented operation, removing soil of about 30 square-kilometre area to the depth of 300 metres on average. Open pit mining is only feasible where the coal lies near the surface. The coal there then extracted removing the topsoil in strips. The extracted pit filled back by the removed soil of previous pit. Being too deep at Phulbari, ‘open pit’ excavation and removal of the coal by strips (as in Germany) is not feasible here, technically. Moreover, the Phulbari ‘open pit’ operation shall need to dry up the entire 200-metre deep Dhupi Tila aquifer, which shall have depletion effect to subsoil water of about 500sqkm surrounding area. People in the locality were reasonably just in their opposition and agitation, as any sort of rehabilitation programme would be a mess, people would have to migrate. The remaining people after the mining would have to survive in inhuman condition around a poisonous lake with their cultivable lands devoured and distorted forever.

In my understanding, investment has now become a corporate gamble than an investor’s liability. As most of the investors in the corporate capital do not have direct knowledge of the daily proceedings, a mastermind in the game can extract profit even from a loosing company at any time. The corporate company behind Phulbari coal has already raised capital from the market, whose share value has halved after increasing tenfold. The company showed improper documents to the government to keep authority on the project. However, after strong resistance from the locals the project prospect is now bleak.

Figure 3 shows the location of the Barapukuria coalmine, Madhyapara hardrock mine and the proposed Phulbari coalmine area. The Phulbari mine would cover a large part of the Parbatipur, Nawabganj, Birampur and Phulbari upazilas. Having the worse experience of shaft mining at Barapukuria, people could not accept the open mining option at Phulbari fearing loss of no bound. Shaft mining does not displace people but it causes pollution to the streams by acid mine drainage. In absence of proper treatment facility for the acid mine waste, the rivers and wetlands around Barapukuria are severely polluted and toxic.

The proposed coal policy of the government is now open to the public for debate. For Phulbari coal, the government had reduced its royalty share from 20 per cent to 6 per cent only, with the rest allowed to export. This raised strong objection from energy activists in the country. Now the pertinent questions of why should the ownership for the people should not be 100 per cent and why export should not be an option until and unless there is enough to meet the domestic demand for the next 50 years remain unresolved. The search continues for technically, socially, economically and environmentally suitable methods to make the coal mining beneficial to the people of Bangladesh.

*M Inamul Haque is director general of the Water Resources Planning Organisation

Sunday, October 21, 2007

Draft coal policy eyes ban on export

Staff Correspondent, NewAge, October 21, 2007. Dhaka, Bangladesh

The advisory committee formed to finalise the draft coal policy inserted in the draft at a meeting on Saturday some major issues, including ban on coal export and bar on assigning any foreign company with operation of any coal field without participation of any state-run organisation.

The committee, headed by former BUET vice-chancellor Abdul Matin Patwari, also decided in principle to keep a provision in the policy for taking a pilot project on open-pit mining at Petrobangla’s Barapukuria coal field.

The committee, which started to review on Saturday every line of the draft submitted by the Energy Division, inserted a provision in the ‘perspective chapter’ that it would not be possible to export coal from Bangladesh keeping in view the country’s energy security for the next 50 years.

It also noted that the people and the nation were the owners of the country’s coal and other mineral resources. The committee also included in the draft a clause that the government sector would get preference in developing coal fields. ‘But, in case of emergency, the government will be able to take a decision on developing coal field through joint initiatives with private and public entities of local and foreign countries,’ its observed.

The meeting was told that no foreign company could be given any coal field alone and any foreign company could only develop coal field jointly with any state-run entities like Petrobangla or the proposed Coal Bangla. The modalities of such joint initiatives will be discussed by the committee in future.

The committee decided in principle to insert a provision in the policy for launching a pilot project on open-pit mining at Barapukuria coal mine covering eight square kilometre area to examine the viability of the mining method that drew much controversy in the country.

Two committee members, Professor Nurul Islam and Professor Badrul Imam, who submitted a paper on their recent experience on India’s coal sector, concluded that it would be unrealistic from environment considerations to go for open-pit mining in Phulbari coal field.

The professors from BUET and Dhaka University attended SAARC Technical Seminar on Strategies on Promotion of Coal Development and Clean Coal Technologies in SAARC Region on October 16 in Kolkata and visited an open-pit mine at Sonepur.

