Coal News of Phulbari – Bangladesh

News on coal resources & coal basins of Bangladesh

Archive for August, 2009

Khalashpir Coal Mine Project-Hosaf’s sketchy study raises questions

Posted by phulbarinews on August 19, 2009

Govt spends $95,000 for review of study by ex-consultant of Hosaf

Sharier Khan

The techno-economic feasibility study for Khalashpir coal mine project by Hosaf Consortium has finally been trashed by a foreign consultant questioning the study’s scientific basis, methodology and raising a host of other questions, sources said.

British consultant IMCL in the first of its kind review of a coal mine feasibility study notes that there are fundamental geological issues regarding the Khalashpir deposit which the company must address before framing realistic and financially viable mining business plans.

The consultant found that Hosaf had done inadequate geological work and had deployed no accredited geologist for the job. Its study offered no detailed outline for environment or resettlement issues, and all these work should be done again before submitting such a study report.

The IMCL, which used to be represented by Hosaf in Barapukuria coal mine project from the nineties and had worked for Hosaf in the same Khalashpir project a few years back, was appointed a few months ago for such a unique review through a tender floated during the last caretaker government’s tenure. Interestingly, the Hydrocarbon Cell of the energy ministry that deals with oil and gas-related policy issues gave the appointment.

The cell last week made a presentation on the IMCL review to the energy secretary and formally submitted the full review to the ministry Sunday. Khalashpir coal field was discovered by Geological Survey of Bangladesh (GSB) in 1989.

The then BNP-led alliance government on October 11, 2003, secretly gave Hosaf the licence to explore Khalashpir coal zone in 2,500 hectares of land. Hosaf applied for mining lease for the area in the same year for mine development.

Hosaf does not have mining experience. The company in association with Shandong Ludi Xinwen Mining Group of China in July 2006 submitted the feasibility report to the Bureau of Minerals Development (BMD) with a plan to develop an underground mine. The report was prepared by China Jinan Mining Development Corporation engaged by Hosaf. During the study, Hosaf took help of Geotech-India, NamNam of North Korea, Geo-Mineral Engineering of China and IMCL.

Many officials and experts had then pointed out that the Hosaf study was a copy of that for Barapukuria coal mine project in which it acted as the local agent, questionably, for all the contractors involved. “The Techno Economic Feasibility Study was prepared mainly on the basis of Geological Survey of Bangladesh’s (GoB) geological reports published earlier and subsequent exploration work (no internationally acceptable standard was followed and the exploration activities were carried out without any kind of monitoring by the GoB),” one expert said.

The experts also questioned quality of the study and claimed that Hosaf had drilled only three boreholes to come to its conclusions. But the company claimed to have drilled 14 boreholes. Even Hosaf’s own claims do not stand as a strong basis for such a study as the feasibility study of Asia Energy was done on the basis of 108 such holes. Hosaf’s study remained shelved, but the BMD did not cancel its licence for Khalashpir coal zone. The caretaker government last year initiated the process of reviewing Hosaf’s study through the Hydrocarbon Cell. The caretaker government had awarded several power contracts to enterprises owned by Hosaf chief Moazzem Hossain, who is an accused in the sensational corruption case concerning Barapukuria coal mine.

Some officials expressed surprise that the government spent about $95,000 to pay IMCL for reviewing a private company’s feasibility study. “When Asia Energy submitted its study report, the government formed a committee headed by Buet Professor Nurul Islam to review that study. There was no cost involvement. But the Asia Energy study was much bigger and detailed that needed professional scrutiny. The Hosaf study is visibly a sketchy report,” noted an official.

Explaining why Hydrocarbon Cell was given such a job when it should have been done by the BMD, one source said, “ BMD did not have enough funds to carry out a review. Hydrocarbon Cell had some Norwegian donation.”

IMCL observations
Sources said IMCL in its review suggested that additional drilling should be carried out by a reputable and proven drilling contractor with modern and well-maintained equipment, who is qualified to operate in accordance with Joint Ore Reserve Committee (JORC), an internationally acceptable coal resource assessment code.

The review says previous boreholes that yielded unacceptable levels of core recovery should be re-drilled; an additional exploration must be carried out in accordance with internationally acceptable standards such as JORC utilising downhole geophysical logging in every hole as Hosaf drilled holes without logging; samples should be taken, logged and prepared as per JORC and supervised by a JORC- accredited senior geologist; analysis of collected samples should be undertaken by at least two accredit international laboratories observing the standard rules of analysis.

IMCL further says some coal samples indicate that coal at Khalashpir might have metallurgical coking properties and should be re-tested with fresh samples; underground mining would be preferred method of coal extraction particularly with respect to the surface environmental and social considerations; the Hosaf study’s production design parameters are out of date with respect to current longwall technology, or inappropriate to meet the overall production targets; spontaneous combustion and air temperatures are likely to be the dominant underground environmental issues which interact, and it is to be reflected in the design process.

The company should have made environmental and social impact studies for construction, operation and mine closure stages, and the relevant department has to consult the local people to consider problems threatening the environment in and around the mine, the review says. Further professional studies are needed to address hydro-geological issues including hydraulic conductivities and aquifer behaviours. There is no information about Acid Mine Drainage in the study, IMCL notes.

Mining subsidence impacts should be addressed during Environmental Impact Assessment (EIA) and engage the local population and all stakeholders in open discussions to ensure that land owners and workers are fully informed at all stages of project development and implementation; the surface layout of the study is based on Barapukuria mine surface facilities. Many of these facilities are unnecessary, IMCL observed.

Hosaf’s study
In its study, Hosaf claimed that Khalashpir coal reserve occurs at depths between 257-480 metres with an estimated total reserve of 451 million tonnes — proven 277 m tonnes and indicated 174 m tonnes. Of the reserve, seam I, II and IV are considered to have a potential for mining 277 m tons.

