Coal News of Phulbari – Bangladesh

News on coal resources & coal basins of Bangladesh

Archive for October, 2009

Coal mining to start!

Posted by phulbarinews on October 13, 2009

S.A. Mansoor, Dhaka

Your front-page report on the matter published on October 6th has at least opened the door of possible open-pit coal mining in Bangladesh. Many so-called energy experts and intellectuals (virtual know-alls) with bookish knowledge and nothing else; and without an iota of mining experience, will as usual cry foul. They are out to sabotage any mining proposal per se. At least the government has gone to the Germans, who have knowledge and hands-on experience in both deep shaft and open pit mining. It is the proper source for expert opinion. It is time that the “Buddhi-Jibies” put a stop to their endless “Bakwas” and go back to their books; and refrain from talking on matters in which they are practically novices!


In the larger interest of the country, we have to maximise utilisation of our natural resource for producing the desperately needed electricity, and coal the raw material for it is lying underground! It will hopefully contain our fast depleting natural gas and reduce the import of liquid fuel. This will be good for the economic health of the country.


Of course, the people affected by the mining should be provided needed facilities for re-settlement; and compensated for their loss; which in the overall context of foreign exchange needed for energy in Bangladesh is marginal; possibly no more than one or at most two years cost of imported fuel. If the BNP government had signed any agreement, it was under duress and in any case they cannot sign away the right to explore and exploit natural resources. This will be worse than selling our natural resources for earning foreign exchange. Such illogical agreement against the interest of the country, should be ignored which will be supported by an overwhelming majority of people!



Date: 12 October 2009, Bangladesh


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Trial of open pit mine mulled

Posted by phulbarinews on October 13, 2009

Test case at Barapukuria may start in 2011; feasibility study soon; UNDP, German donor willing to fund

Sharier Khan

The energy ministry considers a feasibility study to take up a pilot project for an open pit mine as a test case in the Barapukuria underground coalmine from 2011, taking into account the ever-increasing energy crisis, sources say. The government, in this regard, is seeking financial and technical assistance from the UNDP and the German donor organisation GTZ, both of which are willing to provide up to $3 million funding.

The sources say a professional group comprising European and local professionals is likely to conduct the feasibility study and advise the government on this sensitive matter. The feasibility study must be conducted within a short time, the sources inform.

Of the country’s five identified coal deposits, that of Barapukuria and Phulbari are the nearest to surface, creating the possibility of an open pit mine that allows up to 90 percent extraction of coal. The open pit method is widely applied in Indian mines including those in West Bengal from where the Indian subcontinent first began coal mining.

The Barapukuria deposit has 389 million tonnes of coal at a depth of 120-450 metres. The present underground mine will tap less than 10 percent of its coal deposit, or only 30 million tonnes of coal, over a period of 30 years, although the government has invested a staggering Tk 1,600 crore for it.

Since the mine launched its production in 2005, it has produced around 2.5 million tonnes of coal, mine officials say. A 250-megawatt power plant at the mine site is the main consumer of this coal. The mine has on average a very thick 36-metre high quality coal seam.

Previously, during the last caretaker government regime a national coal committee headed by ex-Buet vice-chancellor Prof Abdul Matin Patwari in 2008 recommended turning Barapukuria into an open pit mine on a test basis. In a separate development, the Barapukuria Coal Mine Authority is conducting a report on whether an open pit mine is possible there by compiling the mine’s data of its north and central location.

This report will be presented to Petrobangla soon, sources say. If open pit mining in Barapukuria is found feasible, the government would spearhead the new mining project as a test case. If it is successful, the government would consider larger scale open pit mining, the sources point out. The country’s future demand for coal will shoot up significantly as the Power Development Board (PDB) is preparing to implement four 500 mw power projects based on imported coal.

These plants are intended to be implemented by 2014. If the Barapukuria mine can be developed into an open pit mine, it could cater a part of the demands of these plants. The energy ministry in this connection last Thursday held a meeting with officials of UNDP, GTZ, Petrobangla, Barapukuria Coal Mine Company Ltd, Power Development Board (PDB) and Titas Gas Transmission and Distribution Company. Energy Adviser to the Prime Minister Dr Towfiq-e-Elahi Chowdhury and State Minister for Energy Enamul Haq, among others, were present.

The UNDP made a presentation on various aspects of coal mining on the basis of studying various methodologies, while GTZ talked about its different social aspects. The meeting discussed the possibility of open pit mines in two areas — Phulbari and Barapukuria — and converged that Barapukuria should be the first such case. “But we need huge data to decide on an open pit mine there to extract coal from its northern and central zones. We need to conduct aerial survey and undertake feasibility study quickly,” says a meeting source. Such mining will need an overhauled new mining design.

The existing underground mine’s operational contract with its Chinese developer will end in 2011, while the government will complete all payment against the Chinese supplier’s credit for this project by 2012. While other factors are also favourable for turning Barapukuria into an open pit mine, the national committee on protection of oil and gas has been opposing open pit mining in the country. The committee argues that this would cause environmental damage and people would lose arable land.

This committee has however not opposed to underground mining. However, in reality the underground Barapukuria mine has already damaged arable land and underground water tables to a great extent as the mine design had never considered any environmental aspects. The land damage has angered villagers around the mine, for which the Awami League government back in May signed a memorandum of understanding (MoU) with the villagers assuring them of compensation and relocation.

About 4.2 square kilometres area of the underground Barapukuria coalmine site will eventually subside up to a maximum depth of two metres in the mine’s 30 years lifetime, Petrobangla sources say. Such subsidence will create a large lake, the sources point out. Residents of three to four villages — which are not densely populated like most other villages of the country — adjacent to the mine will eventually have to be relocated.

Land subsidence in the mining area has been reported from 2006. In addition, an improper subsoil water extraction plan has dried up the common water reservoirs for around 15 adjacent villages. Further, the mine is releasing environmentally hazardous water through canals affecting agriculture there. The government is also working on developing a mining city in Barapukuria which would not only help voluntary relocation of the affected people but also function as a centre for mining education and provide jobs and other facilities.

