Monday, June 23, 2008

Energy Ministry finalises coal policy, Inter-ministerial meeting on June 26

The Independent, June 22, 2008. Dhaka, Bangladesh

The energy ministry has finalised the coal policy recommending formation of "Khoni-Bangla", a management body to oversee the country's mineral resources including coal, hardrock, lime stone, silica sand and others, an authoritative source told The Independent yesterday.

The energy ministry last week finalised the policy without making major changes in the draft policy prepared by country's renowned experts and sent copies to the ministries of forest and environment, law, land, finance, commerce, power, and NBR with a request letter to give their opinion and join the first interministerial meeting on June 26 following which it will be sent to chief adviser Dr Fakhruddin Ahmed for approval.

"The committee did not say anything about the coal extraction method. The issue should be coal field-specific. We simply brushed and trimmed it without touching the basic content of the draft except the land reclamation issue", a top official of the energy ministry told The Independent.

It may be mentioned that the committee suggested to the government to examine the pros and corns of open-pit mining and that the government should go for open pit on a limited scale. The policy has not mentioned anything on it.

It is learnt that the energy ministry in the policy suggested keeping the land reclamation issue under government's jurisdiction. However, the committee suggested to give the land to its owner. "20-30 years is a long time and the ownership may change in the meantime. Our observation is it would be a difficult task for government to identify the real owner. So we said that land would be kept under government jurisdiction and it would take decision," a top official of the energy ministry remarked.

A 29-member standing committee 'titled: development committee', comprising government officials, experts, business leaders and members of civil society would act as the highest authority to give policy directives to 'Khoni-Bangla' from time to time. "Khoni Bangla", would work under the energy ministry and the Bureau of Mineral Development (BMD).

It would be the authority to oversee coal exploration, marketing and investment through selecting method (open pit or underground mining) giving approval to Go-Private, Go-foreign and private -foreign ventures.

The country has a known reserve of 2.7 billion metric tons of coal but there is yet no specific policy on coal development, although there are some rules and regulations to lease out coal fields to foreign companies.

The main goal of the new policy is to ensure energy security by developing coal-fired power stations in the country. Though the country has five coal fields, four are commercially viable.

The government in 2007 formed the eight-member committee comprising Abdul Matin Patwary, Vice Chancellor of Asia Pacific University (president), Prof. Nazrul Islam of University Grants Commission, Prof. Badrul Imam, Nazrul Islam of IIFC, Prof. Mostafizur Rahman, Muqbul-e-Elahi, Major General Ismail Farooq Chowdhury and Ataus Samad. The committee at its first meeting suggested inclusion of Prof Nurul Islam of BUET and M.A. Zaman (re-settlement expert) in the committee and invited other experts from time to time to know their views. The draft coal policy was prepared by the IIFC last year, which was amended six times.

The policy suggested 6 per cent royalty for open-pit and 5 per cent for underground mining, but it suggested that fixing of royalty would be finalised by the government. Bangladesh Arbitration Act-2001 would be followed if any disputes arose.
To discourage export, the policy said whatever method was adopted to develop a coal field it would produce only that much which would meet the local demand. It said coal is needed to ensure the country's energy security first.

It may be mentioned that to ensure energy security for the next 50 years (at a rate of 8 per cent GDP growth), it needs to produce 41,599 MW of electricity by 2025. Aiming to slap conditions on coal export, the energy ministry upheld the committee's observation that the entire amount of the country's coal reserve is needed to produce electricity in future, as gas would be exhausted by 2015 if new discovery is not made.

However, it allowed a limited export of coal after ensuring the country's 50 years' energy security and said only that portion of coal could be exported which has no market here, and in case of 'cooking' coal, it could be exported but after making it 'coke' (a raw material use in steel making).