According to the paper of professors Nurul Islam and Badrul Imam, most of the open-pit mines in India are implemented at coal fields that have coal seams at a depth ranging between 100 and 200 metres, whereas in Phulbari, where Asia Energy has proposed to extract coal through open-pit mining, the coal seams are at a depth of 300 metres.

The meeting was told that the north part of Barapukuria coal field, where the country’s lone underground coal field is situated, has a coal reserve at a depth of 110 metres. The meeting observed that by implementing a pilot open-pit mining at Barapukuria coal field, its impact on the environment could be assessed and experience on resettlement issue gathered.

It was suggested that a state-run entity would launch the pilot project for 10–12 years. But many of the committee members felt that funding would be the major obstacle to implementing such pilot projects.

University Grants Commission chairman Nazrul Islam, Bangladesh Army engineer-in-chief Major General Ismail Faruque Chowdhury, Professor Mustafizur Rahman of Dhaka University, Infrastructure Investment Facilitation Centre executive director Nazrul Islam, Petrobangla director Maqbul-E-Elahi, and former managing director of Barapukuria coal mining company Golam Mostafa attended the meeting, among others.

Sunday, October 7, 2007

Conservationists’ group terms ADB ‘corporate lobbyist’

NewAge, October 7, 2007. Dhaka, Bangladesh

National Committee to Protect Oil, Gas, Mineral Resources, Power and Port on Saturday protested against the Asian Development Bank’s role as ‘corporate lobbyist’ for Asia Energy and Tata Group. It also blasted energy and finance advisers to the government for their reported willingness to start stalled negotiations with Asia Energy on Phulbari coal field.

‘We are concerned and annoyed at media reports that a visiting ADB mission is lobbying and pressurising the government in favour of Asia Energy and Tata projects,’ professor Anu Muhammad, member secretary of the committee, said at a press conference at Dhaka Reporters Unity.

ADB officials are lobbying for the Asia Energy venture even before the Manila-based lender’s board is yet to approve the project, which was being framed in violation of ADB’s own guidelines for public consultation, dissemination of information, protection of environment and respect for peoples’ verdict, he said.

The economics professor questioned why two advisers of the government were searching for opportunity to renegotiate with the UK-based mining company. He alleged that ABD was planning to invest the member-states’ money to benefit some companies, not the people. Professor Anu demanded that the interim government must scrap the ‘shady agreement’ the previous government signed with Asia Energy and that the national coal policy, which is in the making, exclude open-pit mining method.

Committee convenor Sheikh Muhammad Shaheedullah said the people would not accept if the government agrees to Tata’s proposals for supplying huge quantity of gas at a time when the country’s gas reserve was depleting and power and fertiliser plants were facing gas shortage. Committee leaders Golam Rabbani, Akmal Hossain, Shamsul Alam, Tipu Biswas, Ruhin Hossain Prince and Zonayed Saki were present at the press conference.

Friday, October 5, 2007

Govt to consider renegotiation with Asia Energy after coal policy finalised

NewAge, October 5, 2007

Energy adviser Tapan Chowdhury on Thursday said that the government would decide whether to renegotiate the controversial Phulbari coal-field agreement with Asia Energy after the coal policy is finalised. ‘Asia Energy has requested renegotiation on the Phulbari agreement and has softened its position. It has proposed some nice things. It wants to set up a power plant, and supply the water that will extracted from the coal-mine to the adjacent villages,’ Tapan told reporters after a meeting with an Asian Development Bank delegation.

The visiting director-general of ADB’s South Asia Department, Kurio Senga, offered to extend all kinds of financial assistance in developing Bangladesh’s coal sector, including the Phulbari coal-mine. He asked the government to take a quick decision on Asia Energy’s plan to develop the Phulbari coal-mine and the Tata Group’s investment proposal.

Tapan told reporters that he had assured the ADB delegation that the government would take a decision on Asia Energy’s development plan after finalisation of the coal policy. When Senga was asked whether he was aware of the government’s agreement with the people of Phulbari to scrap the coal-field deal, he replied in the negative.

The government signed an agreement with protesters to scrap the deal with Asia Energy after the killing of three persons by law enforcers while they were protesting against the open-pit mining method proposed by Asia Energy last year.