A committee in this connection recommended several months ago that the Barapukuria land area outside the mine which has subsided or will subside in future should be acquired by paying premium to the owners. The 2,500-acre underground mine area includes 650 acres of agriculture land on the surface. The mine is directly affecting living of about 2,500 people in seven or eight villages. “Resettlement of these people should not be very costly for the government,” says a source.

The country imports around three million tonnes of low quality coal from India worth more than a thousand crore taka each year to cater the needs of brick kilns and various industries.


Date: 10 October 2009, Bangladesh

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We’ll lift gas, none can obstruct us-Hasina tells JS; gas network to cover whole of North Bengal

Posted by phulbarinews on October 13, 2009


144956_PMThe resistance created by different quarters as well as obstacles notwithstanding, the government is determined to go ahead with its resolve to explore and lift natural gas, prime minister Sheikh Hasina told parliament (JS) yesterday during the question-answer session yesterday. With Speaker Abdul Hamid in the chair, the prime minister was replying to a supplementary question raised by ruling Awami League legislator Enamul Huq.   

She said those who are opposing exploration and lifting of gas from the country’s gas fields including offshore blocks do not want the development of the country and its industries. “But the main objective of our government is to ensure development,” she said. Replying to the supplementary question, Sheikh Hasina said although the government was facing obstruction from a quarter in the way of its exploring the gas blocks and lifting natural gas, her government would enhance exploration and lifting of gas for the overall welfare and development of the country.

The prime minister assured that her government would ensure supply of natural gas through pipeline to the entire north Bengal region including Rajshahi division for setting up new gas-based factories and industries. With Bogra already getting gas supply, the entire north Bengal region would come under the gas network soon.

Responding to a question by Awami League lawmaker Abdul Matin Khosru, who raised the question on behalf of opposition MP Nazim Uddin Ahmed,  Sheikh Hasina said the government would give special priority to the Tipaimukh issue and continue discussion with India to resolve the proposed hydro-electric dam issue of India so that the country would not be affected in any way.

The Prime minister also informed that her government has taken a decision to constitute an expert committee to review the data and information available about the proposed Tipaimukh dam on the Barak river of India as the previous Awami League government reached a 30-year treaty on sharing of the water of the river Ganges through bilateral talks. It would be better for Bangladesh to resolve any problem through bilateral talks without locking in any fracas with neighbouring countries, Sheikh Hasina said adding that her government would lay emphasis to the imperative that any issue with the neighbours including India could be resolved through bilateral talks.

Responding to a question by independent lawmaker Fazlul Azim, the prime minister said her government has already taken effective initiatives for construction of elevated expressway, underground railway and mono-railway system in the capital city and its adjacent districts such as Manikganj, Munshiganj, Gazipur, Narayanganj and Narsingdi to resolve the serious traffic snarls as the number of vehicles has been increasing aggravating the crisis.

The government is also actively considering to reschedule timing of offices, banks and schools to lessen the city streets from traffic jams with a view to reducing of operation of increased numbers of vehicles during the busy office hours, Sheikh Hasina said and urged the school authorities to introduce school buses for the students so as to reduce traffic congestion during the busy hours.

The prime minister also requested all to follow the traffic rules so that traffic congestions could be reduced to some extent in the city. She also informed the House that her government has taken up a plan to construct parking space in the city as the capital has no specific parking areas for a large number of vehicles in operation nowadays.

Responding to a question of lawmaker Mujibul Huq of Jatiya Party, she admitted that the government had faced some problems with the procurement of paddy this season, although the country experienced a bumper crop this year as the Boro paddy yield was the all-time high this season with a total production of nearly 1.85 lakh metric tones. The prime minister assured that the government would ensure monitoring of the procurement drive to avoid the difficulties. Replying to a question of opposition BNP MP Abul Khayer Bhuiyan,  Sheikh Hasina told the House that her government has taken a 13-point initiative for changing the farmers’ lot including priority on the agriculture sector in the national budget, easy availability of agri-loans and inputs, subsidy on non-urea fertilisers and enhancement of the government prices of the food grains in the food procurement drive.

Replying to a supplementary of ruling party lawmaker Abul Kashem, Sheikh Hasina claimed that there was adequate stock of wheat in the government godowns throughout the country and that prices of Atta (flour) and Moida (fine flour) were halved after her government assumed office thanks to some pragmatic steps taken by the government.

Everybody in the country is benefited if the price of rice declines and the peasants’ suffering increases if the price of paddy goes down due to bumper yield of foods. The government has taken initiatives to ensure fair price to farmers by enhancing procurement prices of paddy and wheat (food grains),  she said. Responding to a question of independent MP Fazlul Azim, the prime minister informed the House that the formalities relating to inviting tenders for expanding four-lane Dhaka-Chittagong Highway from two-lane has been initiated and that she hoped that the project work would start in December, this year (2009) and would be completed in December in the year of 2012.

Sheikh Hasina, replying to a question of ruling Awami League MP Gazi Golam Dastagir, said the government has decided in principle to link Bangladesh with the proposed Asian Highway and after completion of the highway, there would be expansion of trade and business, foreign investment and development of socio-economic condition of the country through development of road infrastructure network.

Scopes would be created for transportation of huge quantities of goods through the highway in the South-Asian region if Bangladesh is connected with the Asian Highway and implementation of deep-sea port in Chittagong in future, the prime minister said. Pointing to the Speaker when Jatiya Party’s Mujibul Huq  raised a question on behalf of BNP lawmaker Abul Khayer Bhuiyan, the prime minister said she preferred questions from the opposition lawmakers although her predecessor Khaleda Zia never entertained any question form the opposition bench while Awami League was in the opposition.

Even the then Speaker did not allow any question of the Awami League lawmakers, not to speak of raising any supplementary question by the opposition MPs then, Sheikh Hasina regretted.


