Coal News of Phulbari – Bangladesh

News on coal resources & coal basins of Bangladesh

Archive for June, 2008

Banglar Manush will surely use Banglar Koila

Posted by phulbarinews on June 30, 2008

Ataus Samad

The present Caretaker Government is facing great many problems and it has to take appropriate decisions to resolve these. A question arises whether the present government had the jurisdiction to decisions on certain important issues. This is because of the fact that these matters relate to policy. The Constitution of the country has it that the Caretaker Administration will only perform day to day routine functions.

But to my mind, there are a lot of differences between the present Caretaker government and the one that has been spoken about in the country’s Constitution. The Constitution has it that elections to the Parliament will have to be held within 90 days of the dissolution of the last Parliament for any reason or the completion of its tenure. A Caretaker Administration would be in power to run the administration of the country in the meantime.

The Constitution has it that with the elected Prime Minister entering office, the Caretaker government will leave. As and when one reads these two articles of the constitution together one reaches the conclusion that the tenure of the Caretaker administration is just three months. Moreover, the two Caretaker governments of 1998 and 2001 completed their responsibilities of holding the elections within three months’ of taking change and left within that time. The country was well managed the day to day work of those administrations and they did not have to bother about policy matters. But things have become different for the present Caretaker Administration. The present government has established itself in power for at least two years. It is owing to this that the government has to take many important decisions relating to policy. For instance, there is the question of maintaining subsidies or not for tackling economic problems, asking for balance of power and the like. The matter I wish to raise relates to matter which some have suggested that the matter concerns a policy decision and as such it should be held up for the time being. The subject concerns the development of coal mines.

I have given this introduction because at the moment, Bangladesh has developed a coal mine at Barapukuria. But there have been many problems in the mine. It has been noticed that enough coals cannot be extracted from it. At many places the ground has been giving in. The thermal power station in the mine area has to make do with coal imported from neighboring India. And in order to keep the expenses down inferior quality coal is often imported. This has been harming both the power station and the environment.

Alongside this, the open mine policy in the neighboring Phulbari could not become effective owing to differences of opinion among the leassee, Messrs Asia Energy and the local people. At the root lies the question of relocating and resettling the inhabitants of the area when mining starts .The position is, therefore, that the country has to sit over the uncertainties of the Barapukuria and the deadlock over the proposed Phulbari mines. We see no sign of developing any new mine in the meantime.

Yet the fact remains that Bangladesh has coal and the country needs this resource for production of electricity. According to official data, there are five coal fields in the country. These are: Jamalganj in Joypurhat district, Barapukuria in Dinajpur district, Dighirpar and Phulbari in Dinajpur district and Khalashpir in Rangpur district. In view of the fact that the Jamalganj coal is in a depth of 900 meters , the possibilities of extraction and use of this coal is very thin. According to government estimates, the biggest quantum of coal is deposited here in the neighborhood of 1050 million tones. In the remaining mines some 1005 million tones of coal has been found in the remaining mines. The people now wish to know whether they can use this coal or not?

At the moment, I have before me a media release posted on a website of an organization called Aid Watch of Australia. It has been suggested there that the Australian government should prevent the Asian Development Bank from assisting the Phulbari coal mine project. The media release calls upon the Australian government not to support the Asian Development Bank in matters of Phulbari coal mine on the plea that the project would adversely affect the global ,climate as and when Bangladesh mines and uses its coal for itself. The media release says at one place, ‘Bangladesh will be one of the countries hardest hit by climate change and hundreds of thousands of people will be displaced by construction of this mine. It is also said in the media release ‘ Phulbari coal mine has been vigorously opposed by people’s groups within Bangladesh and NGO’s from around the world’. A committee was formed by the government to review the latest draft of coal policy. I was a member too. The Committee was headed by Mr. Abdul Matin Patwary, former Vice Chancellor of the Engineering University . We submitted a report to the government in January last. I feel that the government should do two things right now. The foremost is to announce that Bangladesh will mine its own coal and use it. The second is to publish in full the report of the review committee. I hope as and when this is done, all doubts and suspicions and the smokescreen created regarding coal will regarding coal will be removed and Bangladesh Government will be able to stand up to the propaganda by the foreign NGOs and use the country’s resources in the interest of the people of the country.


Date: 18 May 2008, Bangladesh


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Law ministry suggests change in mineral rules

Posted by phulbarinews on June 30, 2008

R Akter

The law ministry has pointed out that some sections of the draft coal policy would contradict the existing Mines and Mineral Rules 1968 and suggested amendment of the rules before approving the policy. A representative of the law ministry made the observation at an inter-ministry meeting on the draft coal policy, chaired by energy secretary Mohammad Mohsin at the Energy Division on Thursday, said sources present at the meeting.

Earlier energy division sent the draft coal policy to eight relevant ministries for opinions on the finalisation of the draft. The division, which completed finalising the draft policy on its part, sent the draft to eight ministries, including finance, environment and forest, agriculture, land, law and the National Board of Revenue on Sunday, sources in the division said. The ministries have been asked to submit their opinions on June 24 before the division convenes an inter-ministerial meeting on June 26 to discuss the comments given by the ministries, they said. Sources in the division claimed the division had not made any ‘major changes’ in the draft policy, submitted earlier by the advisory committee, headed by former BUET vice-chancellor Abdul Matin Patwari.The division dropped a provision off the draft, finalised by the Patwari committee, which said the reclaimed land would need to be handed over to the owner in the original form after completing coal mining.

Sources in the division claimed the existing laws did not support the provision of giving back the land to the owner after the government acquired the land. ‘Besides, it will create complexities and scope of corruption as after 10 to 20 years of mining, many “so-called” owners will claim the land,’ observed a source.One of the members on the Patwari committee, however, told the land could be handed over to the owner if the government had the sincerity. ‘Thousands of poor land owners will need to be relocated for mining. The people should have the right to get back the land. If the government owns the land, it will create scope for corruption,’ he said.

Citing the example of land acquisition for the Jamuna Bridge, he said the land was handed over by the government to an influential businessman. ‘The people have not got back their land in the Jamuna Bridge area. Now what we see there is a resort for rich people,’ he said. The division changed the name of the proposed company, Coal Bangla, to Khani Bangla so that other mines such as rock mine could be brought under the authority of the company.The details of the mining method could not be immediately known. Sources in the division could not confirm whether any change was made in the recommendations submitted by the Patwari committee regarding open-pit mining.

The Patwari committee recommended operating an open-pit mine first to observe the viability of the method in Bangladesh before adopting the method for other mines. The division, however, did not make any change regarding the bar on coal export, royalty rate and coal sector development committee.

Source: The Weekly Economic Times, 29 June 2008, Bangladesh

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Law ministry says ‘no’ to draft coal policy

Posted by phulbarinews on June 29, 2008

M Azizur Rahman

The ministries of energy and law are now at loggerheads over adoption of the national coal policy that would determine the fate of foreign investment proposals worth around $ 5.0 billion. The law ministry last week held up its much-expected clearance for the draft national coal policy that the energy ministry prepared after years of hard work, a senior energy ministry official said.

“The law ministry has advised the energy ministry not to adopt any policy but to draft an act to help the process of coal extraction,” energy secretary Mohammad Mohsin told the FE Saturday. The law ministry’s recommendation to adopt an act instead of a policy, however, poured water on the energy ministry’s efforts to get a national coal policy in place.

The energy ministry during last several years was busy in preparing the national coal policy and kept investment proposals worth several billion of dollars on hold. Contradicting the law ministry’s recommendation, the energy secretary told the FE Saturday that an act was necessary for a specific issue. But, he said, the energy ministry has been working on a coal policy to ensure development of the coal sector as a whole.

“The energy ministry will decide on the law ministry recommendation soon,” Mr Mohsin said. Sources said the energy ministry has done nothing to amend the existing Mines and Mineral Rules 1968, which the law ministry thinks, need to be amended to ensure development of the coal sector. The law ministry in their observations also pointed out that some sections of the draft coal policy would contradict the existing rules. For instance, it said, the draft national coal policy provides for giving licences for exploration or extraction work in any coal-field through open tenders whereas the existing rules say that the licences would be awarded on first-come-first-served basis.

Besides, the draft policy says that a proposed coal sector development committee will fix the royalty rate whereas the mining rules say that the royalty on coal extraction would be 6.0 per cent for open-pit mining and 5.0 per cent for underground mining. The companies anxiously waiting for the adoption of the coal policy for their investments include UK-based GCM Resources (formerly known as Asia Energy), Indian business conglomerate Tata group, South Korea’s Luxon Global and US-based Global Vulcan Energy.

Pending investment proposals with the Board of Investment (BoI) include a $2.5 billion project from GCM Resources, a $1.6 billion venture from Global Vulcan Energy, a $1.5 billion investment from Luxon Global and a portion of the Tata’s $3.0 billion proposal. Among the foreign companies GCM Resources proposed in October 2005 the development of an open-pit coalmine at Phulbari with the installation of a 1,000-MW mine-mouth power plant.

Date: 29 June 2008, Bangladesh

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Law Ministry for change in present law before adopting coal policy

Posted by phulbarinews on June 29, 2008



The law ministry has asked the energy ministry to amend the present “Mines and Minerals Rules Act-1968” before adopting the coal policy as it is contradictory to the proposed draft coal policy. “The energy ministry can recommend to the law ministry for enacting a new law in this regard and send it to the advisory council along with the proposed coal policy. However, the energy ministry will decide what they will do but this change is a must for the sake of justice”, a joint secretary from law ministry said at an inter-ministerial meeting yesterday.


The law ministry’s representative told the first inter-ministerial meeting on draft coal policy that some points in  the draft are ‘contradictory’ to the present rules under which the mining sector is being governed now. So the energy ministry should recommend to the law ministry to reform those law first or make new law in this regard. Otherwise, it would not work, meeting sources said. The energy ministry held the interministrial secretary-level meeting yesterday. M. Mohsin, secretary, energy ministry  presided over the meeting.  Representatives from environment, land, agriculture, power ministries and NBR were present.