The IMCL review puts this estimate at 337 million tonnes for seam I, II and IV, showing that Hosaf’s assessment is grossly different. Hosaf suggested underground mining with initial production target of two million tonnes a year, which would be raised to four million tonnes in the 10th year of production.

Regarding underground mining risks and environmental impact assessment, the study said the spontaneous combustion and subsidence risks are high, including high methane emission and high underground mine temperature hazards. But it gave no details of management plans for the mining hazards and environment issues, stating ‘proposed damage and hazards, reclamation plan etc have been duly undertaken.’

Source: http://www.thedailystar.net/story.php?nid=100425

Date: 08 August 2009, Bangladesh

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OGPC’s Road March: What For?

Posted by phulbarinews on August 18, 2009

Engr Khondkar A Saleque

The “National Committee to Protect Oil, Gas & Port” (OGPC) held a road march from Dhaka to Cox’s Bazar in protest against what it said the present democratic government’s bid for leasing out some offshore exploration blocks in the Bay of Bengal for petroleum exploration. The government has overwhelming peoples’ mandate to rule the country for five years. Obviously they are mandated to take decision for exploration and exploitation of natural resources for fuelling national economy. There are government organizations responsible for carrying out assigned tasks and there are well-documented approval procedures to handle such issues. The parliament is very much active to talk issues of national interest and elected representatives can any time raise questions concerning national interest.

The nation is now suffering from serious energy crisis, fuel supply crisis. At this moment all patriotic citizens must support government efforts to explore national resources and create power generation facilities without creating any unnecessary barriers. Bangladesh has unexplored gas and oil in the offshore. It has substantial volume of high quality coal at shallow depths in around 100 sqkm in onshore area. But, energy security of 150 million people is at stake.

When the nation needs to explore natural resources for future energy security the OGPC wants ban on open pit mining for coal. They want all moves to lease some offshore blocks to selected IOCs in the Bay of Bengal.  At a time when nation needs quick access to own resources the self-destructive actions of a certain identified group of vested interest must not be taken lightly. Conspicuously this group remain silent when legal and illegal means are taken to import dump ash coal in Bangladesh from a neighbouring country or when India and Myanmar encroach our maritime boundary. They even do not bother about subsidence impact of Barapukuria mining. They do not talk about wastage of 34000 crore taka in uneconomic venture of underground coal mining at Barapukuria.

Some so-called left leaning political leaders and some columnists have also joined the chorus. These politicians should try to win election and speak in the elected Parliament. In the backdrop of above let us discuss the situation in some depths.

Bangladesh proven gas reserve is running out although there should not be any genuine concern that our entire gas resource is going to be exhausted. Bangladesh is still the least explored country. Vast onshore area and almost the entire offshore remain unexplored. So far there has been no serious attempt to explore for petroleum in the deepwater. Most of our major gas fields like Titas, Habiganj, Bakhrabad, Kaillastilla, Rashidpur, Feni, Chattak and Haripur were discovered by international oil companies. Our own OGDC (now Petrobangla) and Bapex discovered some small gas fields. Then again IOCs discovered Sangu, Bibiyana, Jalalabad, Moulavibazar and Bhangura gas fields. Our own capacity was never grown to any stage that we could invest and explore for oil & gas applying modern technology. But at the same time there is no denial that no genuine efforts were made to professionally make our own companies competent.

Government of Bangladesh is not in a position to make significant investment in exploration and exploitation of natural resources. So it mostly relied on lending of development partners to develop discovered resources and IOCs to explore petroleum resources. Continued negligence to BAPEX has reduced the company now to a weak and sick company not capable to accomplish assigned tasks with required urgency. It can not carry out offshore exploration. We have no option but to engage IOCs for it at this stage.

We should have started offshore exploration at least from 1990s. But even two democratic governments since 1991 till 2001 did not take necessary initiatives. India and Myanmar carried out extensive explorations and discovered some major resources. Bangladesh started its efforts in late 2005. The draft PSC was updated professionally. Offshore exploration is a pure gamble. So any PSC document must have required incentives to attract IOCs. Updated PSC draft is still available in the websites. PSC document is not a document on which a Tom, Dick or Harry can make comment professionally. An elected government does not require to seek people’s opinion every now and then on all issues. In addition the political government has its responsibilities to implement its election pledges.

But, certain quarters are misleading people. It has been ensured that an IOC will be able to export 80 percent of its portion’s gas (not from the share held by Petrobangla) in LNG form only if Petrobangla refuses (which is highly unlikely) to buy it.

But, the OGPC is telling people that the IOCs will own 80% of the gas of offshore discovery. It is a deliberate misinterpretation of PSC provision; it is a propaganda to drum up peoples support. IOCs will offer production sharing split from 50%-80% to PB. IOCS will also offer its share of gas to PB. It is only if PB refuses to buy gas then  IOCs may export 80% of their share of gas in the form of LNG. In the present situation such situation will not arise as PB desperately needs gas.

It is a crime to misguide people. The road march of OGPC was not to serve people or country’s interest but to serve interest of neighbouring countries, which want to create barriers for our offshore exploration.

OGPC also opposes exploration of our own high quality less polluting coal in the most technically appropriate manner to extract maximum resources. They challenged Engr Mahmudur Rahman in 2005-06, they challenged Dr M Tamim in 2007-08 and now they are challenging Sheikh Hasina government. Who are they? Some paper tigers, some failed politicians, some parasites. Other than making sarcastic statements every now and then did they make any substantial contribution ever in the development of energy sector?

Bangladesh has five discovered coal-fields in greater Dinajpur and Rangpur districts. The mines actually cover about 100 sqkm. About 3 billion tonnes explorable coal are there which if properly mined can generate about 20,000 MW power for 25 years. For the energy security of 150 million Bangladeshis it is a massive resource. Modern mining methods adopted in many countries can perfectly address all myths and propagandas, can manage professionally all impacts.