Date: 08 October 2009, Bangladesh

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Vote for quick gas exploration-JS body suggests finalising PSC

Posted by phulbarinews on October 13, 2009

Staff Correspondent

A parliamentary committee yesterday recommended that the government finalise the production sharing contact (PSC) with two foreign companies on gas exploration bids for three offshore blocks soon as it feared further delay might hamper the country’s interests.

In defence of the recommendation, the parliamentary standing committee on power, energy and mineral resources ministry observed that crisis might occur due to delay in starting the exploration. “India and Myanmar have already started gas exploration in their offshore blocks, and if we delay, they might capture our gas resources using sophisticated technologies,” Maj Gen (retd) Shubid Ali Bhuiyan, chairman of the committee, told reporters after the meeting at the Jatiya Sangsad Bhaban.

“The more we will delay in gas exploration at the off-shore, the more we will loose and crisis will increase further as well,” he said. Shubid Ali, also a ruling Awami League lawmaker, said many wars and conflicts are seen over oil and gas issues in the past and it may happen again in future. “Therefore it’s urgent to finalise the production sharing contact with two foreign companies on gas exploration to avert any possible crisis in this regard,” he added.

Ireland-based company Tullow Bangladesh has been awarded shallow water block SS-08-05 while US oil company Conoco Phillips South Asia New Ventures Ltd deep sea blocks DS-08-10 and 11. The parliamentary body also has taken a ‘go slow’ policy to sit with the national committee to protect oil, gas and mineral resources on awarding the three off-shore blocks saying that the national committee is now divided into two factions.

The committee also said at present corruption and irregularities are also going on in the power and energy ministry and asked the ministry officials to go tough on checking those. It said the committee members will visit the ministry soon to talk to some officials about curbing corruption and irregularities. Shubid Ali also outright rejected the allegation of national committee to protect oil, gas and mineral resources that the government has made a blue print to hand over the country’s resources to the foreign companies in exchange of mutual interest.

“Without reading the contact properly they [the national committee] are talking silly. Ours is sovereign country. How come anyone can snatch our sovereignty,” a lamenting Shubid Ali asked. On corruption, the committee chief said corruption is still going on in the ministry including meter reading. “We have asked the ministry officials to check corruption at any cost,” he said.

Asked about the proposed talk with the leaders of the national committee to protect oil and gas, Shubid Ali said, “We will take time to sit with the leaders of the national committee as they have split into several factions.” “We will sit with them later at a convenient time,” he added. Meanwhile, the parliamentary body on September 16 said they will arrange a views exchange meeting with the leaders of the national committee in its next meeting to discuss the much-debated awarding of three offshore gas blocks to the foreign companies.

The leaders of the national committee on September 20 said they are ready to sit with the standing committee if they are invited formally.  The cabinet committee on economic affairs on August 24 approved oil and gas exploration bids for three off-shore blocks under the condition that the explorers would not work in the internationally disputed maritime areas until the dispute is resolved.

As per the cabinet decision, the two companies are allowed to explore the areas of the blocks not claimed by Myanmar or India. The national committee that enforced a half-day hartal in the city on September 14 gave an ultimatum to the government till October 15 to cancel the decision of giving offshore gas exploration rights to the two foreign companies. It claims the contracts would oblige the government to export up to 80 percent of the gas to be extracted from the offshore fields.

Date: 07 October 2009, Bangladesh

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German help sought-Govt considering extracting coal thru’ open pit mining facility

Posted by phulbarinews on October 13, 2009

FE Report

The government is still considering extracting coal through open pit mining facility and Commerce Minister M Faruk Khan has sought German help in this regard, ministry sources said. The minister sought German support, advice and cooperation when German Ambassador Holger Michael called on him on Monday.

“The minister asked for the help as Germany has modern technology and experience in open pit mining system,” said an official of the ministry. The minister informed the envoy that Bangladesh is using Chinese technology to extract coal but the government wants more advanced technology where Germany has an edge, the official said.

In reply the German envoy assured the minister that he would discuss the issue with his government as to how they can help Bangladesh, he added. Faruk Khan also sought German investment in readymade garment sector and export of the products back to the country, the official said. “The minister told the envoy that the knit sector is doing well in Bangladesh but investment in the woven sector is most welcome,” he added.

Meanwhile, a press release of the ministry said the commerce minister sought investment in renewable energy and river dredging too. “Shipbuilding and textiles sectors can also use German experience to make it more competitive,” the press release said. The minister said there is ample scope to increase trade volume and strengthen the relations between the two countries.

“Exchange of business delegations can help materialise the potentialities,” he said. The envoy said that Bangla-German trade volume has increased by fourfold in the last 10 years and the current environment is favourable for investment in Bangladesh. He enquired about labour situation in the garment sector and the minister informed him that the government is committed to protecting the rights of workers especially in the RMG sector.

Bangladesh exported $2.27 billion worth of products to Germany in 2008-09 which was only $681 million in 2001-02 while it imported products worth $410 million in the last fiscal whereas the figure was $169 million in 2001-02. Germany is the second biggest export destination of the country and major export products include knit wear, woven garments, home textiles, frozen foods, footwear, pharmaceuticals, ceramic tableware, leather bag, bi-cycle and jute products.


Date: 06 October 2009, Bangladesh

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Govt seeks German help for open-pit coal mining

Posted by phulbarinews on October 13, 2009

Asia Energy’s lobbyists seem gaining the upper hand

Staff Correspondent

The government on Monday requested Germany to assist Bangladesh to extract coal by the open-pit mining method.  The commerce minister, Faruk Khan, called upon the German ambassador, Holger Michael, to provide some expert advice as the government is still in doubt about the possible impact of open-pit mining on the environment.

Holger met Faruk at his secretariat office and discussed investment in the renewable energy sector and dredging to deepen the rivers and increase their navigability. ‘We are examining the pros and cons of open-pit mining in the country which is densely populated and suffers from scarcity of land,’ Faruk Khan reportedly told Holger. Holger said that the German government would provide all technological and investment support to Bangladesh through the GTZ, the German technical agency.