Although the government committee on draft policy has already suggested the energy ministry to amend some laws and rules in this regard but some crucial parts of the draft coal policy including royalty, mode of awarding coal field, mining method, foreign investment policy remain unresolved. Law ministry’s official said that according to the mine and minerals rules the royalty is fixed and it is awarded on the basis of “first come first serve.” But the draft says that royalty would be decided by a committee and coal field should be awarded through tendering process which is contradictory, law ministry official told the meeting.

“The present government policy has encouraged the privatisation and foreign investment policy. But the draft is virtually narrowing the path of foreign investment as well as privatisation”, meeting sources told The Independent quoting law ministry official. Meeting sources further said none of the representatives submitted any observation on the policy in writing rather  they raised some issues which have already been elaborately discussed.

“Yes it is law ministry’s observation, the environment ministry has also raised some issues which we discussed. Whatever the observation we get from them we will send those along with the coal policy to the advisory council”, M. Mohsin, secretary, energy ministry, told The Independent. 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, etc.  It is alsolearnt that the energy ministry has finalised the policy without making major changes in the draft policy prepared by country’s renowned experts and following the secretary-level meeting it will be sent to Chief Adviser Dr Fakhruddin Ahmed along with the committee’s observation, for approval.

The committee did not say anything about the coal extraction method. The issue should be specially on coal field. It may be mentioned that the committee suggested to the government to examine the pros and cons of open-pit mining and that the government should go for open pit on a limited scale. The policy has not mentioned anything about it. It is learnt that the energy ministry in the draft policy suggested the land reclamation issue be kept under government’s jurisdiction. However, the committee suggested to give the land to its owner. The country has a known reserve of 2.7 billion metric tons of coal but there is no specific policy on coal development, although there are some rules and regulations to lease out coalfields to foreign companies.



Date: 27 June 2008, Bangladesh

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Law ministry says draft coal policy contradicts some mining rules

Posted by phulbarinews on June 29, 2008

Amendment of rules before approving policy will take too much time, say officials
Staff Correspondent

The law ministry has pointed out that some sections of the draft coal policy would contradict the existing Mines and Mineral Rules 1968 and suggested amendment of the rules before approving the policy. A representative of the law ministry made the observation at an inter-ministry meeting on the draft coal policy, chaired by energy secretary Mohammad Mohsin at the Energy Division on Thursday, said sources present at the meeting.

They said that along with other provisions of the draft coal policy, the awarding of licences and royalty fixation method contradicted the Mines and Minerals Rules. As per the proposed coal policy, licences for exploration or extraction from any coal-field will be awarded through open tenders, whereas the existing rules say that the licences would be awarded on first-come-first-served basis, said sources.

On royalty rate issue, the mining rules said that the royalty on coal extraction would be 6 per cent for open-pit mines and 5 per cent for underground mines, whereas the policy says that a proposed coal sector development committee will fix the royalty. When contacted, Mohsin told New Age that they have received the comments of the concerned ministries on the draft coal policy. ‘The law ministry has commented that the draft coal policy could be formulated as a policy or could be made an Act. The division will go with the policy and send it to the council of advisers, incorporating the opinions of different ministries, for approval,’ he said.

Regarding the draft coal policy’s sections that contradict the rules, sources in the Energy Division said that in the draft it is written that those sections would come into effect subject to the revision of the rules. ‘It is not necessary to amend the rules first. If the government approves the coal policy, the mining rules will have to be amended to incorporate the issues,’ said a source. If the government decides to amend the mining rules before enactment of the coal policy, it will take months before any decision can be taken on the coal policy, which was initiated in late 2005.

Representatives of the forest and environment, agriculture and land ministries, Power Division and the National Board of Revenue were present at the meeting, along with others. Although the Energy Division forwarded the draft to the concerned ministries for getting their written opinions on the policy by June 24, none of the ministries submitted any opinion till Thursday.



Date: 28 June 2008, Bangladesh

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“Desertification Claim in Phulbari Unrealistic”

Posted by phulbarinews on June 26, 2008

Prof. Dr. Ajoy K. Ghose, FNAE



World’s leading mining expert Prof. Dr. Ajoy K. Ghose thinks Phulbari Coal Mine Project has more potential compared to Barapukuria Coal Mine. It is possible to extract 15 million tonne/year of coal safely. And water management is the major challenge for it. The plan the project authorities have taken is world class. Environment and rehabilitation challenges are also manageable. On the other side, the claim of causing desertification due to withdrawal of water from the mining area is unrealistic. Such a situation will not happen in real sense. 


Prof. Ghose has been closely working on mining for five decades. He started his career from a UK mine at the age of 23. But he has long association with teaching profession. Prof. Ajoy Ghose is now visiting Bangladesh at the invitation of UNDP for a study on Sustainable Energy based on Alternative Fuel such as coal. A former Director of Indian School of Mines, he is now a mining industry consultant and Editor of the Journal of Mine, Metals and Fuels. He is also a part-time Director of Central Mine Planning & Design Institute, Ranchi. He talked to Editor of Energy & Power Mollah Amzad Hossain. Following are the excerpts of the interview:


EP: How do you evaluate the energy sector of Bangladesh? 


Ajoy: Bangladesh faces acute crisis of energy. The depleting gas resource creates a very critical situation for country’s future energy situation. So, the country needs to exploit all possible energy alternatives to ensure energy mix so that the economic growth does not slowdown because of non-availability of energy supply. Bangladesh has one of the lowest per capita energy consumptions and it has gas reserves, which is fast depleting. There is no recent oil discovery. It has a coal reserve of 2.4 billion metric tonnes and it is a big challenge how the country can ensure maximum use of coal overcoming the hurdles against coal exploitation.


EP: You are saying that coal extraction is a big challenge and difficult task. Why you are saying so, would you explain the matter in details? 


Ajoy: There is a water-bearing formation over the coal deposits of Bangladesh North-West region. It is called Dupi Tila and such a formation cannot be found in most of the countries. There is a similar formation in Neyveli Lignite Mine in South India. For extraction of each tonnes of Lignite, it needs to pump out 12-13 tonnes of water. So, without pumping of water, it is not possible to extract Lignite. Water management is a big challenge to work beneath of he Upper Dupi Tila and lower Dupi Tila. It is difficult but possible. And it certainly involves technology and cost. 


In Barapukuria, coal is being extracted through underground mining and there is problem with this water-bearing layer too. A big flooding took place once that reduced the quantity of extractable coal. I cannot say definitely but I came to realize through my discussions with officials of Barapukuria who went to Indian Institute of Coal Management it may not be possible to extract one million tonne of coal annually from this mine. And the main reason is that it is very difficult to do such a feat using multi-slice mining in underground method. It is possible under open-cut or surface mining. But in such a situation, water management is also a big challenge. I told you about Neyvely. There are a number of lignite mines of Rheinbraun near Cologne in Germany. Such water-bearing structures are also there. They are mining by pumping out water continuously. There is technology, it is possible but certainly, the entire job is a difficult task. 


EP: Would you please explain more elaborately about India’s Neyvely mine? 


Ajoy: Over 32 million tonnes of lignite are being extracted every year from these mines and the lignite is being used to produce some 2750 MW electricity and it is the largest power hub in that region. 


EP: You are comparing Bangladesh situation with India and German mining. Would tell me in details? 


Ajoy: There are open-pit mines in both places –Neyvaly and Rheinbraun. I think mining could be done more successfully and much greater scale of operation in open-pit method in Phulbari compared to Barapukuria. I knew about Phulbari, its conditions and saw their mining plan. It is my observation, if the scope is created, it would be possible to extract 15 million tonnes of coal annually that could help to generate 500 MW, 1000 MW and even 2000 MW electricity in phases. It needs 6 million tonnes of coal. The pumping system that has been planned for water management in Phulbari is of high standard. 


EP: Petrobangla recently held a symposium on coal where you were present. How do you evaluate the discussions and opinions? 


Ajoy: Different people explained the matter in their own ways and they did so without knowing the mining systems. They do not know how it would be possible and how it would not be possible. It should not be right for me to say. But that is what I came to know from that discussion. I think Phulbari is a well-conceived project and the plans that have been made for environmental mitigation are sound and also got environmental clearance from the government. Some people will be displaced, but should be manageable with care. I personally believe Bangladesh economy will benefit once Phulbari project is fully implemented. It is assumed from evaluation that it will add 1 percent to the GDP growth. 


EP: Projects face losses due delay in implementation. You have enough experience about mining. What is your observation about the incidences centering Phulbari and the delay in getting approval? 


Ajoy: I am not fully conversant with the ground realities. Politics is everywhere. It is not only in Bangladesh, India faces the same situation. Last year, 456 million tonne coal and 32 million metric tonne lignite were extracted in India. Government has taken a policy to allow more of private sector in mining but many are opposing it. But we are observing it that it is not possible to meet the demand of electricity in India without extraction of coal. India gets over 70-71 percent power from coal and it will increase in future because India’s vision is to reach electricity to every body by 2012. I think that Bangladesh needs to extract coal to increase electricity generation. So, the government should take an informed decision on Phulbari without keeping the matter pending. 


EP: In India policies are being changed in coal sector. Actually, what is happening there and how the civil society is evaluating these? 


Ajoy: India is also facing some problems in extraction of coal. Keep it in mind that civil society is active everywhere and they are demarcating a land as forest even with a few trees and they are trying to prevent coal extraction in the name of forest preservation. Because, environmental clearances are not given in such cases. The Indian government and the regulatory authorities are working together on how to go ahead mitigating such problems. It is government’s prime target to extract maximum coal minimizing all adverse effects. In 2006, the Planning Commission formed a committee to review India’s mining policy and that committee presented a set of recommendations highlighting how the license would be given and what the royalty would be. The cabinet approved the policy in the light of those recommendations but it is yet to be passed by Parliament. But this time, Parliament will pass it. 