Bangladesh imports polluting inferior quality coal from neighbouring country. This coal is seldom used even in that country. They dump it to Bangladesh, which pollutes our environment. Coal merchants and the beneficiaries make huge profit. Our self styled patriots of OGPC do not speak against them. If BAPA is so much concerned about environment then why they do not protest against import of dirty coal?

Source: http://www.ep-bd.com/news.php?cat_id=31&archive=36&namee=COMMENT

Date: 01 August 2009, Bangladesh

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Energy Sector Heading for Crash Landing?

Posted by phulbarinews on August 18, 2009

EP Analysis

The elected government with massive mandate in the last general election spent almost 7 months in office. It is sheer irony that the government is still grappling with strategy for resource exploration to fuel power generation for sustained economic growth. The nation is suffering from severe energy crisis, power load-shedding. 

There are little or no reason to believe that the government is really serious about positively approaching in its efforts to revitalize almost non performing energy sector management when one reads the following news headlines of media.

  • Petrobangla comes under JS body fire.
  • Petrobangla gets hammered for not taking steps for exploration.
  • Cabinet Committee sends back for fresh scrutiny oil, gas & metro rail projects.
  • JS panel suggests speedy approval of coal policy.

These reports refer to lack of appropriate efforts of Petrobangla for exploration and development of potential energy resources, indecision of government policy makers to approve offshore exploration efforts of Petrobangla and protracted delay in finalizing coal (essential or non essential) to explore and exploit countries substantial coal resource.

Petrobangla is mandated to deal with exploration and exploitation of gas, oil, coal and other mineral resources. It works on behalf of Energy & Mineral Resources Division of the Ministry of Power, Energy & Mineral Resources. All its actions are seriously impacted by bureaucratic chain of the government.

The news headlines refer to two parliamentary committees — Public Accounts Committee headed by MK Alamgir MP and Standing Committee on Power, Energy & Mineral Resources Ministry headed by Major General (Rtd) Subid Ali Bhuiyan MP. The other news refer to indecision of Cabinet Committee for Purchase headed by Finance Minister M.A Muhith.

The country is suffering from serious power load shedding. Effective Power generation capacity now is about 3800-4000MW against daily demand of 5500MW. About 90% of power is generated from natural gas. Gas is also used for fertilizer production, industrial, commercial, domestic use and for CNG. Gas demand now is 2100MMCFD against which effective production is about 1800MMCFD. There is some apprehension that the proven gas reserve may deplete by 2015 if no new gas fields are discovered and brought into production.

It is also true that almost entire offshore and significant areas on onshore have not been explored yet. Even the known gas reserves have not been thoroughly appraised as yet.

Bangladesh possess about 3 billion tonnes of high heating value, low sulphur and low ash coal reserve in about 100Sq KM area in the greater Rangpur and Dinajpur area.

Bangladesh Awami League in its election manifesto declared that by 2011 it will add 1500MW new power and by 2013 another 3500MW. This means that by the end of their tenure the countries total power generation capacity would reach from 3800MW to 8800 MW. To achieve this it was expected that it had accomplished some homework. It is not out of context to consider that some policy makers read the draft coal policy and offshore exploration PSC.  But judging from present stalemate situation over coal policy finalization and hesitant attitude of the government to approve PB recommendation for engaging IOCs for offshore exploration it appears that there were very little or no homework done.

Government has spent almost 7 months in office.. The present situation does not give positive indication that government can achieve its election vision of adding new power to national grid. They cannot have required fuel; they can not complete installations of required power plants.

Parliamentary committee for public accounts has put Petrobangla on sword. But what Petrobangla can do without appropriate government support? Petrobangla has little role in signing lopsided deals with IOCs, Petrobangla has limited capacity to recover compensation from defaulters of blowouts. Why Parliamentary Committee dies not ask Energy Minister, Advisor to PM what happened to Enquiry Committee Report on Magurchhara blowout? How that issue was managed? Why Occidental was let off the hook when the PSC had provision for scraping their PSC for non-performing minimum obligation at the time of blowout?

PB had its limitations. It could not retain its trained professionals. Its capacity eroded over time due to massive brain drain. But did this government in 7 months perform any efficiency check? Did they engage appropriate professionals in key Petrobangla positions? What professional track records senior executives of PB have to manage PB in crisis period? Only experienced PB professional having extensive technical track record is sidelined in administration. Who is to answer this?

Petrobangla took appreciable initiative within its humble resources to update PSC for offshore exploration with professionals and assistance of international consultants. It was viewed and endorsed by notable lawyer Dr Kamal Hossain. The draft tender document and draft PSC got approval of the government. PB followed all recognized transparent route of tendering, tender evaluation and approval process. The caretaker government could have taken decision. Considering very aggressive exploration campaign of neighboring countries Bangladesh should have commenced its part much earlier. But the caretaker government lacked guts to take decision and left it for elected government. It took over 6 months for a advisor led government to take the offshore exploration PSC award case to cabinet committee to Council Committee after endorsement of PM as Energy Minister. But unfortunately it bounced off. Can one blame Petrobangla for it? Even if government takes positive decision soon on offshore exploration it will not be possible to get benefit in less than 7 years and that too depends on discovery of gas.

The only major option is to explore discovered coal resource. The coal exploration efforts are stuck in the quick sand of coal policy. When a country has Mines & Minerals act and Mines & Minerals rules why did we need coal policy? Do we have separate hard rock mining policy, gas policy or oil policy? Will we have iron policy, lime mining policy? How Barapukuria Coal mining could start with out coal policy?