Many energy experts, various rights groups like the National Committee to Protect Oil, Gas Mineral Resources, Power and Ports, and the Citizens Committee of the Bangladesh Economic Association have been demanding a complete ban on open-pit mining for the last three years, saying that it would destroy the environment and displace a huge number of people from the their lands. After the Awami League-led government took office in January, a move in the government is underway to use the open-pit mining system in the country, and the controversial UK-based company, Asia Energy, has begun lobbying to get permission to use the open-pit mining system at Phulbari coalfield in Dinajpur.

State minister for environment Hasan Mahmud visited Germany on September 6-9, reportedly to acquire some knowledge of open-pit mining and coal-based power plants. An official of the environment ministry, who had accompanied the minister, told New Age on Monday that the minister’s visit was arranged by the GTZ and they had visited many coal-mines and power plants including that of German company RWE.

The GTZ has sponsored a number of roundtables and seminars that recommended open-pit mining in Bangladesh. Asia Energy also took some persons, including selected academics, from Bangladesh in 2007 to Germany to visit the coal-mines and power plants operated by RWE. ‘The RWE is learnt to be interested to become a partner of Asia Energy in the Phulbari coal-field and to build a coal-based power plant, and that is why Germany is so eager to ensure that Bangladesh goes for open-pit mining,’ said an official of the energy ministry.

The official said that after Hasan Mahmud’s visit, he submitted a report to the government saying that they had seen nothing wrong in open-pit mining in Germany and that it was successfully generating electricity from coal. ‘We have collected still pictures, videos and other materials in favour of open-pit mining. We have seen that Germany was doing a tremendous job in operating open-pit mines. The RWE is producing around 7,000MW of electricity from the coal from two mines. We have seen nothing wrong with open-pit mining, but some people in Bangladesh are against the system as they do not want the development of the country,’ said official of the environment ministry.

The energy ministry last month recommended that Prime Minister Sheikh Hasina allow open-pit mining at Barapukuria coal-field, and she told the ministry to carry out a detailed study and present the findings to her after which she will decide what to do. Professor Anu Muhammad, member-secretary of the National Committee to Protect, Oil, Gas, Mineral Resources, Power and Ports, told New Age on Monday that the campaign to allow open-pit mining in the country was launched again after this government took office as Asia Energy had gained more powerful lobbyists in its favour.

‘The government’s ministers are saying what Asia Energy wants to hear. They are saying open-pit mining is good so that Asia Energy can do so at Phulbari,’ he said. Professor Anu said they had time and again pointed out that the environments and geographical traits of Germany and Bangladesh were very different. ‘The density of population, the water level and the rapidly diminishing arable land of Bangladesh make it totally dissimilar to Germany,’ he said.

He said that if Sheikh Hasina decided to allow open-pit mining, she would break her ‘commitment’ as she had endorsed a six-point agreement that the people of Phulbari signed with the then BNP-led government in August 2006 to oust Asia Energy from Bangladesh and to ban open-pit mining in the country. Three persons were killed and many others injured at Phulbari in August 2006 when policemen suddenly opened fire on protestors demonstrating against Asia Energy’s plan to use the open-pit mining system at Phulbari coal-field.


Date: 06 October 2009, Bangladesh

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Plan to conduct study on open pit coal mining

Posted by phulbarinews on October 6, 2009

Unb, Dhaka

Energy Ministry has initiated a move to carry out a study on social and environmental impact of coal mining, particularly of open pit mining. “We have already moved for the study in compliance with the prime minister’s directive. We’re hopeful of completing the study by next month,” Energy Secretary Mohammad Mohsin told UNB yesterday.

The energy ministry on September 16 made a presentation before Prime Minister Sheikh Hasina on a draft coal policy. The draft suggested open pit mining as a better option for extracting coal from different coalfields across the country, including the Phulbari Coal Mine.

After the presentation, the prime minister had directed the ministry to conduct a study to determine the social and environmental impact of open pit mining. Petrobangla was asked to appoint an expert to conduct the study. It is now under process, said an official. Framing the coal policy has been a long pending issue that evoked debate on determining the method for extracting coal from the mines.

Bangladesh has 7 coalmines with estimated total reserves of 2.5 billion tons. A section of experts argued in favour of underground mining as it has very little social and environmental impacts. Others recommended open pit mining as it ensures about 85 percent output. British company Asia Energy had signed an agreement with the government for extracting coals at Phulbari through open pit method, which was strongly opposed by the locals arguing it will leave an adverse impact on their livelihood.

This led to a clash when 9 people were killed in police firing in 1996. Since then fate of the coal mining agreement remained undecided.

Date: 27 September 2009, Bangladesh

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PM asks energy ministry to review coal policy further

Posted by phulbarinews on October 6, 2009

Staff Correspondent

Prime Minister Sheikh Hasina on Wednesday asked the energy division to further review the draft coal policy, especially of the possible impact of mining on the people and environment. The energy officials at a meeting with the PM recommended open-pit mining of the north side of the Barapukuria coalfield in Dinajpur, but Hasina said that she would not make any hurried decision on open-pit mining, said sources present at the meeting.

Energy officials and the prime minister’s adviser Tawfiq-e-Elahi Chowdhury, state minister for power and energy Enamul Haque, energy secretary Mohammad Mohsin and Petrobangla’s chairman Muqtadir Ali made presentations before Hasina on the latest developments in the energy sector at the Prime Minister’s Office.

Finance minister Abul Mal Abdul Muhith, prime minister’s economic affairs adviser Mashiur Rahman and state minister for land Mustafizur Rahman were also present at the meeting. The energy officials told the PM that non-resident Bangladeshis as well as latest draft of the coal policy prepared by the interim government had recommended open-pit mining at Barapukuria.

The PM, however, told the energy officials that they needed to ascertain the possible impact of open-pit mining before they could come to a decision on the matter. ‘Nothing is to be done in a hurry,’ she is learnt to have said. Hasina asked the energy officials to further review the draft policy before placing it again before her.