At present, there are a lot of discussions on Coal Mine Nationalization Act. Captive mining is being allowed but they are not given permission to sell coal. Permission must be given to sell coal if anyone is allowed to extract coal. 


EP: You are well-aware that the civil society is doing the same thing in Bangladesh. What is observation about it? 


Ajoy: Civil society is also focusing on different issues. They are trying to prescribe that underground coal mine is needed in Phulbari but there is no scope to think about such a mine for Phulbari. I want to say it again that there is no alternative but to go ahead with a large-sized open-cut mining plan for Phulbari. 

EP: Some experts here are suggesting conservative mining. What is your opinion? 

Ajoy: We should not use any term like conservative mining. It should be ensured that maximum extraction of coal should be the target if we think about mining. But it will be a different issue if we want to preserve coal for future generations. Then, there would be no need to have a mine. It is possible to keep closed a gas field after its development but if coal extraction is once started, there is no scope to stop it. And you have to use the extracted coal. There is risk of catching fire by self-heating if we keep coal stacked. 


EP: There is also controversy about sustainable energy development. How do you explain it? 


Ajoy: Actually, sustainable development, sustainable energy development are nebulous ideas. It is notoriously difficult to give a clear definition. It is said sustainable development means economic sustainability, social and environmental sustainability. I think economic sustainability is the real thing. All others will be taken care of if there is economic sustainability.


EP: You have seen our draft coal policy. Would you comment about it? 


Ajoy: I had an opportunity to see it. Actually, it is not a policy paper in real sense. It is an action paper and you must keep it in mind that policy and action are completely different things. Policy is a guideline for what should be done in long term. So small issues included in it could never be part of a policy. The demand of electricity has been mentioned in the policy, which is unnecessary. Policy cannot contain demand figures; it can only articulate the overall intent for the nation. 


EP: Some people are saying that it should not be rational to do an open-cut mine with 200-meter depth showing India’s Raniganj mine as example? 


Ajoy: It depends on economic considerations how deep you will go to extract coal. I think it is site-specific. In India, coal is being extracted from 250-meter depth and in our country, some 87 percent coal is being extracted from open-pit mines. Underground mining is reducing day by day in India because it has become difficult in terms of costs, production volume and safety. 


EP: It has been widely discussed about Phulbari mine that water level will go downward when water will be pumped out and the entire area will gradually turn into desert. What is your observation? 


Ajoy: Look, water table will go down when water will be pumped out. But it is possible to solve such a problem through recharging or injecting water back. And those who are talking about desertification are only speculating. 


EP: Mining affects farmland. Would re-filling of mining area restore the fertility of land? 


Ajoy: Farmland will certainly be affected by mining but if we refilled it after extraction of coal, it becomes possible to vegetate it again. In some cases, the land becomes more fertile and for this topsoil must be preserved. It must be kept in mind that hybrid crops are cultivated by using fertilizer and water is used, the production will certainly be increased. On he other hand, it is possible to turn double-crop land into a three-crop land. It will take time to restore fertility if topsoil is not preserved. 


EP: We have to think about community if we develop mine. How we can ensure rehabilitation of community? 


Ajoy: It is really a big challenge. If the entire mining area is not developed along with the mine, it will look desert. Under the present system, it would not be enough to rehabilitate the people of the mining area, we must ensure rehabilitation of entire area economically. And for this reason, industries, schools and hospitals will be set up there and bringing back people to their respective professions. We should remember that we are making man-made capital through exploiting natural resources. People must be trained up for the new jobs and we need resources and we need to search for new energy resources. For this reason, coal extraction has become essential for Bangladesh. 


EP: It is now worldwide recognized that company community bridging is necessary for developing mine. What is your opinion about it for Bangladesh? 


Ajoy: It is true. Coal mines across Europe faces closure, leaving workers jobless and it is responsibility of the governments there to rehabilitate the workers and their children to new jobs through training. But USA, China, India and Australia are extracting coal to meet their energy demand. USA extracts 1000 million tonnes annually, India 450 million tonnes, China 2400 million tonnes, Indonesia 160 million tonnes, Australia 300 million tonnes, South Africa 230 million tonnes and Colombia 100 million tonnes. These countries are extracting coal and ensuring the jobs for their communities. In Bangladesh, the community must be compensated and rehabilitated properly and sensitively. 


EP: Coal is being used as main raw material for power production across the world. In Bangladesh, it has been mentioned in the power sector master plan. What is your opinion? 


Ajoy: Power sector master plan has been prepared aiming to achieve 8 percent GDP growth and according to this plan, the country needs to produce 43000 MW by 2025. Out of it, 33000 MW must be coal-based. I think it is an over estimate. Bangladesh needs a maximum of 22000 MW power by this period to maintain 6 percent GDP growth. From this point of view, Phulbari coal mine has huge potential because the country will get 15 million tonnes of coal annually from Phulbari and out of it, 3 million tonnes will be semi-soft coking coal, which is not used in Bangladesh. So, this coal can be exported. And remaining 12 million tonnes of coal can be used for power generation, brick fields and other commercial purposes, including coal to oil conversion. This coal can be used for next 35-40 years. In many cases, reserves could be increased with more exploration 


EP: What can we do for the development of coal-based industries? 


Ajoy: Bangladesh must extract coal for solving energy crisis and ensuring energy security. Steps must be taken to develop gas, coal and other energy resources for a balanced energy-mix. Electricity demand is on rise due to expansion of industries and for improving the quality of life of 135 million people. So, there is no alternative to it. 


EP: Would you tell something about Barapukuria coal mine? Is here any scope to set up an open-cut here? 


Ajoy: I have no clear idea about it. I think recovery will be very poor here using underground method. But it is very difficult to change it when a mine is fully developed. Emphasis should be given on extraction of maximum coal and reduce coal losses. May be after extraction of first slice, the mine is transformed into open-cut one. 


EP: We need efficient manpower for the development of coal industries and we need efficient regulators. What should we do about it? 


Ajoy: I think a mining engineering department must be opened in any university immediately to prepare mining engineers for the country. In India, mining engineers used to join IT profession even four years ago. But now they are getting good jobs at home or abroad. Side by side, Bangladesh should start some research institute. For example, if it is not possible to develop Jamalganj coal basin because of huge depth. But it would not be wise to keep resources unused. Some pilot projects on underground coal gasification could be taken up. 


EP: Every sector faces some controversy at the beginning level and it is worldwide. Do you think carbon traders have any role against development of coal mine? 


Ajoy: There is no way to deny it. But it is not possible to stop carbon emission cent percent by Third World countries like us. I think Kyoto Protocol is a device in real sense that is being used by the developed countries to stop developing countries. Its prime target is China and India. We must lay maximum emphasis on economic development.



Date: 01-15 May 2008, Bangladesh

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“Civil Society Must Discuss about Optimum Utilization of Coal”

Posted by phulbarinews on June 25, 2008

Nandita Mongia 


Development planner Nandita Mongia says job facilities must be expanded in rural areas by ensuring energy access for all. “Attaining Millennium Development Goals (MDGs) would not be possible if steps are not taken to ensure job facilities or create income generation scope for rural people, which in turn will need some form of energy,” she said. “I think universal energy access is still a big challenge for Bangladesh. As a result of limited supply, it has not been possible to create job opportunities permanently in rural areas,” said the Head of Energy for Poverty Reduction Project of UNDP regional center in Bangkok.

Nandita Mongia recently visited Bangladesh to undertake a joint exercise with the Ministry of Planning on needs assessment for energy to meet the MDG targets. She shared her experiences with Energy & Power Editor Mollah Amzad Hossain. Following are the excerpts. 

EP: You are working for UNDP’s energy & poverty reduction program. How do you relate between energy and poverty reduction with Asia and Bangladesh perspective?

Nandita: Securing energy supply is a critical concern currently. However, it is not always remembered that secured energy supply doesn’t necessarily mean increased energy access. There are two aspects… first, given the energy supply possibilities, how does it match with the demand and second relates to proper distribution of energy that is already at hand.So for many of the developing countries, especially for Bangladesh and Nepal… the problem that I have seen is a question of distribution. Often the power sector policies or energy policies are mainly targeted for large-scale supply options and demands by organized endues sectors. And distribution policies do not take energy supply to the remote areas and the rural areas easily. These linkages have additional costs. The additional costs involve transmission and distribution expenses, over and above the production cost This doesn’t come through easily in planned policies.

So, on the whole, in an analysis of energy-poverty and MDG attainment, this is an issue I have highlighted most often. For Bangladesh, we undertook a study of energy and poverty linkages given Bangladesh’s current conditions. The challenges that we mentioned in the end of this report are about distribution, policy reforms which are linked to regulatory distribution of energy-power and support decentralized energy access, institutional and cross sectoral coordination mechanisms in place which could contribute to poverty reduction. Decentralized rural energy access help attainment of MDG targets easily.
We are recommending repeatedly that while we focus on big picture energy security of a country, we have to also consciously distribute energy in a more equitable way. 

EP: You know that in Bangladesh the generation of electricity is at a very low level due to the indecision of policymakers as well as now it is a big challenge for supplying primary energy for power generation. What is your suggestion how Bangladesh can manage these things?

Nandita: Supply shortage often is not as a stand alone issue. It is closely linked with how demand is being managed or demand is being projected. One thing Bangladesh can do on the demand side, which will reduce the demand-supply gap is to undertake demand side management. While growth requires energy, it doesn’t require per unit of energy consumption to be so high for industry or transport. More over there is energy transmission, and distribution losses, which need to be cut down. It is not in a country’s best interest to have limited primary energy resources like coal oil & gas using which we produce electricity but finally distribute it inefficiently. 