If one checks the 9th draft of coal policy achieved after 4 years of struggle of non coal miners one can discover it is an extensive research paper having so much inherent conflicts and contradictions. Usually a policy is a brief concise document discussing energy security, investment and resource mobilization, implementation agency structure, impact management and resettlement and rehabilitation issues of mining. When we have mines and minerals acts and rules the initiative to formulate coal policy was to frustrate mining efforts which theoreticians could successfully do putting the nation in the present energy crisis. It is encouraging that parliamentary standing committee realizes the necessity for finalizing coal policy urgently and commences mining.

But one thing we must remember Bangladesh has almost zero capability of mining itself. It even does not have enabling core technical or managerial group to efficiently monitor activities of a world-class mining company. There is no opportunity to learn mining technology in the country. The only operating mine in Barapukuria is a technical and financial disaster.

Coal policy cannot dictate technical aspects of mining – like mining technique, mining methods, and rate of mining. Economics will dictate mining method. If the extent of the resource recovery justify investment of all require costs in a particular method including all cots of impacts management, relocation and rehabilitation of impacted community that method must be applied. Investor will have its own economics. It will have its own plan for recovering investment. No coal policy dictates what should be the rate of recovery. Once commercial coal mining starts it is impossible to change mining rate. Hence down stream local market must have capacity to absorb mined resources. Coal is self-burning.

We should also remember our coal has only 0.5% sulphur and very little ash. The coal, which is imported from across the border has much higher sulphur and ash content. It is polluting our environment while our sweet coal remains buried. Conspicuously the section of our civil society opposing mining does not object to import of dirty coal from neighboring country.

A media report also quoted Energy Advisor’s discussion with US Ambassador seeking technical help for coal mining. He reportedly said about challenges of strip mining given the fact the coal seams are at least 200m below the surface and extensive water pumping is required to reach there. He off course pointed out subsidence impacts of underground mining.  Modern mining technology can even reach much higher depth with appropriate water management. Water is considered as another mine resource, treated and is used for community supply, round the year irrigation and refilling the aquifer. Advisor possibly wants to train Bangladeshi professionals utilizing SARRIE resources. That will be extremely useful. But Bangladesh must immediately start mining education. Some smart boys and girls after HSC exam result must be offered scholarship to study mining engineering, mining technology on condition of serving Bangladesh after education and training.

Time is fast running out for the government. It will be impossible for them to reach anywhere near its energy sector vision if it fails to start coal mining and exploration for petroleum in a proper way by December 2009. For this they must evaluate the performance of present energy sector management without bias and engage truly committed professional to mean business. People with failed image and dark past record of hobnobbing with energy sector mafias will lead energy sector to further disaster.

Source: http://www.ep-bd.com/news.php?cat_id=10&archive=36&namee=ANALYSIS

Date: 01 August 2009, Bangladesh

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New PDB Plan Highly Ambitious, Unlikely to be Materialized

Posted by phulbarinews on August 18, 2009

Saleque Sufi

Bangladesh Power Development Board (BPDB) has just submitted a power generation plan to raise the installed capacity to 7,313 MW by the year 2009 when the demand would rise to 6,066 MW as per the forecast under Power System Master Plan Update 2006 (Base case). The plan has already been submitted to the Power Division and is expected to be submitted to the Prime Minister in the first week of August.

If the under construction plants are commissioned by December this year, 756 MW new electricity would be added to make a total installed capacity at 6400MW. The plan, however, recognized the downside risks of capacity de-rating, outages (forced and maintenance) and fuel supply crisis that could reduce the effective generation capacity to 4,300 MW. If the present demand continues to persist, the power supply deficit by December 2009 would increase to 1,300 MW.

PDB estimated that another 2,800 MW electricity would be added to the national grid subject to commissioning of the under implementation power generation projects in time by 2014 while at least 700 MW from the existing capacity would be retired, making actual increase of capacity to 2,100 MW. If the demand situation remains consistent, the deficits in 2010, 2011, 2012 and 2013 would be 1800 MW, 2200 MW, 2300MW and 1900 MW respectively. It would increase to 2300MW in 2014.

The PDB projection looks very alarming while the figures seem unreliable. The present deficit is not less than 1500 MW. The peak demand, according to a reliable source, is not less than 5300MW against which PDB can generate only 3800MW on an average. Moreover, adding of 700MW in only a little over 5 months seems unrealistic considering the problem of fuel for power generation. About 700MW of generation capacity remains idle only due to shortage of gas supply.

The Parliamentary Standing Committee had instructed the Power Division to plan and implement projects for generation of 2000MW power in one year, which is an over ambitious plan and even higher than the government’s pre-election pledges.

To confront with the crisis through reducing deficit, PDB suggested setting up contingency short-term rental plant to generate 450 MW in the following locations through private sector:

Private Sector Rental Contingency Plant to add 450MW by 2010

Location

Cap MW

Fuel

Contract

Years

Commissioning

Ashuganj

100

Gas

1-3

2010

Bheramara

50

HFO

1-3

2010

Shikalbaha

50

HFO

1-3

2010

Khulna(BMPP/Land)

100

HFO

1-3

2010

Noapara ( Jessore)

50

HFO

1-3

2010

Hraipoor , Narayanganj

100

HFO

1-3

2010

PDB proposed actions to set up similar capacity or higher capacity plants in the locations through PPP or IPP in the future. Depending on practical situation, the rental period can also be extended, if necessary.

PDB also proposed that, by 2011, the first phase of PDB planned power plants through PPP in the following locations may add another 550 MW. PDB, in addition to private sector rental contingency plants and first track public sector plants, also submitted proposal for long term coal based base-load power plants.