She also wanted to know whether the people affected by underground mining at Barapukuria were getting due compensation and at what stage was the plan to establish a mining city in Dinajpur. The energy officials said that they had taken up a Tk 300 crore project to compensate the affected people, acquire land and create a mining city. The officials also briefed the PM about the gas supply situation.


Date: 17 September 2009, Bangladesh

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Controversy Over Offshore Exploration PSC

Posted by phulbarinews on October 6, 2009

Engr. Khondkar A Saleque

On the very first day of third session of the new parliament an honourable member of parliament on point of order has brought serious allegation that Government recently acted beyond constitutional authority and against the interest of the country in approving Production Sharing Contracts (PSC) for offshore exploration for petroleum. This must be treated as a very serious allegation, which came from a prominent politician who belongs to ruling party alliance and himself chairman of a parliamentary standing committee. He also requested the government not to create any barrier when a pressure group proceed to seize office of the Prime Minister as a mark of protest and register claim to overturn the decision.


It may be recalled that highest approving authority of the Government recently approved a proposal from Energy & Mineral Resource Division (EMRD) of the Ministry of Power, Energy & Mineral Resources to award PSCs for three deepwater offshore blocks in the Bay of Bengal to two International Oil Companies — Conoco Philips of USA and Tullow of Ireland. This is the first time after 1974 that Bangladesh could take positive step in deepwater offshore exploration in the Bay of Bengal. Our neighbours India and Myanmar are exploring for several years in adjacent water engaging exploration companies.


A pressure group called National Committee for Oil, Gas and Port Protection (OGPC) is agitating against engagement of foreign companies for exploration of petroleum resources and against open pit mining of coal for few years. The OGPC announced agitation program following government approval of PSC and were proceeding to seize Petrobangla head office on 2nd September when some activists including a senior academician came under police action and were injured. All sensible persons including government expressed deep concern and investigation to track offenders is ongoing. Now that a ruling alliance lawmaker has made serious allegation that the PSC award should be discussed in the parliament and minister concerned. And the Prime Minister in this case should make a statement to dispel all doubts and confusions. The MP who raised this issue may first identify and clarify how, where the award of PSC to IOCs would contradict constitutional provisions.


The mother document used for the PSC is the document prepared by Dr Kamal Hossain, the eminent petroleum lawyer and one of the leading personalities who drafted Bangladesh Constitution. He was Petroleum Minister when the mother PSC document was used to engage IOCs in offshore exploration in 1974. That document subsequently got amended to suit circumstances. Finally the present document was prepared by experienced line professionals during the tenure of past democratic government, updated after scrutiny by none less than Dr Kamal. Council Committee of Advisors of Caretaker government approved it. Petrobangla followed very transparent path of tendering process. The evaluation was meticulously done by inter-ministerial committee. Line ministry and the Ministry of Law examined all the pros and cons. Finally the relevant authority of the present government approved it. The draft PSC document is available on Petrobangla’s website. There appear no procedural flaws or irregularities in tendering and award process.


We do not understand what made honourable MP to state that the award of PSC violates the constitutional provisions. Let us have a view of draft PSC. For the sake clarity, let us quote from its preamble:


Where as

1. All mineral resources including Petroleum within the territory, Continental Shelf and economic Zone of Bangladesh are vested in Peoples Republic of Bangladesh.


2. The Government has under Bangladesh Petroleum Act 1974 (Act No LXIX of 1974) as amended up to date, the exclusive right and authority to explore, develop, exploit, produce, process, refine and market petroleum resources within the territory, continental shelf, and economic zone of Bangladesh and it has also the exclusive right to enter into Petroleum Agreements with any person for the purpose of any Petroleum operation



3. Petrobangla shall have the power to exercise rights and power of the government to explore, develop, exploit, produce, process, refine and market petroleum resources within the territory, continental shelf, and economic zone of Bangladesh and it has also the exclusive right to enter into Petroleum Agreements with any person for the purpose of any Petroleum operation



4.The Government and Petrobangla desires that exploration for Petroleum may be accelerated with a view to exploring and discovering any Petroleum resources which may exist in the contract Area and in the overall interest of the people of Bangladesh.


The government of Bangladesh and Petrobangla by acting to engage International Oil Companies to explore for petroleum have definitely not done anything in contravention of Constitutional provision. Present government is a legitimate government voted to power in a free and fair national election. Now it needs to be seen whether such PSCs would serve the overall interest of the people of Bangladesh.


Petrobangla and Government of Bangladesh have followed all prescribed routes of approval of PSC document, tendering, tender evaluation and award process. So as far as tendering and award processes are concerned, there are no irregularities like some previous occasions where exploration blocks were awarded on the basis of unsolicited offers and some Petrobangla owned fields were awarded in very non-transparent manner.


We must accept Bangladesh at this moment do not have technical capabilities and resources to explore petroleum in the offshore. Indian public and private sectors have much greater capacity but even then through several bidding rounds they have engaged exploration companies in the offshore. Many International Oil Companies are working in Myanmar offshore as well. Bangladesh in foreseeable future will not acquire expertise to explore in the offshore. Bangladesh is suffering from energy crisis, which is mainly triggered from gas crisis. We should have started offshore exploration at least 10 years before. We have already idled away valuable time. So engagement of IOC in deepwater offshore exploration is definitely the right idea.


Bangladesh will remain owner of any gas field that may be discovered. IOCs will only be developer and operator. PSC that Bangladesh prepared has not come from other planet. Similar PSCs are in existence in many different countries- Indonesia, Thailand, Vietnam, and the Philippines.


In any PSC there is cost recovery and there is profit petroleum. IOCs will take all risk to explore for petroleum. Offshore exploration is always a gamble. If they are not lucky they lose all the money. If they discover commercially exploitable resources, only then they can recover costs. In the draft PSC, 59% of gas will be used for cost recovery and during the cost recovery remaining 41% profit gas will be shared among Petrobangla and IOCs. Petrobangla will get the lion share. As costs are progressively recovered, Petrobangla’s share will increase.