In many of the big conferences, I look to the ceiling to see whether they are using energy efficient bulbs and most often than not, they are not using CFLs or the air conditioning is too cold & the doors are repeatedly opened to make the room temperature comfortable. This is a waste. It’s high time that part of energy supply gap is addressed through the demand side management. That of course will at least particularly solve the problem.

So, coming to your original question… supply side management. Yes, Bangladesh is facing particularly a tough situation on the energy supply side. And that’s why we all are discussing about coal as an alternative.

Coal resources are really abundant for Bangladesh but the coal development is in a nascent stage in Bangladesh. Of course, it has to be encouraged to supplement domestic primary energy resource base. But, two issues are attached to that utilization of more coal for supply side management. One, coal mining has local and global socio economic & environmental impacts. Globally, it is not a preferred fuel in the world of climate change especially due to its environmental impacts. Though Bangladesh does not have a particular commitment to bring down its green house emission under any international commitment, it needs to be mentioned that currently its emissions are low. To meet the growing demand for energy the country has to go for coal, but we should try to move towards clean coal. And if clean coal production requires more cost upfront there are mechanisms to finance that. In the context of using clean coal, the opportunities of the clean development mechanism and the MDG carbon facilities need to be explored. A country can use some of the funding sources for financing clean coal technology utilization as well as meeting expenses on socio economic rehabilitation. 

EP: You are also saying Bangladesh needs to develop coal sector but civil society is opposing it although some of them do not have clear idea about it. 

Nandita: To resolve it, among other things the civil society has to play a role of informed mediator .You have to increase awareness among the people through advocacy programs on the real situation on the ground, objective alternatives and costs there of. The civil society must get informed about the real situation so that they can appreciate the pros and cons of these steps. As a greater good if indeed a policy action is be striving for it. If uninformed and low awareness when the power supply is hampered due shortage of energy, the same civil society will draw attention towards government’s failure. 

There is no scope to think that coal mine development will entirely be a negative one. The civil society’s opinions about the anticipated problems need to be heard for the development of coal mines and the government should fully engage in analyzing civil society’s opinions whether their reservation are based on solid ground and informed judgments. If yes, they absolutely need to be addressed before proceeding. Typically the issues are about resettlement. Is there adequate land for it? Is there any scope for income generation? You have to see whether people are ready to leave their old villages. How are they being compensated? Moreover, you have to see whether their life standard is improving or not.

In many countries, promises are being made to the people but not much is being done for them as a final follow up. I have witnessed many such incidents in south Asian countries and in such cases, the government is not being able to monitor it. NGOs can come forward to properly monitor it and NGOs must be impartial in undertaking such jobs. It must be kept in mind, the people who are being evicted have limited or no strength to protest. So, the main responsibility of the civil society would be to aware the government whether the evicted people are given the promised facilities as mentioned during the project’s clearance phase. In China, civil society has limited role but they have been active in India and the Philippines. The civil society can do the same here in Bangladesh. 

EP: It has been mentioned in the strategic paper that equal opportunities must be ensured for people of all regions to achieve MDGs but it is not happening. Employment opportunities are not being created in the country’s northwestern region due to non-availability of energy. Some experts say coal mine development can be a solution to this problem. But controversy has created over it. You are working on coal mine, economy and community development. What are your suggestions? 

Nandita: I am coming to the point in a different way. There is huge scope to generate employment through developing coal mining as an industry. However, for the local people to find employment, they must be trained up. But would they get such training? What are the immediate employment scopes for them? Would the people who have lost their land for mining get priority in social and economic activities? NGOs and civil society must work with these important issues. These issues and their implementations must be discussed besides discussing whether the coal mines will be developed or not. Such facilities were given to people in central mining areas of India. It is my personal experience that resolving energy crisis is a must for development of energy-starved region. It is the prime condition to create employment opportunities for improving the standard of life of the poor. 

EP: Your were talking about decentralized energy supply system for Bangladesh. Would you explain it? 

Nandita: Let me try using an example. You said that northern region is agriculture-based. Agricultural waste can be used for electricity generation and its technology is not costly and certainly it could be a good business opportunity for private sector. Think about rice husk. With this, it is possible to produce electricity through co-generation in many locations. It can be helpful to supply electricity to a small area. Besides biomass, there is scope to generate power by using bio-gas. Bangladesh can do it easily through encouraging the private sector enterprises, SMEs etc. Although it would be an alternative to grid-power, it could play a vital role in providing energy in smaller communities and rural areas, creating employment opportunities.

EP: Solar home system has witnessed a massive expansion in Bangladesh as decentralized energy but people are getting it at a high cost.

Nandita: You know, solar home system is rather costly as an upfront cost when not subsidized. It lights some bulbs, runs televisions, charges batteries. But, it will not directly contribute to motive power. On the other hand, cogeneration-based power generation has two benefits: its low-cost and economic return is very quick. It makes income-generation easier, creates payback scopes of people. Further I think, Bangladesh should go for micro hydro, mino hydro and piko hydro projects, in feasible terrains.

EP: Do you think that the government should enact a law for implementation of energy saving appliances? 

Nandita: Absolutely. This will support demand side management I was referring to earlier. You can do these voluntarily or as mandatory measures in selected sectors. If former, the expected results will be slower to achieve and for this reason, I think a law is needed to make the mandatory use of some obvious gadgets: energy saving bulbs and other equipment, especially white goods. Our study shows that energy demand can be reduced by 25 percent though energy saving measures. It will be successful when the government takes steps about establishing minimum standard, labeling, regulatory activities and compliance in place. For this the government does not need to invest large funds. Once the regulatory environment is in place the business sectors will invest in making CFL and tools for efficient use of energy. What you need is proper regulatory system. Right now there is no incentive or motivation to get out of producing and consuming products that are inefficient but cheap in the short-run, but longer term they cost more. But it does not mean that Bangladesh will have to be efficient like Europe in one stroke. You have to start because you have no time to waste. You have to take the country to a level ultimately comparable to global standards. 

You have to ensure quality of energy efficient equipment because people will lose their interest if they are given sub-standard equipment. For example, people in Vietnam a few years back lost their interest in using such equipment when sub-standard Chinese equipment were supplied to them. In India and several other countries in South Asia, there is Bureau of Energy Efficiency (BEE), which ensures the standards of such products and manufacturers are given necessary training to identify, and achieve them through energy audits. 

EP: Experts across the world say that energy availability must be ensured to achieve MDGs. You are working on it directly but nothing is being done in Bangladesh on this issue. What type of cooperation can Bangladesh get from other Asian countries? 

Nandita: We should keep it in mind that it would not be possible to achieve MDGs if energy supply is not ensured. A driving force is needed for income generation. Cooperation from Asian countries can be both at large and small scale. At the larger political level cross-border energy trade is being discussed within SAARC & ASEAN countries. I will not get into the larger political discussion except mention that regional cooperation on energy can only enhance our collective security. At a smaller scale there can be project level collaborations and cooperation on lessons learnt and best practices that have enhanced energy access for communities and decentralized groups of consumers. We recently completed review of energy access projects helping in poverty reduction. Some 28 projects were reviewed in different countries under these issues. And from these, some12 projects are reflected in a compendium of bets practice across Asia & Pacific countries. It serves well as a reference document.

Every government needs an advocacy tool on what should be done to highlight a good work or successful handling of challenging issues. Of the mentioned projects, three are in Bangladesh but how many entrepreneurs know about it? If you have such a tool, you can inform the people about it. NGOs can also play an effective role. What is important is that entrepreneurs should be developed from lower level. Results of a work must reach at the national level from lower level. What I mentioned earlier, the government or the company must talk to the NGOs that are working in mining areas of the northern region. The NGOs must be briefed about the measures the government or the company is going to take for rehabilitation of the people and protection of environment of the mining area. NGOs can give their suggestions about it. If acceptable, steps must be taken to motivate the community with he help of the NGOs. 

EP: Please tell us something about your visit to Bangladesh? 

Nandina: I have come here to carry out a need-assessment on MDGs along with the Planning Commission. It is one type of review. Our main work is to see where we are and what we have to do in achieving the targets. What type of training and how much money are needed, what types of resources we have and what things we need beyond these. How the private sector will participate, what will be the role of community and how much assistance and loans will be required. I am hopeful of getting a clear picture by July-August next about what we have achieved and what we have to do. 

EP: What can we do to ensure supply of energy? 


Nandita: Government must construct infrastructure for energy supply. For example, if coal mine is needed to develop for extraction of coal, government must decide it. If government does not have capacity to invest fully, local and foreign private companies can be partners. Government can involve civil society in deciding what type of contact is being done, what would be the rate of royalty and what the country would get. But the civil society must be responsible. And if it cannot be done efficiently and properly, resources will go out of the country, people will not be benefited. The government has sought support from UNDP for it and UNDP has given its support. The government can seek expertise from outside if such experts are not available in the country. Government must formulate the necessary law and rules and then the private sector will come forward. On the other hand, different government agencies like LGED can work on renewable energy. NGOs can be involved in it. You have to work collectively to use all energy resources to ensure energy security. If necessary, steps to be taken for sub-regional cooperation. 

EP: You are saying about sub-regional cooperation. How can it be initiated? 

Nandita: It is actually cross-border energy trade. Thailand and Cambodia are trading energy. Steps must be taken to successfully explore whether Bangladesh can import energy from neighbors. 

EP: In comparison to many other countries it is said that Bangladesh is in better position on resources and demand. It has become a big challenge for Bangladesh to take a decision about its use. How can we face it? 

Nandita: I want see it from a different direction. The responsibility of experts and civil society is to identify issues and they can also say which project the government can do and how. Which one needs local private sector’s assistance and which one needs foreign investment. 

EP: Energy sector needs US$20 billion investment in the next 12 years that is not possible for government alone to mobilize. But some people are opposing foreign investment. 

Nandita: It is not possible for any developing country to go alone in this effort. Besides physical investment, availability of skill set is very important. Efficient and highly skilled manpower is available in the region and investment too is also there but the government must be efficient to make investor friendly atmosphere and yet not strike deals contrary to long-term national interests. Along with investment comes the question of efficient revenue management from the investment streams.