PDB Plants (1ST Phase) to Add 550MW by 2011

Location Cap MW Fuel Cost. Tk Crores Commissioning
Thakurgaon

50

HFO

300

2011

Barisal

50

HFO

300

2011

Katakhali

100

HFO

600

2011

Cox’sbazar

50

HFO

300

2011

Dohazari

100

HFO

600

2011

Ashuganj/Ghorashal

200

HFO

1200

2011

 

550

 

3300

 

 PDB Plans (2nd Phase) to add 250 MW by 2012

Location

Cap MW

Fuel

Cost Tk Crore

Commissioning

Faridpoor

50

HFO

300

2012

Hathazari

50

HFO

300

2012

Mysmensingh

100

HFO

600

2012

Gopalganj

50

HFO

300

2012

 

250

 

1500

 

As per the proposal, PDB plans to add a total of 1700 MW (700+ 450+550) by 2011 and about 2000 MW by 2012. If the ambitious plan is implemented, the election pledge of adding 1500MW new power by 2011 and achieving new generation target of 5000MW will be fulfilled. “But, it’ll not be easy to achieve the target at all.” The fuel for target plants for 2010, 2011 and 2012 have been identified, but fuel for 700MW additional generation remains uncertain. Furnace oil will need to be imported and world market of liquid fuel is volatile while the price might soon rise again unexpectedly. As a result, generation costs would be much higher. Unless power tariff is adjusted upward, SOEs in power sector would face serious liquidity crisis.

The PDB plan for adding 450MW capacity through private sector rental plant appears to be ambitious, which is likely to be similar bitter experience of contingency rental power plant initiative by the caretaker government. In our political system and people’s efficiency that is unlikely to improve significantly in the near future, we can expect reversal of implementation record so drastically. Can the tender process, approval, award to successful bidders be made within December and can it be guaranteed that all private sector developers will be able to install and commission plants positively by end 2011.

PDB is expected to encounter serious political lobbying, complaints and media pressure. But, if matters can be done in a transparent way restricting the biddings for genuine power merchants, this can be achievable. “Unfortunately it will be a very costly option.” Effective initiatives must be taken to set up proper plants in these locations once fuel supply situation through gas and coal exploration improves.

PDB may not sustain financial pressure of buying expensive power from these plants and selling at a lower rate for along time. BERC must consider proper power tariff in consideration of higher purchase price of rental power. Taxes of furnace oil must be reduced to lower generation cost.

PDB Plan for Coal Base Load Power Generation by 2013 & 2014

PDB suggested setting up of four large coal-based power plants either on IPP or PPP. If the options fail, the plants would be set up on government financing to generate about 2000MW power by 2014. All the plants would be based on coal – be it local or imported or a combination of both. Mining on own coal, according to PDB, will depend on adoption of coal policy and formulation of coal sector master plan.

PDB Plan to Generate 2000MW Coal Based Power by 2014

Location Cap MW Fuel Ownership

Commissioning

Khulna

500

Coal

IPP/PPP

2013

Chittagong

500

Coal

IPP/PPP

2013

Meghnaghat

500

Coal

IPP/PPP

2014

Jazeera/Mawa

500

Coal

IPP/PPP

2014

  2000      

The government has so far failed in last six months to set up its mind on how to deal with the AEC contract for Phulbari coal mining. AEC has exploration and mining lease for mining at Phulbari. This is a continuation of exploration and mining lease signed with BHP in 1994. AEC submitted all required documents along with its scheme of development proposing strip mining in October 2005. In last four years, their proposal is hibernating.

Unnecessary coal policy formulation, conceived from an ill motive, confused the policy makers and frustrated the mining initiative of significant volume of high quality coal. Can any international contract operation be put on hold for prolonged delay of policy formulation when that contract was signed on the basis of legislated Mines & Minerals Act and Rules? Will any major mining company feel secure to invest borrowed capital for mining in Bangladesh or setting up large coal-based plant after having been aware about the contract management record of Bangladesh? Even if the coal mining starts now, commercial production of coal to feed four 500MW power plants in addition to one 500MW at mine mouth will not be possible. The only alternative is to import coal.

India is not in a position to export steam coal. Other sources may be Australia or Indonesia. Has anybody done any homework whether our Chittagong or Mongla port channels have required draft to allow medium capacity coal carriers? We will also need separate coal terminals. Does the national exchequer have the money to develop the terminals? Our logical approach should be examined — AEC scheme of development through accredited professional consultant, renegotiate contract with AEC to tighten loose knots, forget about coal export unless special circumstance arises, adopt a concise 3-4 coal policy, amend Mines and Minerals rules wherever appropriate and let mining at Phulbari start by early 2010.

In the meantime, after completion of mining in the present phase at Barapukuria, the mining options should be revisited. After having a detail study, further mining by appropriate method to recover maximum coal should start by end 2010. Initiative for mining at Khalaspeer and Dighpara should also proceed simultaneously while the option for CBM/UGC at Jamalganj mine must be explored.

The PDB plan is not backed up by sound financing plan and fuel arrangement. PDB suggested investing Tk 5,000 crore from the national exchequer and requested additional allocation of Tk 1,800 crore in the budget for 2009-2010. “These, however, do not include the money required for arranging fuel and other enabling facilities to generate the power.”

Looking back, the BNP–Jamaat alliance government is believed to have spent Tk 2,000 crore in the power sector development. One may raise questions about the outcome of the investments. One can also ask about the performance of PDB during the last seven years while expressing doubt whether the PDB performance would change so soon if the money is allocated. Will the present road map to conceive projects, float tenders for these, complete all layers of approval process, engage developer, and implement project change dramatically to create a revolution? The recent past does not speak in favour of PDB.

PDB will require massive subsidy to absorb purchase of high-priced power from HFO contingency plants. BERC must realize this. Power tariff to end users must be logically adjusted covering generation and transmission costs. The PDB proposal here deserves active considerations.

In last six months of the present government, it has not been possible to sign even a single new contract for additional power generation. The tender evaluation process for the 450MW Bibiyana gas-based power plant did not even start. It is not the Parliamentary Standing Committee that would plan for PDB or act on their behalf. It is the PDB that has to make workable plan while others will facilitate only.