Tapan said that they would take a decision on the issue after getting the law ministry’s opinion on the agreement.

Proposals of Tata, Asia Energy have to wait

NewAge, October 4, 2007. Dhaka, Bangladesh

Decisions on investment proposals of Tata Group and Asia Energy are set to take some more time due to confusion over gas reserves and absence of coal policy, finance adviser Mirza Azizul Islam said on Wednesday. ‘We are giving wrong signal to foreign investors as we cannot decide on investment proposals of Tata and Asia Energy,’ he said to reporters at his planning ministry office after a meeting with a visiting Asian Development Bank executive.

The long-pending investment proposals came up for discussion at the meeting with Kunio Senga, ADB director general for South Asia, who is now in Dhaka. The Manila-based development bank offers Bangladesh assistance in developing coal sector amid differences of opinion among Bangladesh’s mining experts and conservationists over the mining method— whether it will be open-pit or underground. The debate led to a bloody outrage in Phulbari coalmine area last year. The finance adviser said the government will settle the Asia Energy issue once the coal policy is formulated.

Meanwhile, the UK-based mining company has expressed its willingness to start renegotiations with the government on Phulbari coalmine development. ‘We’ve told them that we will seriously look into the terms and conditions for the negotiations after finalisation of national coal policy,’ he said.

About the long-drawn-out $3 billion investment proposals of Indian conglomerate Tata, the adviser said it is a complicated matter and the gas reserve issue is closely linked to it. ‘As the terms and conditions have a provision for ensuring uninterrupted gas supply for several years, we’ll have to assess our actual gas reserve as there are several findings in this regard, and we’re not sure which one is correct,’ Aziz said.

He also discussed with the ADB executive matters relating to recent floods and post-flood rehabilitation. Aziz said the government formed a committee headed by the planning secretary to assess the flood damages and rehabilitation needs. ‘Rough estimates suggest the flood damages will be within $200 to $250 million,’ he told a questioner. ‘After the finance adviser’s visit to Manila, we realised that the flood in Bangladesh was severe and we formed a team for needs assessment,’ Kunio Senga said after the meeting. ‘Hopefully, we’ll be able to provide assistance for flood rehabilitation,’ he said without giving any figure.

Tuesday, October 2, 2007

Coal committee seeks 50 more days to finalise policy

NewAge, October 2, 2007

The advisory committee on the draft coal policy has sought another extension of 50 working days from the government to finalise the draft as it could not complete the task in the 30 days extended earlier. The committee members are still not sure which mining method they should recommend as both open-pit and underground mining have merits and demerits. The committee, headed by former BUET vice-chancellor Abdul Matin Patwari, held its seventh meeting on Monday, but was yet to go through the nitty-gritty of the draft coal policy submitted to the committee by the energy division.

The high-profile committee, which has so far taken a major decision that the coal policy will not allow coal export, decided at the meeting that it would start to go through every paragraph of the policy and make amendment, if needed, at its next meeting on October 20. It has so far taken opinions and recommendations of the cross-section of people including experts, economists, journalists, rights groups, and people of Phulbari during a visit to three coal fields in Dinajpur.

The advisory committee, formed on June 21, was initially given 30 working days, but it could not start work till July 31 as the committee convener was abroad. The committee was then given 30 more working days and it has so far passed 40 working days till Monday.

The committee members in Monday’s meeting discussed their recent visits to Barapukuria, Phulbari and Khalashpir coal fields and the recommendations of people of Phulbari. The meeting was told that about 19 associations of Phulbari, where the UK-based Asia Energy wanted to develop an open-pit mine, submitted recommendations and memoranda to the committee. It was told that most of the associations recommended against open-pit mining saying that it would destroy the environment while some of them recommended in favour of open-pit mining saying that it would be beneficial to the people of the locality.

The meeting discussed whether the coal policy would recommend that a pilot project of open-pit mining should be undertaken by a state-owned company to scrutinise the viability of the mining method and operate underground mining till getting the results of the pilot project.

Among other committee members, University Grants Commission chairman Nazrul Islam, Bangladesh University of Engineering and Technology professor Nurul Islam, Dhaka University professors Badrul Imam and Mustafizur Rahman, and journalist Ataus Samad were present at the meeting.