EP: You mentioned about informed civil society. How can we take it ahead? 

Nandita: The government cannot go alone for. Academia, journalists, intellectuals and experts have to share with open mind, disseminate debate and accept the ground level reality. It is possible to build informed civil society through outreach and advocacy. Share information with all and reach consensus through dialogue. 

EP: Developing manpower for future. What can be done to educate children about energy conservation and efficient use at school level? Is there any initiative in other countries? 

Nandita: It can be explained in different ways. Some subjects can be incorporated in school level curriculum and many countries are doing it. Radio-TV program can be developed. A quiz contest was organized to educate children of Pacific Island about environment. Such programs can be taken up in Bangladesh. Media can take an initiative with the help of local authorities, schools, donor agencies and other interested parties. Certainly, it will yield good results.


Date: 16 June 2008, Bangladesh

Posted in coal, Phulbari-news | Tagged: , | Leave a Comment »

Future Energy for Bangladesh

Posted by phulbarinews on June 25, 2008

Zubayer Zaman


While the country is facing severe power crisis, public life is shattered for unbearable sufferings of load shedding; experts are busy with debate and discussion over extraction of alternative energy source coal. The use of this valuable underground resource for the benefit of the country is becoming uncertain for emotional debate over various issues associated with coal sector development. The government is still indecisive about the coal extraction issue. Many concerned that if this indecisive situation continues, the country will soon face severe energy crisis; economic development will be threatened. Even Chief Adviser’s Special Assistant for Energy Dr M Tamim expressed his concern that the country would face a tremendous power crisis after three to four years if proper decisions are not taken and implemented. The situation is not very encouraging; time to act now. Otherwise the country will pay the price for this inaction and indecision.

Power Generation & Demand
A big majority of the people are still to have access to electricity. Only 40% are enjoying the facility. With this situation, a major initiative with visionary planning would be required to ensure reliable access of electricity to every citizen. According to the government statistics, the peak hour electricity demand of the country is around 5000MW. Against this demand scenario, the installed power generation capacity of govt. and private power plants together is around 5,212 MW. But PDB could not generate power according to the installed capacity as most of the power plants lost their installed generation capacity. Moreover, at least a dozen of power plants always remain under maintenance works for their poor state. Fuel crisis also force to reduce generation of many power plants. Therefore PDB generates on an average 3,500MW against peak demand, making a 1,500MW power deficit, which brings unbearable load shedding and sufferings to public life. Transmission and distribution problem also makes the situation worse. General people have been facing this serious power crisis for decades. This has been always the subject of debate and discussion but still to find any reasonable solution. People find it very difficult to cope with the situation but it seems there is no relief or improvement of the situation in the near future.

Gas –The Major Source of Power Generation
Our power generation is heavily dependent on gas with minimal contribution from other sources. Only a 250MW coal based power generation started in 2005 dependent on Barapukuria coal mine, which often face interruption for technical difficulties or regular supply of coal. Hydropower generation capacity is 230 MW and around 200MW comes from imported oil sources. According to the estimates of 2007, about 80% of the power plants are gas based. Sector wise gas consumption according the Petrobangla estimates is power generation 42%, fertilizer industry 17%, captive power 12%, industry 14%, domestic 12% and others 3%. CNG use in the transport sector is also increasing rapidly with sky rocketing oil price in the international market. This statistics shows how heavily we are dependent on gas and how venerable we are regarding energy security. Any major reduction or interruption in gas supply would create serious crisis in power and industrial sector. The proven and probable gas reserve in all the gas fields operated by Petrobangla and International Oil Companies (IOCs) is approximately 15 TCF, of which 7 TCF has already been used. The gas demand is increasing at a rate of 10%. But the exploration and development of infrastructure were not initiated simultaneously with growing demand. At present the country is having 100 mmcf shortages of gas against 1800 mmcf demand daily. A significant numbers of industries couldn’t start operation due to lack of gas supply. Chittagong region is the worst sufferer of this crisis. The government has already stopped providing new gas connections in Chittagong and adjacent areas and has been maintaining a cautious approach in allowing new connection in Dhaka and adjacent areas because of gas shortage. Petrobangla has also informed Power Division about their inability to supply gas in any future big power plant. Recently the government has started gas rationing in various sectors and urged the industrialists/businessmen to be sensible in gas uses.

Bangladesh is blessed with a substantial amount of high quality coal in the northwest Bangladesh. The estimated resource in the five discovered coal fields is around 2500 million tonnes, which has heat value equivalent of 70 TCF gas. Among the discovered coal fields only Barapukuria and Phulbari coal resources are confidently defined, others are inferred only and significant efforts will be required to define the mineable reserve of those coal fields. But coal sector with all its potential has never been in the serious considerations parallel with gas sector development. Our policy makers never realized the importance of diversification of energy sources to reduce dependency on gas for long term energy security of the country.

Our only achievement in the coal sector is the development of a small-scale underground coal mine at Barapukuria with Chinese financial and management support. But the mine is having trouble to feed the nearby 250 MW coal fired power plant making the expectation bleak for significant contribution in coal based power generation. Phulbari, another coal field near Barapukuria with a reserve of 572 million tonnes is ready to start mining operation after completion of all relevant studies. The UK-Australia based mining company Asia Energy is involved with the development of Phulbari coalfield. The company has submitted its Scheme of Development to the government in October 2005 and has been waiting for the decision in this regard from the Government.

Coal Sector Development: Debate-Controversy
Nobody was looking into the potential of coal before the Phulbari Coal Project coming into the scene. Very seldom energy expert, policy makers, or pressure group/activists were seen talking or aware about the severe energy crisis that might be created for the sole dependency on gas. Actually the debate started after the declaration of 572 million tonnes of coal at Phulbari Basin by the foreign company Asia Energy. We have seen the active or even violent role of some activist groups against Phulbari Coal Project. Some international NGOs and activist groups are also seen very actively campaigning against this project. But those who are opposing extraction of coal or open pit mining don’t offer any feasible option to the nation to overcome this severe energy crisis.

Those who are opposing open pit mining are arguing that coal extraction by this method will create desertification in the whole northern region and its environmental consequences will be severe and there will be a permanent loss of huge amount of agricultural land. Others favoring this method with the logic that resource recovery is very high in this method, more than 90% comparing to 10-20% in underground mining which is vital for our energy security. Open pit mining will also allow extraction of some other valuable co-products which have high demand in the country. There are well tested mitigation measures in the world to manage the environmental impacts of open pit mining. The loss of agricultural land is temporary and can put back to productive uses after reclamation and rehabilitation. Threat of desertification is a mere propaganda to create panic in public mind against open pit mining. The extraction of groundwater over a period of few decades in Dhaka and surrounding areas has lowered the water table significantly to some 50-60m. If groundwater extraction of much larger scales (some 75,000 litre/sec) doesn’t make any sign of desertification in and around Dhaka City then why mine dewatering with a much smaller scale (5000-6000 liter/sec) would create desertification over the whole northern region? Moreover determination of mining method is not a general policy decision issue; it is very much site specific. Geological, geotechnical reality of the coal field and economic viability should dictate the decision. There is also a sharp difference in opinion over royalty rate, export issue and involvement of foreign companies and investment in coal sector development. But the question is how long we would continue the debate over coal extraction leaving the country in a severe power crisis. Who will be benefited from this debate or delay in the process of coal sector development? Although our contribution to green house gas emission is very insignificant, there is a growing concern over global warming. The rapid economic growth of India and China increases burning of fossil fuel tremendously. China almost every week is setting up a new coal based power plant to meet the growing demand. There might be international agreements in future limiting the use of coal to control the emission of green house gases responsible for polluting the atmosphere. Bangladesh shouldn’t be left with a lot of coal in the ground that has no value due to these usage restrictions. So, whatever the reasons or interest behind this opposition, an acceptable and reasonable solution of all those issues raised is important for immediate development of a healthy coal sector.

Coal: The Reliable Future Energy
Coal is the most abundant fossil fuel in the world with recoverable reserve in around 70 countries. At current production levels, proven reserves are estimated to last for more than 150 years. Many countries are heavily dependent on coal for power generation. It is the single largest source of power generation of the world with 40% contribution in this sector. World steel industry also consumes significant amount of coal. Approximately 12% of the total hard coal production is currently utilized by the steel industry. The substantial amount of high quality coal presents unparallel opportunity for Bangladesh to diversify fueling of the power sector, reduce dependency on gas and thus improve energy security. A mine with 10-15 million tonnes annual production capacity can feed few large 500MW power plants for next 30-40 years. Reliable long term supply of coal will also attract local and foreign investors in coal fired power generation. The preferred power generation strategy for Bangladesh would be to shift the base load of the power system to coal and save gas either for peak loading or for other valuable uses. Use of coal to fire large power plants would be one of the keys to rapid improvement in the power sector over the next decade. The coal for its semi-soft coking properties also has the potential to use in steel making industry along with other domestic and industrial uses. Coal has another potential use in briquette making. Coal briquette is widely used in many countries for domestic cooking and in small industries. It could a good option mainly for the north-western Bangladesh, where the forest resource is depleting rapidly for the dependency on fire wood for domestic cooking in absence of other alternative fuel sources. We already have the experience of underground mining. Barapukuria mine clearly demonstrates how difficult it is mining in underground condition. Considering the energy situation and geology of the coal basins, Bangladesh has to go for large open pit coal mining adopting modern technologies and `best practice’ mitigation measures. The coal extraction has to be economically viable to manage all social and environmental issues associated with mine development. But to see the coal on the ground within next 2-3 years and use it for power generation to overcome the severe power crisis, decision has to be taken right now. Bangladesh cannot effort to loose time further for indecision.


Date: 16 June 2008, Bangladesh

Posted in coal, Phulbari-news, Power & Energy | Tagged: , , | Leave a Comment »

Coal: Where We Stand?