The investors are not getting positive signals from the way things are progressing. In this situation, “it looks highly unlikely that the PDB plan as proposed can be achieved at all.”

Source: http://www.ep-bd.com/news.php?cat_id=9&archive=36&namee=ARTICLE

Date: 01 August 2009, Bangladesh

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Exploiting coal reserves: No more time to waste

Posted by phulbarinews on August 16, 2009

Shamsul Huq Zahid

The government has recently decided to offer 15-year tax holiday facility to those new power plants, which would be able to start commercial production by June 2012. The facility that has come in contrast to the government’s recent policy to discontinue the same for other sectors of the economy highlights the urgency of improving the country’s power situation.

Many investors, both local and foreign, might feel tempted to start new power plants, which, according to a government’s policy announcement, would be dual fuel (gas and coal) fired. Going by the ongoing developments in the gas sector, one does not have reasons to believe that enough gas would be available soon to feed new power plants of medium to large capacities. In that case, the use of coal remains to be the most viable option for power generation.

The country is rich in coal deposits, an estimated 2.5 billion tonnes, in five coalmines discovered so far at Barapukuria, Phulbari, Jamalganj, Khalsapir and Dighipara. The deposits are equivalent to 65 trillion of cubic feet (TCF) of gas and enough to ensure the country’s energy security in both medium and long terms. However, except for the Barapukuria, all other coal deposits are awaiting exploitation. One of the unexploited deposits at Jamalganj with a proven reserve of more than 1.0 billion tonnes was discovered way back in 1962 at a depth ranging between 640 metres and 1158 metres.

The Phulbari deposit (proven reserve of 572 million tonnes) was discovered in 1997 at a depth of only 150 metres to 240 metres, making it easily exploitable. The Khalaspir deposit-143 million tonnes, is also located at a depth of 257 to 483 metres. Similarly, the Dhigipara deposit, proven reserve 150 million tonnes, was found at a depth of 328 metres to 407 metres.

It may appear rather strange why a country facing acute shortage of fuel to feed its old and new power plants is delaying the exploitation of its huge coal reserves. The nation needs an economic growth rate of over 7.0 per cent to eradicate poverty and meet economic and human development goals. And for achieving these goals, energy remains a fundamental challenge.

Bureaucratic foot-dragging apart, there are other problems, some are serious in nature, which have made successive governments hesitant to take definitive decisions on coal exploitation. The issues of high population density, environment and response from civil societies have always occupied the minds of the policymakers. Displacement of population living in the coalmine areas and destruction of arable land are two politically sensitive issues that every government in the past tried to avoid.

It is because of the same reason the first draft coal policy prepared by the International Finance Corporation (IFC) back in 2005 has been amended, at least, eight times until now. The recommendations made by the ‘Patwary committee’, of late, have been the most discussed ones.

There exist two opposing views in the present ruling circle on the method of coal extraction. One is strongly opposed to the open pit mining method, which ensures the maximum recovery of coal deposit but not without a cost. It causes displacement of people, destroys completely agricultural land and forests in the coalmine area. The other view does support such human and environmental costs for the sake of greater good of the nation.

However, recommendations made by a group of non-resident Bangladeshi experts at a recent seminar held at the Jamuna Resort have contributed to the softening of the stance of the second group of people in the government. The experts maintained that through the application of modern technology even 80 per cent deposit of a coalmine could be exploited under the traditional mining method. They also suggested creation of a statutory body like ‘KhaniBangla’ and making necessary legal framework for coalmining.

The Petrobangla has, reportedly, modified the draft coal policy in the light of the recommendations made by the NRB experts and sent to the energy ministry for approval. The final draft of the policy is likely to be placed before the head of the government soon after necessary review.

The deteriorating power situation and the fast depleting gas reserves of the country makes it imperative for the government to take an early decision on the exploitation of the country’s coal deposits. The political leaders and experts have wasted enough time in doing that at the cost of the national economy.

The government will have to finalise the coal policy within the shortest possible time. However, the nation cannot afford to exploit only 10 to 20 per cent of the deposits of the coalmines. The country needs the maximum possible exploitation of coal reserves. Nobody would mind if the government decides in favour of traditional tunnel mining method, provided it ensured the maximum recovery of the coal deposits.

Moreover, the coal policy should not only concentrate on extraction of the coal. It should also examine the possibility of using the coal-bed methane and underground coal gasification if extraction of coal is found difficult because of depth. The Jamalaganj coal deposit is a strong candidate for such exploitation.

What is also important is taking up of a programme by the government to fill in the vacuum of manpower needed for coal development. The public sector engineering universities should introduce mining degree programme, putting special focus on coalmine development. The energy ministry should also set up a training institute to create other necessary manpower in the sector.

Source: http://www.thefinancialexpress-bd.com/2009/07/27/74369.html

Date: 27 July 2009, Bangladesh

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JS panel suggests speedy approval of coal policy

Posted by phulbarinews on August 16, 2009

bdnews24.com

A parliamentary panel has suggested speedy approval of a coal policy to tap Bangladesh”s coal resources to meet growing energy needs, reports bdnews24.com. The parliamentary standing committee on energy and mineral resources also suggested the ministry extracted coal from the country”s virgin coal fields.

“We need energy for development,” Subid Ali Bhuiyan, the committee chairman, told journalists Wednesday after the meeting at the parliament building”s media centre. “We have coal to meet our growing energy needs. Absence of a coal policy is considered one of the obstacles to extracting this coal.”

“Therefore, the committee has recommen-ded swift finalisation of the coal policy for proper utilisation of our coal resource,” he said.
The immediate-past military-installed interim government finalised a draft coal policy which provided the option for controversial “open-pit mining”.

The draft coal policy, prepared by BUET professor Abdul Matin Patowary, recommended that the government initiated an open-pit mining project in Barapukuria as a test case to see its impact on environment.