IOCs will first carry out extensive seismic survey and other surveys. If they are reasonably confident, they will prepare development plan. IOCs cannot start exploration until Petrobangla extensively examine and review development plan. At every stage Petrobangla will have the right to monitor and oversee IOC activities. Now if there is a major discovery, for example, 5Tcf, the question of LNG plant will come up. LNG plant is capital intensive. If an economy-size LNG plant is to be set up, there is nothing wrong in dedicating 80% of the discovered resource for LNG. In such case, 80% lion share of Petrobangla’s gas will also be included. IOCs will buy this gas from Petrobangla at international price. While IOCs submit plan for LNG to Petrobangla, they will mention their intention on the LNG market. Petrobangla will need to approve LNG price and LNG market. Nothing in the PSC prevents Bangladesh from buying a part or the whole of LNG if it can absorb. Now it appears that the mass people are being confused by some talking heads who did not read or properly interpret the PSC provisions.


It may be mentioned here that our neighbours are not in favour that Bangladesh starts exploration in the Bay of Bengal. They will love to see that Bangladesh initiative gets stuck for some reasons or other. The unnecessary and unimaginative barriers that some of us are creating to offshore exploration is in fact serving the interest of our neighbours. Bangladesh is not required to worry about LNG export from its offshore so long domestic market is capable to absorb. The exploration and development will take at least 7-8 years and there has to be a substantially large discovery to set up LNG plant. Finally the destination of LNG will depend on final approval of Petrobangla. Can Petrobangla authorise LNG export if domestic market is hungry for it? Moreover, if LNG plant is set up in Bangladesh onshore, Bangladesh will not require expensive offshore pipelines to evacuate gas from discovered and developed offshore fields.


It is right that Rashed Khan Menon MP has raised this issue in the House. Let it be discussed. Let the government clarify its position. Let the nation know how some people are misinterpreting PSC provisions and misguiding the nation either for ignorance or with ulterior motives.


Date: 16 September 2009, Bangladesh

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

Dogmatic Activism

Posted by phulbarinews on October 6, 2009

Zahid Newaz Khan

12529983601Cover-inner-7Bangladesh needs power, Bangladesh needs energy. To explore the opportunities, the government finally decided to award IOCs three offshore blocks for oil-gas exploration. And, again the opposition from the radicals. Experts say the government has no alternative but to go ahead for the sake of the future energy security.

Bangladesh performs well in the worst group.

A perfect conclusion of Center for Policy Dialogue (CPD), the leading local think tank, in releasing the Global Competitiveness Report (GCR) in Dhaka recently. The GCR originally belongs to World Economic Forum (WEF). The CPD is a partner organization of the WEF. According to the GCR, infrastructure in Bangladesh ranks among the worst in the world, securing only the 126th position in 133 nations.

“Infrastructure is the number one threat, even a more serious problem than corruption,” said Dr Debapriya Bhattacharya, distinguished fellow of the CPD. Bangladesh in the GCR ranked 122nd out of the 134 countries surveyed last year. However, it moved up five notches in the overall index, moving from last year’s 111th position. A simple analysis of the GCR shows that Bangladesh lags behind its South Asian neighbors.

India ranked 49, a step better than last year and Pakistan remained unchanged at 101. Sri Lanka stood at 79, down from last year’s 77th position, understandably due to the period when it was on its last lethal offensive on the Tamil tigers. It’s not only the GCR where infrastructure has been blamed for lack in a congenial business-and-investment-condition.

The Bangladesh Business Environment Study, conducted by the CPD and published simultaneously, also found infrastructure to be the major bottleneck. Almost all the respondents– 98 percent– say poor supply of electricity was the major concern. The government itself admits that the poor infrastructure, particularly energy crisis, is a major impediment for investment. Finance Minister AMA Muhith on a number of occasions categorically mentioned about this.

The smiling always forerunner of a poor economy however is optimistic that if not cent percent at least 60 percent of Mohajote government’s plan in the energy sector will witness success. “Since energy crisis is an obstacle to investment, the government has prepared a mega plan to improve the situation. Implementation of the plan would increase investment not only in the power sector but also in the areas where it (investment) was not being attracted for lack of power,” said the Finance Minister.

Investment now is the key challenge facing the Bangladesh economy today. At 24.2 percent of GDP in 2009, economists say, investment rate in Bangladesh is low relative to emerging economies like India and China where it hovers around 40 percent of GDP. In order to accelerate the economic growth rate to 8.5 to 9.0 percent range for becoming a middle-income country in a decade and a half, their suggestion is clear: It needs to raise the total investment rate to at least 34 percent of GDP in the next three to five years.

Bangladesh Bank statistics show Tk 34,762 crore excess liquidity is lying with the banking sector meaning that there is little domestic demand for investment funds. The present foreign exchange reserve is about US$ 850 crore. Also L/C opening for capital machinery and import of industrial raw materials has declined. FBCCI President Annisul Huq poses a question that where the gas and electricity will come from that the entrepreneurs will make investment. “There are problems relating to land, interest rate, extortion and law and order. But, the main problem now is energy,” says the boss of the apex business body, Federation of Bangladesh Chambers of Commerce and Industry.

Waliur Rahman, President of Federation of International Chamber of Commerce and Industry (FICCI), says: New investment will not take place until the gas crisis is over. Rather, the existing units will face closure. Mir Nasir Hossain, a former President of the FBCCI, also blames the gas and electricity crisis for a grim picture in the investment. “If you run an industrial unit, you must need power and gas. But, can you depend on the national grid for electricity? No. “So, you have now generators. But, there is also problem in gas supply situation,” observes the frustrated entrepreneur. According to Finance Minister Muhith, the global economic recession has some adverse impacts on recent investment scenario.

But, he himself admits that internal constraints are energy and the quality of public administration. Even the conservative estimate shows that Bangladesh needs an additional 4,000 MW of reliable power supply in the next four years. A 100 megawatt power plant needs 25 million cubic feet of gas per day (MMCFD). Practical situation is that the government can’t even give gas connections to new areas until the production marks a rise by 200 MMCFD and reaches to 2,200 MMCFD. On the other hand, to have 1,000 MW electricity from a coal-fired plant, the per annum requirement of coal is three million tons. Million dollar question is where the primary energy– gas and coal or oil– will come from?