Posted by phulbarinews on June 25, 2008

Dr. SM Mahfuzur Rahman

The Information Gap & an Unwanted Bottleneck

One of the major limitations of researchers and decision makers in Bangladesh is the difficulty in having complete information related to the issue, which they intend to study or on which they are to take decisions. The case of coal mine in Phulbari is not an exception. Not many among the people, who are now involved in the debate on the mine actually have full information about the

a. Economy of Phulbari and the surrounding area,

b. Geophysical characteristics of the area,

c. Technical details of the possible mining methods that can be applied in Phulbari and their consequences, and

d. Mitigation measures for facing the adverse effects of adopting any particular method or a combination of methods.

Curiously enough, a section of the intelligentsia has taken a very open stand against mining coal in Phulbari apparently having only very scanty information on the above issues. This section of the people smartly ignores the whole agenda of energy crisis in the country. Instead, the leaders of the section are vehemently running the campaign that the mining in Phulbari coal field will cause disaster to the local community and environment and are not at all ready to consider that the various issues, including acquisition of land causing people to leave their ancestral abodes, temporary, or even permanent loss of agricultural land and difficulties in shifting infrastructures on the land acquired of mining the coal resources in Phulbari are to be looked at in a framework of overall analysis of

a. The resources of the Phulbari coal mine and their importance for the economy of the region and of the country;

b. All the different types of social and economic costs and benefits of mining at Phulbari and their magnitude;

c. The available mitigation measures for the possible adverse effects;
d. Anticipated gains for the nation by mining the coal and the losses by leaving it underground for an indefinite period;

e. Opportunities to be missed by postponing any initiative of coal mining in a situation when the country is facing severe energy crisis, the prices of energy resources are soaring high in the international market and the prospects of developing alternative energy sources in the country is very bleak; and

f. An outlook to the country’s coal resources when the regime of carbon trading in the world is changing very fast.


Unfortunately, much before being able to understand the importance of the mine, as well as of the problems and their possible solutions, a part of the Phulbari people had been instigated to organize movement against the mine and the key strategy used in motivating local people in the movement was the psychological play of the arguments that millions of local people will become permanently homeless, that the mine will eat up all the fertile agricultural land of the area and that the mine will cause desertification of the whole region. Obviously, the campaign was based on exaggeration of the ‘threats’ of mining coal in Phulbari for the local people.

Regional Disparity & the Poor Economy of the Coal Rich Area

It is a popular belief in Bangladesh that the north-western part of the country is the victim of prolonged regional discrimination by policy makers which has made the region a relatively backward one. There are many economically backward territories in other parts of the country also, but such territories in other parts are mostly enclaves, while the backwardness in northern Bangladesh stretches widely throughout the region. An important observation in the case is the alleged indifference of the policy makers to the causes of underdevelopment of the northern region of the country and to the need for eliminating the disparity.

A few years ago, people in the northern region of the country started to believe that with completion of the Jamuna Bridge, the region would get a momentum in development. It was expected that the factor mobility created by the Bridge alone would change the economic geography. In fact, the Bridge has a significant contribution to taking the agro resources, including agricultural raw materials from the northern to the eastern part of the country and making development of the eastern part easier. But since the Bridge could only provide the transport facilities and the northern part continued to remain deprived of power or gas supply, there had been no expansion of manufacturing industries in the region and the Bridge could only contribute to a faster drainage of resources from this part of the country to the eastern part. The effect was the increase in prices of agricultural products in the northern region. The local producers at the grassroots level however, did not get the benefit, which was appropriated largely by the middlemen. Most rural markets in the northern region now face scarcity of fish, milk, eggs and seasonal fruits. Because of the easy access to local markets the brokers and wholesale buyers purchase these products at cheaper prices for selling in towns and cities and thus create shortage of them for local consumers. The later now buy products of their own origin at prices much higher than what the urban buyers sometimes pay.

Inadequate power supply is the single most important reason for economic backwardness of the northern region of the country. Bogra, once an emerging industry center of the country, had a few pioneering industry units, which were closed down largely because of the failure in competitions with similar industries in other parts of the country. Most important among the causes was the power factor. Industries in Bogra could have uninterrupted power supply only through a support by producing diesel fuelled electricity. The cost of production of such power is much higher than the gas fuelled power available in the eastern regions. This makes the difference in competitiveness of the Bogra products and ultimately, a cause to the ‘death’ of the Bogra industries.

The scenario is the same in any other part of the northern region of the country and the conclusion is obvious: it is not possible to eliminate disparity between the eastern and northern regions of the country without availability of sufficient electricity in the later region. Discovery of coal deposits in Phulbari, Barapukuria and Dighipara in the southern part of Dinajpur district and in Khalaspir of the adjacent Rangpur district has opened up a great opportunity for providing electricity to the region and also solving the country’s energy crisis in the face of quick depletion of the gas reserves and bleak prospects of developing other energy sources.

The six southern upazilas of Dinajpur district – Parbatipur, Phulbari, Birampur, Nawabganj, Ghoraghat, and Hakimpur – which surround the coal deposits in Barapukuria, Phulbari and Dighipara, cover a total area of 1400 sq. km. and have a total population of about 1 million. Agriculture is the main profession of the local people. Fifty per cent of the area’s total population has farming as the principal (for majority, the single) profession and about one-third of them are agricultural laborers. This means that three-fourths of the people of the area live on agriculture, which was the scenario for the whole country some four decades ago. Employment structure in other regions of the country had changed over time because of the structural changes in the economy. But the employment structure remained unchanged in Phulbari and its surrounding areas, which only indicates that the economy of the sub-region did not have much change over a long period of time. About 2.5% of the people in the area are non-farm laborers, about 11.5% are engaged in business, 5.5% have jobs in private and government offices and the rest are involved in miscellaneous professions. That only a small proportion of people work as non-farm laborers shows that the industry sector has an extremely marginal development in the area.

There is no reliable statistics about the number of the different types of industry units in the six upazilas and also, not much is known about their production capacities, the capital and manpower employed, the technology used, and their contribution to use of local resources and to the economic and social development of the local people, as well as of the people of the country as a whole. This does not mean that the area is rich in industries and it is just a point of non-availability of statistics. The literature is relatively blank on the issue because there is no considerable industrial development except that there are a few automatic rice mills, a number of paddy husking/wheat grinding mills and some bakeries, ice factories, and saw mills and a handful of welding workshops. The area was once rich in traditional workshops of craftsmen such as the goldsmiths, blacksmiths and potters all of which are now in the decay and at present, they have practically no importance as industry units. The area has a great potential for development of agro-based industries which remained unrealized largely because of the poor transport and communication infrastructure and non-availability/acute shortage in supply of power. Less than 10 per cent of the 2700 km road network across the six upazilas are metalled and although the maps show existence of a large number of rivers and their tributaries in the area, they lost navigability long ago and are of no use now as part of transport network.

The area however, is blessed with some modern industrial projects – a railway workshop at Parbatipur, the Barapukuria Coal Mine and a 250Mwt power plant at the Barapukuria mine gate and the Madhyapara Hardrock Mine. It is assumed that the selection of Parbatipur, a large railway junction in the northern part of the country, as the location for setting up the railway workshop was historical. The railway department possessed a huge amount of land at Parbatipur and although the railway workshop might have some contribution to repair and maintenance of the railway wagons and or engines, there is every doubt whether it actually has any effect on the local economy. It was easy for the government to establish the workshop at Parbatipur because there was no resistance from any group of social activists in acquiring such a huge amount of fertile land. Most local people have little knowledge about what the workshop actually does. A significant reason for it is the fact that the workshop has practically no or a very insignificant multiplier effect in the region and it does not create new employment opportunities or could trigger any momentum in the region’s economic development. Unfortunately, neither the media nor any section of the intellectual community and the social workers have ever raised the question whether it is at all justified for the workshop to acquire such vast amount of the fertile agricultural land. But it can be guessed that perhaps the workshop could not be established in some other location of the country in the face of the resistance of the local people of those other places against acquiring the fertile and scarce lands for the purpose.

Coal for Power to the Country & Development of the North-Western Region

Discovery of coal deposits in Barapukuria, Phulbari, Dighipara and Khalaspir has opened up new prospects for development of the North-western region of the country. Coal search and exploration started in the area fairly long ago and a good number of intensive studies have been done on various aspects of mining the area’s coal deposits, including the technical, social, economic and environmental issues. Review of the findings of these studies leads to the conclusion that with fast depletion of the reserves of natural gas, the main fuel for producing electricity and the main raw material for production of fertilizer, there is now no alternative to mining coal of Phulbari, which can solve the country’s energy crisis and provide new engines of growth. Some other major conclusions are:

a. Discovery of coal reserves in the Phulbari area of northern Bangladesh is seen as a blessing in a situation when the country is facing the threat of an inadequate supply of affordable commercial energy including electrical energy.

b. The growth rate to be achieved by Bangladesh in the coming few years for achieving the Millennium Development Goals should be higher than the 5-6% that the country could achieve in the past two decades but the reality for the country is that even the modest target of a sustained 7% economic growth is not achievable without regular supply of electricity.

c. The present installed capacity of around 5500MW of the country’s power plants fuelled about 85% by gas, 3% by hydro, 4% by furnace oil, 4% by diesel and 4% by coal is not sufficient to meet the country’s energy demand, the generation is much lower than the installed capacity and at the existing rate of use of gas in power plants, production of fertilizer, vehicles, brickfields and some industrial units and in household consumption, the reserves of gas will be exhausted in some 15 years, when power production will collapse in the country.

d. Given the fact that the country is not in a position to significantly develop other sources of energy to meet its energy requirements in the near future it has become an obvious necessity for her to mine coal.