It also kept an option for coal export but made no mention of sharing of royalty between Bangladesh and the investors. The incumbent government has yet to decide on approving the coal policy, according to energy and mineral resources ministry sources.

They said the prime minister, who oversees the energy ministry, will see a presentation on the coal policy before giving her decision. Critics say the policy was aimed at making way for the British company Asia Energy to extract coal from Phulbari coal mine in Dinajpur through open-pit method, which would cause environmental disaster and displace thousands of people from their homesteads.

In 2006, at least two people were killed by law enforcers as Phulbari people took to the street demanding cancellation of the government”s agreement with Asia Energy. In the face of mass upsurge, then the BNP-led government announced scrapping of the deal with Asia Energy which reportedly released share bonds in the UK share markets.

But the interim government said the deal could not be rescinded because of “some difficulties”. Bangladesh has five coal fields-Barapukuria, Phulbari, Jamalganj, Dighipara and Khalaspur-all in Dinajpur and its surrounding districts.

Source: http://www.newstoday-bd.com/frontpage.asp?newsdate=7/23/2009#20659

Date: 23 July 2009, Bangladesh

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Coal mining to bring benefits in northern area

Posted by phulbarinews on August 16, 2009

Torun Khan

The company of the coal mining project in northern Bangladesh has promised to compensate people for loss of land and businesses and modernize the area.

One young women says the mine is a good idea because it will create new jobs and she would consider going to work for the mining company. A local politician, meanwhile, says the mine will be good for the region’s economy and should attract other companies to invest in the area. He adds that when farmers lose the use of the land, another job will be waiting for them in the mine.

But the mine will provide around 2,100 jobs whilst it is being constructed, and 1,100 long term positions. Gary Lye, chief executive of the mining company Asia Energy, says the region will be better off in the long term. “At the moment farmers in the area cannot afford to do what they are doing now. A fact of life is, the coal under the ground is worth much more to everybody than growing rice on the surface,” he says.

will bring $21bn to Bangladesh over 30 years and add one per cent to GDP Asia Energy study said. Apart from coal, the mine will also provide co-products such as kaolin, clay, sand, rock and aggregate, which can be put to productive use.

During the 30-year expected life span of the mine, the land will be re-filled as the open pit moves forward, and revert back to agricultural use. And a huge artificial lake will remain when the mine’s supply of coal has been exhausted. The company says the lake will be clean and could be used as a safe water supply or for irrigation and fishing.

As if to emphasise the energy problems facing the country, the electricity failed twice whilst Mr Lye was explaining his company’s plan and emergency generators had to be switched on.

Source: http://weeklyeconomictimes.com/news-details.php?recordID=4155

Date: 21 July 2009, Bangladesh

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Energy Sector Priorities for Grand Alliance Government

Posted by phulbarinews on August 16, 2009

Saleque Sufi

The Grand Alliance government of Sheikh Hasina spent the first 10% of its 60 months term in very challenging situations. It can be given some credits as it managed to survive waves after waves of organized conspiracies from internal and external sources. It can also be given some benefits of doubts, some excuses as teething problems. But now it is serious business session. The next 6 months will create make or break situation for them. Their performance will be under thorough scrutiny from all around- left, right and above.

Among other challenges the government had to deal with serious energy crisis and still managed to ensure supply of required power for irrigation pumps in intensive irrigation season from January to April. Government started with a deficit of 2000 MW power and about 300 MMCFD gas shortage. Even the bitterest critic will agree government did wonderfully well in reaching diesel, fertilizer, seeds to farmers and ensure proper power supply for irrigation. Farmers responded with bumper crops.

The government achieved mixed success in checking price spirals of essentials. At least market syndicate can no longer take nation for a ride. But lot needs to be done in this area still.

Traffic jam and Dhaka city mess is a big headache. Commuters on weekdays have to spend hours on busy roads and loose on the average 2-3 hours in traffic congestion. There is very little that can be done soon to mitigate this situation. But government action so far is limited to seminars, discussions and meetings only. City circular road, elevated express highway, metro, mono rail for Dhaka are equally important as Padma Multipurpose Bridge and Dhaka-Chittagong 4 lane express highway. Rivers around Dhaka city are dying, Canals crisscrossing the capital are almost nonexistent. Drainage problem in Dhaka is so massive that even a few hours of moderate rain cause serious water logging. Wonder what DCC and WASA did over the years? Where are all the moneys gone? Government in 6 months could do very little. Hatirjheel project is moving at a snails pace. The suspended Gullisthan–Jatrabari flyover project is hibernating.

The most serious problem for the government is to deal on top most priority must be energy crisis. Digital Bangladesh dream will remain un-realized if energy situation is not remedied on priority basis. Economy will soon start to stagnate if energy situation remains like this. The task to turn around will not be easy.

The Grand Alliance government inherited almost a non-functional energy sector. Four-party alliance government from 2001-2006 failed to set up required power generation units to meet increasing demand. They started with generation capacity of 3200 MW against a coincident peak demand of about 3000MW in 2001. Taking advantage of cheap energy and cheap labour there were mushroom growth of medium and small inefficient energy consuming industries. Energy managers did not take care of demand supply imbalance. In 5 years demand grew to 5200 MW. BNP-Jamaat alliance could only complete the 450MW Meghna IPP and 2X125MW Barapukuria coal plants initiated by previous Awami League government. Their only new addition was Tongi 100 MW. Consequently in 2006 when BNP-Jamat alliance government left office they left behind a huge deficit of 2000 MW in the national power grid. During their period they also scrapped several matured power plant installation initiatives. Among those 450MW PDB-Summit PPP initiative failed to get Prime Ministers approval. Some other controversial deals signed like Belhasa-Orion contract for Meghnaghat Unit 2, Harbin contract for Chandpur 150 MW were to be scrapped by the caretaker government. Alliance government initiative for small and contingency plants got bogged down for excesses of party MPs and activists. No major initiative was taken to explore for gas and oil. A major coal exploration initiative at Phulbari at matured stage got bogged down for mismanagement by energy sector management.