Bangladesh can’t afford to run its power plants by imported oils. It has its vast coal reserves in the northern parts of the country. But, the underground Barapukuria coal mine has been creating scandals one after another since it went into operation. World class Phulbari coal mine with a reserve of 572 million tons is ready to be developed. But, it didn’t get go-ahead due to opposition of a civil society group. The same group is now putting barricade towards offshore oil and gas exploration. The opposition got momentum after the government, in the wake of diabolic energy crisis triggered from gas supply crunch, finally took the bold and courageous decision to sign PSCs for three offshore blocks with two IOCs.

With the two next-door neighbors went for aggressive exploration and made significant discoveries, the bidding for Bangladesh offshore blocks took place during the caretaker government. But, the interim government didn’t take any final decision leaving the matter pending for the caretaker government. After eight months in office, the Mohajote government which came to power with overwhelmed majority, decided to award two international oil companies (IOCs) three offshore blocks and sign production sharing contracts (PSCs). According to government decision, PSCs will be signed for two deep-sea blocks– 10 and 1– with US company ConocoPhillips, which was originally selected for eight blocks.

Decision has also been finalized for signing PSC with Irish company Tullow for shallow sea block, number 5. But, the National Committee to Protect Oil, Gas, Mineral Resources, Power and Ports (OGPC), mainly an umbrella of small left leaning groups, are opposed to the government’s bid. Even they called a half-day hartal in Dhaka city for September 14 and laying siege to UNO and DC offices across the country the same day. According to them, they are opposing the “government’s ill designed blueprint to lease out country’s natural resources to foreign companies with the provision of export”.

The September 14 hartal is the first since December 21, 2006 when the Awami League-led grand alliance enforced a countrywide dawn-to-dusk general strike as a part of their joint movement to resist any partial election. The hartal call was made at a rally before a march towards the Prime Minister’s Office on September 10. Announcing the 6am-to-noon shutdown, committee Convener Sheikh Mohammed Shahidullah warned that the committee would go for tougher programs if the government did not drop the plan immediately. He said the committee would call a national convention after the Eid-ul-Fitr to announce its next program.

“We must establish our rights offshore in the Bay and we must protect our natural resources for domestic uses,” said committee’s Member Secretary Anu Muhammad, in a written statement read out in the rally. He also called on all political parties, social organizations as well as general people to be united against the government’s move to what he said lease out the offshore blocks. Anu Muhammad is recovering from injuries he sustained in the police action during their Petrobangla gherao program with the same demand on September 2. After Anu Muhammad was injured in the police action, the government tried to make convince that the incident was not intentional one.

Several ministers and ruling Awami League leaders who once kept eyes on  Square Hospital where their ailing leader Sheikh Hasina had been undergoing treatment during the caretaker regime rushed to the same posh hospital to see Anu Muhammad and console him. The ministers and AL leaders expressed their sorrow at the incident and assured that stern action will be taken if excess by police is found into it. However, following the hartal call it’s clear that no bid by the government, if any, to bring the OGPC across the discussion table was successful.

The hartal call, first ever during the present Mohajote government, came under sharp criticism by the government and the ruling party as well. LGRD and Cooperatives Minister and AL General Secretary Syed Ashraful Islam said those who have called the general strike “in the name of protecting the country” are rather trying to harm her. Terming the police action on September 2 excess, he said the government was transparently doing whatever necessary for exploring oil and gas. “We have taken a fresh initiative to explore oil-gas to meet the demand of the country, neither to export nor giving benefits to others,” clarified the AL General Secretary.

He claimed that AL could not assume power in 2001 due to its policy of exporting gas only after keeping it preserved for 50 years requirement of the country and said AL still maintains the policy. “What’s the meaning of protection? Keeping the resources beneath the soil or their optimum utilization?” questioned Syed Ashraful Islam. Experts also say the OGPC has been misleading the nation by resorting to a campaign based on untrue or half-true. According to them, a PSC is different from leasing out oil and gas blocks, as in a PSC the contractor is not a co-owner of the block. Under a PSC, Petrobangla remains owner of the blocks while the IOCs, upon successful investment and operation would share the production with Petrobangla, they say.

The pros and cons of the PSC, after being drafted by professionals, was vetted by Dr Kamal Hossain. It was finalized only after all his queries were replied to his satisfaction to preserve the country’s interest at the highest level. Then the state owned Petrobangla based on draft PSC invited bids for 28 offshore blocks in 2008 and seven IOCs submitted bids for 15 blocks for oil and gas exploration. After evaluation by a competent evaluation committee the recommendations were routed through EMRD for approval of the relevant authorities. Council of advisors of caretaker government examined all the pros and cons of the matter but thought it wise to leave the matter of approval to democratically elected government.

Awami League-led Mahajote government’s energy management also scrutinized the matter thoroughly before placing it to the approving authorities. Petrobangla and EMRD endorsed the recommendation of evaluation committee. Of the bidders only two companies– ConocoPhilips for 8 blocks and Irish Company Tullow for 1 block were recommended. Experts say the OGPC’s claim that the model PSC would allow the IOCs to export 80 percent of the extracted gas is misleading. As per Model PSC-2008, Petrobangla Chairman Major (retd) Muqtadir Ali says, IOC has to conduct all of the exploration activities at its own risk and finance.

“After commercial discovery of hydrocarbon it will start to recover its cost. If commercial discovery is not found, the cost of such acts would not be borne by Petrobangla,” he says. Analyzing the PSC, the Petrobangla Chairman says: Only after commercial discovery the produced gas will have two shares, Petrobangla share and IOC share. “First of all IOC will offer its own share to Petrobangla. If Petrobangla refuses to take it then within 6 months of the offer Petrobangla will intimate its opinion to IOC.” Then, he continues, IOC has to look for the gas market locally within the country.