The expected benefits of a coal project in Bangladesh are

1. Use of coal as an alternative fuel for generation of electricity and improvement of the energy security and the economic infrastructure as the basis for growth and development of the economy of the country as a whole and the north-western region in particular;

2. Saving natural gas by use of coal in electricity generation and the use of the saved gas in increased production of fertilizer and other beneficial purposes including in industry units and households by expanding the gas supply network and thereby arresting the depletion of forest resources;

3. Supply of coal as a cooking fuel (for example, in the form of briquette) in rural households now dependent on traditional biomass that are becoming expensive and have alternative uses;

4. Working of the multiplier effect of the implementation of coal project(s) and especially, development of derivative industries and the working of export elasticity to economic growth; and

5. Revenues of the government over the lifetime of the project.


Issues Which People Love Talking About, Thinking, Considering

The costs and benefits of mining the coal in Phulbari would significantly vary depending upon the method of mining. Open pit mine would cause loss of agricultural land and displacement of the population and commercial and residential land and structures within the mine footprint area in phases over the years of mining in the area. This type of loss is inevitable in any development work and there are plenty of cases in Bangladesh which are more questionable in terms of the justification of the size of valuable agricultural land acquired or the number of people displaced in the name of development. This does not mean that the coalmine in Phulbari can be allowed to develop causing irreversible damage to people, land and the environment. An extensive investigation and work with local communities are required in identifying households and the land affected by the project, valuation of assets lost, estimation of the compensation and resettlement/rehabilitation requirements and determination of mode of comprehensive arrangements for all losses of assets, structures, lands and the crops, vegetation, fisheries, poultry etc. and training of people to cope with situations created by possible loss of livelihood/professions.

There is however, no reason to believe that coalmines cause permanent losses of all lands and structures. Designers of a coal mine should know how to phase out the mining work and develop a mining plan with provision for removal and storage of the top soil, excavation and mining the coal, backfilling and then restoring the topsoil. The forests and wetlands can be realigned and there are proven technologies of keeping the water table in and around the mining area at normal levels, and also of mitigating environmental degradation. Underground mining would involve costs of managing water inrushes inside the mine beneath the ground, inevitable risks associated with spontaneous combustion of coal with the emissions of hazardous and toxic gas and the high temperature, the risk of land subsidence in the mining area, the cost of holding the roof atop the long walls and the like and more significantly, the loss of major part of coal that would not be possible to extract in the underground mining method.

There is a debate around whether to use the entire coal of the mines in Phulbari or other areas in the domestic economy or a part would be allowed to export. A ‘nationalist’ claim may suggest that there should not be any export at all and the claim apparently looks very reasonable. But once the emotional element in the thinking is eliminated one may take a few points in consideration irrespective of whether the mines are operated as projects of a foreign, or a domestic (government or private) company or of a partnership venture having both government and private (including foreign) ownership. The points are:

(a) What should be the economic size of the projects (i.e., how much should be the annual extraction of coal from a coal mine to match the scale of investment in a project and make the project economically viable);

(b) How much of the coal the country is prepared to absorb within the economy (i.e., the requirement of the new coal based power plants and the plants for production of coal briquettes, use of coal in brickfields and in domestic cooking and the like).

(c) What to do with some grades of coal (for example, the high grade semi-soft coking coal) available in Bangladesh that would possibly have no use within the country in the near future.


The equation is: a coal project may need to produce, say, 15 million tons per year to be an economically viable one (at the given trends in the domestic and international market price of coal and co-products) but the country is ready to absorb say, only 9 million tons per year. Some economists may reasonably consider it wise for the government to allow export of the ‘surplus’ coal (and use the income from the export for settling import bills for machineries and supplies required for operation of the mine and associated infrastructure, as well as for economic development through reduction in pressure on the foreign currency reserves and establishing better commands on balance of payments) instead of asking the project to stockpile it. But the government might possibly gain more by not allowing coal exports. In that case, the government is to create additional coal use capacities in the country (say for example, by establishing new coal fuelled power plants, briquette factories, supplies of coal to brick fields, industries that use coal as fuel and not diesel or petroleum).

This paper assumes that by not implementing the project, the country would face severe energy crisis within less than a decade. It also assumes on the basis of the experience of the Barapaukuria coal mine, which is now in operation around the coal deposits in Phulbari, that although underground mining might apparently look more acceptable in terms of lesser displacement of people and structures or of losses of agricultural land and crops, the method is highly inefficient in terms of resource recovery. Some major problems of underground mining have already been raised above. In addition, the shallow depth of coal deposits at Phulbari, loose soil structure of the surface and sub-surface crust and the thickness of the coal seams do not suggest that the underground mining would be safe and cost-effective. In addition, the extraction of coal by using underground mining would create voids that will inevitably cause land subsidence. There are in fact cases of subsidence in Barapukuria underground coal mine and many among those who are proponents of underground mining in Phulbari now say that if the underground mining method is applied in the project, the land on the surface cannot hold the weight of buildings or relatively heavy structures.

Reduction in coal recovery rates or increase in the costs of mining for measures against the risks would make the project economically non-viable not only for the implementing agency, be it a government, a private, or a joint venture company. A question to consider is: if underground mining ultimately leads to subsidence and subsequently, the loss of the habitat and agricultural land, why shouldn’t the policy makers think of considering open pit method for the project from the very beginning?

The logical point in that context is to make thorough estimates for the losses in settlements and the environmental effects of open pit method of mining in Phulbari and create provisions for compensation and rehabilitation and the protection of environment. Three major concerns are: resettlement, water and the project area economy. The project affected people (PAP) are to be appropriately compensated for the losses they would incur and resettled somewhere and they are to take up land that can be used for production or to have the opportunity of being engaged in gainful alternative livelihoods. Unused land under the possession of Parbatipur Railway Workshop can be an ideal location for the resettlement.

Mining coal in Phulbari would have a substantial impact on the ground water regime and the availability of water for irrigation, fishing and household purposes. There is already proven technology of water management in and around open cut mines in different soil and aquifer conditions in various parts of the world and therefore, it should not be a problem for a coal project in Phulbari to maintain the desirable ground water level and keep the water free of hazardous elements, provided that the investors in such project allocates sufficient attention and resources for the purpose.

The mining would introduce the prospect for three aspects of development that are vital for more rapid development of northern Bangladesh:

(a) Development of agriculture;

(b) Development of industry; and

(c) Development of trade and commerce.


The mining would significantly improve ongoing production in both agriculture (largely because of expanded irrigation support, extension and contract buyers, introduction of new crops and cultivation methods as well as more agro-business to supply inputs, and training of local farmers, if arranged as a part of rehabilitation program for the project affected people) and manufacturing and services sector (directly, by using sustained supply of electricity and indirectly, because of development of derivative industries as the multiplier effect of development of mining activities in the area). There is considerable room for increases in production from a more commercial agriculture using greater inputs and consequently producing higher incomes.

Sitting in the Middle of Nowhere?

There are broader implications of having a coal mine project in Phulbari for development of the country as a whole. The key point here is the manufacturing implications of serving the mine and the urban expansion that will occur as a consequence of the investment. Such project will create impetus to development of trade and commerce in Phulbari and the whole of northern region, as well as in other parts of the country. However, development of the coal mine only is not sufficient for the purpose. Neither will it automatically call for a fast growth of business. What is needed in addition is the improvement in roads, railway and port system, and among many others, improvement in the financial transactions.

The Barapukuria Coal Mine is feeding coal to the 250 MW power plant at the mine gate. How much of the power generated by this plant goes to the national grid is not known but it could be gathered that the office of the Rural Electrification Board in Phulbari is keen to maintain uninterrupted power supply to the fast growing number of deep tube-wells in the area that pay solid revenue to the company and thanks to such business interest of the company, people in the area enjoy regular power supply, at least during the irrigation season. Many however, have strong doubts about the regularity of this supply once the season would be over.

Discovery of coal deposits in the north-western region of the country has attracted a great interest of the nation in the region. But despite the general understanding that the country is facing severe energy crisis and that there are strong potentials of these coal mines in solving the crisis, policy makers continue to hold a strategy of ‘critically reviewing all the different opposing views’ and ‘going slow in taking decisions’. Sometimes, arguments are put in a way that says that the strategy of going slow is justified because there had been public protests against implementation of any mining project in Phulbari and the protest even turned into violence leading to killings. The question is: why can’t the government investigate into the incidence while it has already earned a reputation of investigating into hundreds of different cases. The investigation would not only reveal the motives of the movement and the reason for killing but also pave the way for better understanding of the local community about the various aspects of the Phulbari coal mine, for their informed and meaningful participation in taking decision about mining coal in the area.

The government could investigate into how the so called ‘popular movement’ was organized and whether the motives of its organizers were at all very clean. Such an investigation is necessary for quick ending of the so-called ‘controversy’ over mining coal in Phulbari. Keeping the issue unresolved would only mean that the local people will continue to remain divided in opinions, which only goes in favor of those who want that the country should not develop its own coal mines and are not interested to respond to the question: what the nation would do in just a few years’ time when it will find that there is no electricity around. People now opposing the idea of mining coal in Phulbari may not be available for being held accountable in the critical situation when not only all factories in the county would stop, but also even the fans over the heads would not turn or the bulbs in the rooms or streets would not give lights. Given the present energy situation in Bangladesh and the forecasts for the future, there is no scope of wasting too much time on decision on the country’s coal.

The ‘go slow strategy’ for coal mining decision in north-western Bangladesh helps none but those self proclaimed ‘patriots’ who wish no coal mine in the name of protecting everything in the country. It may be safe for the government to sit and do nothing while ‘watching’ public opinion but possibly, it is not at all safe for the nation to wait for the candles to replace the bulbs or the hatpakha to replace fans and no power for the industry units, especially when oil prices in the world already exceeded $125 per barrel and diesel is no more any good fuel for electricity.

Dr. SM Mahfuzur Rahman: Professor, Department of International Business, University of Dhaka


Date: 16 June 2008, Bangladesh

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How Much Natural Resource Is Adequate For A Country?