Two state ministers of power division and one state minister for energy division were fired by own administration failing to perform in golden triangle of PM office, Hawa Bhaban and energy mafia conspiracy. Many efficient energy sector professionals were purge out branding them Awami League elements. Alliance government left behind party loyals dominated weak and sick energy sector management.

The army-backed caretaker government in 2 years also could not make noticeable progress. So-called anti corruption national taskforce started witch hunting. Many innocent energy sector professionals along with corrupt elements were harassed unnecessarily. On the other hand the blessed persons of alliance government were allowed to carry out more sabotage. In 2 years the caretaker government could not complete formulation of coal policy or start offshore exploration. Several gas transmission infrastructure project implementations also got bogged down. Government followed wrong line in 450 MW power plant venture at Bibiyana and Sirajganj and ultimately failed to make much achievement.

On the other hand, in 6 months Sheikh Hasina’s government could not set up mind whether or not to proceed with controversial unnecessary coal policy. They could not deal professionally with maritime boundary dispute in the Bay of Bengal with India and Myanmar or start offshore exploration. There are hardly any genuine efforts in view to explore for new petroleum resources or further prove existing resources. Dispute with Niko could not be resolved. Chattak and Tengratilla cannot be developed without solving disputes with Niko.

The only under operation coalmine is running with great risk. A recent visit of a professional Bangladeshi miner in Barapukuria has surface serious safety hazards. The present mode of mining may need to be abandoned soon. Mining in different method can not be started straight away at Barapukuria for several reasons. Government to government suppliers credit between China and Bangladesh may not be scrapped so easily. Moreover mine mouth power plants and Taj Mahals of Barapukuria are sitting on thickest coal seams, which require removal and demolition.

Also, the government still remains confused with Phulbari, only mine that is ready in all respect for mining. It is not only discovered by the prime mining company BHP Billiton in 1997, all types of professional studies have been carried out by leading consulting companies during pre-feasibility and feasibility studies as part of submission of scheme of development to BMD of government in 2005. The government appointed a so called expert committee that in one year did not address the technical or technological part of scheme of development but deliberated on peripheral issues outside its TOR. Finally 8 out of 12 members of the committee submitted note of dissent. The expert committee report becomes scrap as such.

The initiative for coal policy formulation was taken to frustrate mining initiative. This was not necessary at all. Mines & Minerals Acts and Mines & Minerals Rules were more than enough. But in 4 years valuable time were wasted producing 9 drafts. The same controversial person who spoiled the experts’ committee report on scheme of development of Phulbari mining was the driving force in formulating a voluminous coal policy unworkable draft.

If present government really means business they should deal with mining professionally. The Mines & Minerals Acts and regulations can be updated recognizing the recommendations of NRB brainstorming. Contracts and deals signed already must proceed as per provision of those documents. Bangladesh needs 90% coal on surface from at least two mines by 2013 to generate at least 3000 MW for its mere survival. No other option appears workable at this moment.

But energy sector management to deal with massive impacts of mining requires massive overhauling. Regulatory authorities like BMD and DOE do not have required efficiency. We must aggressively develop our mining capability. I am sure the so called energy expert who examined scheme of development of Phulbari cannot be the right person to professionally evaluate the technical aspects. One senior mining engineer and another Professor of BUET who is acknowledged as water resource expert opine differently in the experts committee. But their reports were not included. While dealing with Phulbari issue government must carry out a through professional investigation into Phulbari mining episodes.

Government must professionally prepare its submission of maritime boundary demarcation and exclusive economic zone to UN. It must also immediately register official protest against illegitimate claims of Myanmar and India. Side by side the government must start offshore exploration without delay. It is ridiculous to note that Petrobangla could not take necessary initiative to explore for new gas or further prove existing resources although some Petrobangla senior executives have joined chorus that present reserve is running out in one side and on the other made GTCL procure very expensive line pipes to construct transmission pipelines all the way to Khulna. In normal pace these projects will take up to 2013 to complete. By that time as per own records of the Petrobangla, it will be struggling to supply its last reserve of gas. The where from gas will come to feed the national gas grid over its 25 years design life?

We do not believe that our gas is running out. We have not done much works on gas reserves. 3D seismic has not been carried out on Petrobangla gas fields. The fields are not professionally appraised. Vast frontier area onshore and entire offshore remains unexplored. BAPEX our flag bearer lacks capacity and still getting step brotherly attitude from gas sector management.

Our own prolific Titas – much larger than Bibiyana is having internal bleeding. Gas sector masters are not caring much for Titas. It may turn suicidal. If Titas could be professionally managed it could produce more than Bibiyana. Now Titas has to survive the leakage. The government management must address to Titas problem as soon as possible.

We need more natural gas from new fields and also more from existing fields; we need our own coal reserve exploited professionally. We need renewable source meet at least 10% of our national demand by 2020. We also need regional energy trading in win-win deals.

Government alone can not provide all investments. We need strong professional BERC to ensure true level playground for all energy sector active players. We need free flow of private sector capital. We need proper care of our own competent energy sector professionals. We need energy sector to be treated as strategic area free from petty party politics. We need market based energy pricing to encourage efficiency in energy use. We need courageous, dynamic, patriotic energy sector professional managers. We need private public sector partnership flourish in our energy sector development and operation.

Let the Grand Alliance government read the writings on the wall. Now it is in serious business session. No excuses, no blame games will be accepted. The government should remember that energy sector vision cannot be implemented till blessed persons of anti liberation forces continue to frustrate government efforts sitting in key positions of energy sector.

Source: http://www.ep-bd.com/news.php?cat_id=9&archive=31&namee=ARTICLE

Date: 16 July 2009, Bangladesh

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