If it does not find any local gas consumer/customer, thereafter IOC could think for 80 percent of its marketable shares to export in LNG form (not in gas form) upon consent of Petrobangla, he added. The Petrobangla Chairman says: It appears from the Model PSC-2008 that only in case of refusal by Petrobangla and the country’s other gas consumers, i.e. only when there is no gas consumer within the country, the 80 percent of IOC’s marketable share (other than Petrobangla share) in the LNG form is exportable. “I would request that one should read all the articles and he should point out the merits and demerits.”

“Just quoting a sentence from an article is not the proper way of interpreting the particular article of the PSC and the PSC as a whole,” he said adding the PSC is on the website of Petrobangla. Anyone interested can visit it and go through each and every article of the PSC. The website had invited opinion on the draft PSC and it was open for one year from anyone willing to give opinion. But, none of the people who are now on agitation gave opinion, said a senior official of Petrobangla. As different quarters are now giving different versions, experts say, the question of export may not come at all as the country itself will be able to consume the discoveries in the offshore.

At present, Bangladesh’s annual demand of 600-700 BCF. The growth of demand indicates that the demand will be one TCF by 2012 and by 2020 it will be two TCF (See Table:1).

Sector Wise Daily Demand Forecast (Projected by Petrobangla 2007)

FY Power Fertilizer Others Total MMCFD
2008-2009 886 289 843 2018
2009-2010 1191 289 890 2370
2010-2011 1284 325 1011 2620
2011-2012 1434 325 1088 2847
2012-2013 1475 375 1171 3021
2013-2014 1588 375 1261 3224
2014-2015 1700 375 1360 3435
2015-2016 1822 375 1403 3600
2016-2017 1960 375 1488 3823
2017-2018 2093 375 1577 4045
2018-2019 2255 375 1673 4303
2019-2020 2417 375 1775 4567

“So, if the country can consume the entire gas, why the question of export will come,” said an expert. Bangladesh is going to sign PSC for three blocks, out of 28 shallow and deep-sea blocks. “We don’t know what will be the result of exploration. So, it was better to sign PSCs for all the 9 blocks for which the IOCs had qualified,” he said. As the OGPC has been campaigning that the gas will be exported, energy economists say the only option of export is through LNG only after the government as well as private customers in Bangladesh refuse to purchase it. But an LNG project will not be profitable if the discovery is less than five TCF. Also, if the deep-sea discovery is less than one TCF the commercial production may not be viable at all.

Again, a pipeline project to bring gas to the country will be viable if the shallow discovery if 500 BCF. However, experts say transmitting gas from offshore– no matter whether from shallow or deep– will not be a problem as the concerned IOC will increase investment under the cost recovery scheme. But, OGPC has been campaigning that the blocks are being “leased out” only to export. “Their street speeches are either motivated or they are not going deep into the reality,” said a top official at Petrobangla. “You see if we don’t go for offshore exploration, there are chances that our own maritime area with natural resources could go to others as already we witnessed such move by our neighbors.”

So, he questioned: Of whom purposes they are serving in the name of protecting natural resources. “The radical group’s demand is also that no foreign company should be allowed,” he said adding if not the IOCs who will carry out the investment-intensive technically sophisticated operation. He said BAPEX is not in a position even for onshore exploration. “How can we expect from them they will do it in the offshore. Experts say there is no alternative to go for offshore exploration now by the IOCs, considering all the aspects– necessity of energy now, country’s own capacity in oil-gas exploration and to protect the natural resources in Bangladesh’s own maritime area. They categorically refer to India and Myanmar’s success in the offshore with the exploration carried out by the IOCs.

“So, sooner is the better,” said an expert apprehending that the opposition by the dogmatic activism of the OGPC may differ the beginning of the offshore exploration. Such a deferment took place due to the OGPC during the caretaker regime. It had said that the caretaker government has no right to take major decision on offshore gas blocks. Their demand was that the elected government will take the final decision. “Now a government having over two third majority in the Parliament has taken the decision, but the OGPC is not accepting it,” observed an analyst.

Government’s policymakers however are happy that some components of OGPC, who are also partners of the Mohajote, are lately realizing the reality and withdrew support from the September 14 hartal call. Workers Party of Rashed Khan Menon, Jatiya Samajtantrik Dal (JSD) of Hasanul Haq Inu, Samyabadi Dal of Dilip Barua and Ganotontree Party have asked the OGPC to postpone the hartal and go for discussion. Awami League’s Joint Secretary Mahbub-ul-Alam Hanif offers dialogue if the OGPC is willing. He however blamed BNP for “provocation” and said the BNP is behind the hartal call.

Although the offshore bidding process was first initiated during the BNP-Jamaat alliance government, the BNP extended “moral support” to the hartal. “And this is the irony of Bangladesh and Bangladesh politics,” said a political analyst. “Our successive governments in one side can’t maintain the continuity of policy decision and on the other they take U-turn from their own decision when they are in the opposition,” he said. The U-turn also took place in the case of some leaders of the OGPC itself. At a Muktangon rally, prior to the march towards the PMO on September 10, Workers Party General Secretary Bimal Biswas said that the people would protect the country’s natural resources with their lives.

“Prime Minister Sheikh Hasina has recommended the leasing process to satisfy imperialist America,” he said. But, in the evening he said that they support the demand of the OGPC but don’t support the hartal. Analysts say the hartal is the first barricade towards the government’s vision of a digital Bangladesh. “If the government really wants to attain the goal, it has to be realistic. It needs power and for that primary energy. Offshore has a big prospect,” said an analyst. The prospect was first dreamt of by country’s founding father Bangabandhu Sheikh Mujibur Rahman in 1974 and initiative was taken for the offshore exploration. Thirty five years have gone by since then. Others achieved a lot despite late start, but Bangladesh lags behind.

If the government maintain boldness it can go far, an analyst said asking himself, can it? Only time will say. 


Date: 16 September 2009, Bangladesh

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