Posted by phulbarinews on June 25, 2008

Mushfiqur Rahman

A very commonly asked question is “How much natural resource is enough?” In our country there is a popular ongoing debate on coal extraction to meet the present pressing demands for energy versus the suggestion for keeping the resource underground for the future needs, until we will learn how to mine the coal resources without causing any interference with activity on the surface (above the resources) and until we have home grown technology and local financing. Hard to believe? Certainly the recent announcement that the research level in our universities has waned doesn’t instill confidence that we Bangladeshis can do it all alone at least in the foreseeable future. At times a section of people relate the coal extraction issues with the questions of resource adequacy paradigm. A section of activists have successfully established the perception that we have consumed almost all our natural gas resources and only a small amount of coal should be extracted for beneficial use in the future. So we need to promote the strategy of coal extraction only by ‘local miners (?)’ so that the extracted resources can be used locally. At the same time the fact remains unchanged that there is no local miner and investment to facilitate any serious coal mining and we don’t see plans materializing for enough coal (to help solve our energy crisis) to be mined in the foreseeable future.

So the country has been systematically moving from shortages of commercial energy to disastrous crisis, almost like someone is planning to hold back our country’s economic development. Simply put we have an eager workforce and the urge to do better, but without energy industry and human development can’t move forward.

The discovery of coal resources in our country is not new, but for the last forty years of the knowledge of having coal we could hardly secure much and only one million tonnes has so far been realised from our only commercial coal mining operation. Even then the cost of producing this coal has been enormous and difficult to economically justify. Although this existing coal mine has been dependent on foreign funding, technology and manpower support, its performance demonstrates inadequate studies were carried out and choice of mining method was not made based on proper analysis of the ground conditions and nature of the coal seam(s), especially the large thickness.

There is now speculation that this underground mine which apparently will extract less than five million tones of coal from the total 390 million tonnes coal reserve, will be wound down and the Government may invite new investors to develop the coal deposit using the open pit mine method. This will obviously negate the existing underground operation and its infrastructure will be demolished to make way for a much higher production and recovery of our precious coal. So the coal exploration and mining with its more than forty years history followed inadequate strategies and has failed to secure any practical mining which is economically, environmentally and socially sustainable.

The country has been badly suffering from commercial energy supply shortages but ironically is still sitting on good quality coal resources estimates to be at least 2.5 billion tonnes. So the possession of vital natural resource in the country (remaining safely under the ground) does not necessarily automatically mean the resources will be available for its economic use, ie; that we Bangladeshis will get any benefit. While the people of our country and our Government continue to debate the adequacy of natural resources we are running out of time and denying ourselves the benefit from the coal resource, ie; a reliable new energy supply, new power stations, no load shedding, industrial development and jobs, no problem with power for irrigation pumps, etc etc.

If we recall the natural resource related fundamental studies, we see the longest running issue in natural resource economics is resource adequacy. The conventional approach towards natural resources as ‘input’ to production always leads to the simple conclusion that the existing natural resources are not adequate for any nation and it can never be adequate in the long term. The reason is simple; the growth required for economic development will always require more and more inputs so in time the needs of our future generations will not be indefinitely met by our existing natural resources.

A section of people within the society always try to project the ideas that the existing natural resources are extremely limited specially those which are non renewable. They love to believe that the natural resource scarcities will restrict economic growth in future. In 1914 the US Bureau of Mines estimated that there would be oil left over for only ten year’s consumption. In 1939 the Department of the Interior projected that oil would last only 13 years, and again in 1951 it was projected that oil would run out 13 years later. Even if we were to run out of oil, this would not mean that oil was unavailable. Rather it would become more and more expensive. If we want to examine whether oil is getting more and more scarce we simply have to look at whether oil is getting more and more expensive, ie; supply and demand. A similar analogy can be drawn for other natural resources and their scarcity projections.

Before the industrial revolution when the economic activities were tied more closely to local natural resources, fears for shortages of items like forest resources and water were common. With the industrial revolution becoming obvious through the significant contribution of in 1769 of James Watt’s steam engine invention, the reliance on coal grew manifold. Accordingly concerns shifted to the possibility that the depletion of coal will lead to the collapse of development. In the Twentieth Century coal was partially replaced by oil as it is easier to transport, store and use. As recent as the mid 1970s petroleum crisis there were no shortages of scaremongering about natural resource scarcity and economic collapse.

In 1973 and 1979 a pair of sudden price increases awakened the industrial world to its dependence on cheap crude oil. Prices first tripled in response to an Arab embargo and then nearly doubled again when the Shah’s of Iran Regime was overthrown resulting a major recession worldwide. Many analysts warned this crisis as a proof that the world soon will run out of oil. But the reality was different. The dire predictions were emotional and reactions political. By 1973 the world had consumed only about one eighth of its readily accessible crude oil. The five Middle Eastern countries (members of OPEC) could make the price hike for crude oil worldwide not because the oil was growing scares, but because they had managed to corner 36% of the market. Later, when the demand sagged, the Alaskan and North Sea oil weakened OPEC’s economic firm control, the price curve of oil collapsed. Ever since we have been depending on naturally occurred fuel we have been worried about running out of fuel.

The pessimists are not infamous. We may recall at least Thomas Malthus who became famous for his treaties that human population growth would inevitably outstrip the ability of nature to provide sustenance in ever-increasing amounts. With the assumptions of exponential growth and limited resources, we can easily make a doomsday prophecy.

Our present day energy supply is mainly based on coal, oil and natural gas which were created over millions and millions of years. Many people believe that consuming the wealth created over millions of years within a few hundred years is just not right. We should consume our natural resources in a way that our future generations effectively get their share of these resources through developing our country’s economy and human resources to the best of our ability, and positioning our country and people so that our nation is able to afford whatever is required in the future.

The argument of “sustainable resource use” sounds attractive, however, it is inevitable that at some stage in the future a generation of people will be left with no fossil fuel at all, even if we slow down consumption and use just one barrel of oil a year! The strong counter argument is that although we can’t preserve our natural resources for future generations we have an obligation to leave for them the knowledge and capital such that they can secure a quality of life that is better than ours, ie; this is the definition of ‘progress’. The same argument furthers the logic that if our society, while using coal and other fossil fuels in the near term, can further its technical know-how and economy, then it should be able to develop longer term energy resources (some of which are yet to be identified) to ultimately sustain our nation.

The former Saudi oil minister and founding architect of OPEC genuinely pointed out: ‘the Stone Age came to an end not for lack of stones, and oil age will end but not for a lack of oil’. Thus we can appreciate that eventually better substitutes and superior materials will and do replace the conventionally used natural resources over time. We stopped using stone because bronze and iron were superior substitute materials. The patterns of natural resource use have changed dramatically. History shows that substitution does occur in response to changing conditions, scarcity of supply and price. In the 1970s high energy prices encouraged substitution for energy inputs including the pursuit of energy efficient machines. Today we see this happening in the car industry where we are now able to buy cars that are no longer restricted to use conventional fossil fuel but can run on bio-fuels, battery power and hydrogen.

In the backdrop of the new ‘oil crisis’, analysts say that the world contains enormous caches of unconventional oil that can substitute for normal crude oil, with the rising oil price to making such alternatives profitable to manufacture. The Orinicco oil belt in Venezuela has been assessed to contain 1.2 trillion barrels of sludge known as heavy oil. Tar sands and shale deposits in Canada and the former Soviet Union may contain the equivalent of more than 300 billion barrels of oil.

The United States Energy Information Agency estimates that based on today’s oil price, it would be possible to economically produce about 550 billion barrels of oil from tar sands and oil shale which would have the effect of increasing the present global oil reserves by some 50%. It is further estimated that within 25 years we could be able to access commercially twice as much oil than the world currently has available. The total size of oil shale resources is staggering. It is estimated that globally there is about 240 times more oil shale than the conventional petroleum resources. In addition the development of technology for conversion of coal to synthetic oil, especially the ‘rejected’ low quality coal, will add a volume of oil to the world’s reserve.

Theoretically these unconventional oil reserves could quench the world’s thirst for liquid petroleum as conventional reserves are depleted. The above potential substitutes are an addition to the current conventional oil reserves that (based on existing finds) will last at least another 40 years at present consumption rates. There is also an estimated at least 60 years worth of gas and 230 years worth of coal. Consequently, there is no need for immediate worry about running out of fossil fuels. But the industry will be undergoing difficulties for some time and investment will be needed to ramp up production of unconventional oil.

From a macroeconomic standpoint, natural resources are neither necessary nor sufficient for achieving high growth rates. Countries like Japan, Korea, and Singapore for instance have achieved high growth rates despite relatively poor natural resource endowments. On the other hand, many countries like Nigeria, Venezuela, and Zambia with very substantial resource endowments have not only failed to secure high growth in recent decades but have rather regressed. On the other hand, history clearly shows many examples where natural resource endowments have been instrumental in supporting economic growth. Some countries of the Middle East, for example the United Arab Emirates, have achieved high incomes and significant national development based on their petroleum resources.

Economic growth in any country is related to the growth in its productive capacity and relative to the growth of its population. Productive capacity is a function of several factors including the quality of productive inputs, (labour, traditional capital, natural capital etc.) available to the economy and the productivity of those inputs in turning out useful goods and services. Natural resources may be linked to economic growth and we can consider them as natural capital, the quantities and qualities are gifted by the nature. But the human being is to make use to this natural capital to produce goods and services combining with other inputs.

So the burning issue remains: we will promote using our natural resources to develop our human resources and industrial productive capacity to rocket our economic growth and build the necessary knowledge and financial means for our future generation’s well-being or will we continue our never-ending debate and procrastination thus leaving our natural resources buried and depriving our nation of a better present and even better future?

Mushfiqur Rahman: A mining engineer. The views are of the authors and do not necessarily reflect the opinions or views of the organization where he works or with which he is associated in any form.


Date: 16 June 2008, Bangladesh

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