[mukto-mona] Draft coal policy and national interest

Draft coal policy and national interest

by Dr Sheikh Manjura Hoque

A high-powered advisory committee appointed by the energy and mineral resources ministry submitted the draft coal policy to the government on January 8. On approval by the Energy Division, it will be sent to the law ministry for vetting, which will then be sent to the council of advisers for final approval. The Bangladesh Nationalist Party-led alliance government initiated the process to formulate the coal policy in the context of some foreign companies showing interest to invest in the coal sector. The first version of the draft coal policy was prepared and submitted by the World Bank-financed Infrastructure Investment Facilitation Centre on December 1, 2005. The second version of the draft policy was published January 23, 2006. The previous government could not finalise the policy since it was mainly focused upon coal export, foreign investment and open-pit method. Asia Energy had commenced their activity at Phulbari before the then government finalised the coal policy. On August 26, 2006, local people rose up against Asia Energy and three people were killed in the subsequent skirmishes. Mass upsurge of Phulbari soon transformed into a national issue. The present caretaker government soon after assuming power formed an advisory committee headed by Professor Abdul Matin Patwari, a former vice-chancellor of the Bangladesh University of Engineering and Technology.
   In the final draft, export of coal has not been encouraged. It has been demonstrated that whatever gas and coal reserve the country has is very limited to meet the domestic demand. Coal exploration license can be awarded to any government company or joint venture (with a government company) to any private or foreign government/private company through competitive bidding. To ensure participation of Bangladeshi people, 25 per cent share must be offloaded in the share market. It has been recommended that open-pit mining can be adopted at least in one coal mine on an experimental basis. To fix the royalty, it has been recommended to form one 'coal sector development committee'. So long this committee is not formed and its recommendation does not come into effect, royalty rate will be followed as previous, i.e. 6 per cent for open pit and 5 per cent for underground. One holding company, named Coal Bangla, has been recommended to be formed under the energy and mineral resources ministry, the responsibility of which will be development of the coal sector.
   While discussing the draft coal policy, the happenings of August 26, 2006 may be considered as the context. The people of Phulbari drove out Asia Energy at the expense of loss of lives and bloodshed on the day. In spite of all sorts of support from the then government, local administration, the police and the Bangladesh Rifles, Asia Energy could not perpetuate its position in the locality. Fear of eviction from their forefather's land prompted the people into joining the struggle. People from six sub-districts rallied with the people of Phulbari. This incident provided a lesson that whatever the dimension of a project, if local people are ignored, it becomes rather complicated to implement even a huge project. For this reason, all information and data regarding profit and loss of the local people should be made available to them.
   Let us consider that a person possesses a piece of land on which there is a small house of his ancestors. If any real estate developer offers to develop a multi-storey building and 50 per cent of the flats to the owner in return, the person may not hesitate to agree to the demolition of his ancestral house. However, if he is forced to stay in some other place for a prolonged period and returns to find no sign of his old house, the situation would be quite unacceptable, especially when there are grounds for apprehension about the terms of compensation. Nobody should raise a finger of accusation at him other than people who are submissive to the corporate interest. One point must be taken into consideration at this point that production sharing in mineral resources cannot be the same as builders. Mineral resources are possessed only by the people of this land.
   Let us try to find out what the recommendations in the draft coal policy are, to elevate the living standard of the people in the mine areas. The second paragraph of the draft says, 'Owners of all kind of mineral resources including coal are the people of Bangladesh.' The constitution of Bangladesh says the same thing. Other than this single statement there are no real suggestions or recommendations, which have legal coverage regarding the development of the standard of the people's lives, in so many versions of the coal policy. There is a recommendation to hand over the land only to those people who will be able to show legal papers of their ownership of land. There are millions of people who do not possess any land but who are associated with different professions, who once owned land but have become landless since. There is no recognition of these people who will be forced into an uncertain fate compared to their relatively stable life and known surroundings. Most of these people, who are farm labourers, do not merely produce food but also help run the cycle of economic activity in the northern districts. There is no assurance to elevate the standard of living of commoners in the draft policy. The coal policy appears to be biased towards ensuring gains of the lessees since it can be observed that original owners of the coalmines, i.e. the people, are expected to receive whatever compensation the lessee deems appropriate for their loss of ancestral land, homestead and extraction of their minerals.
   According to the draft, one government company named Coal Bangla solely or in joint venture with private or foreign private/public organisations through competitive bidding should be awarded the development work of coal field. Coal Bangla would encourage private or foreign investment. For private investment, let us consider India as an instance. In India coalfields have been nationalised in 1973 since private organisations demonstrated their extreme failure to manage coalmining. Other than some captive mining, no private companies are entitled to be awarded the license of coalmine in India. And about foreign investment the people of the country have experienced that, after the miserable accidents in Magurchhara and Tangratila, international oil companies were very reluctant to pay compensation. Thus, it has been proved on many occasions that mineral resources are not secured in the hands of any foreign companies. If we go by the constitution stipulating that the people are owner of the country's mineral resources, there is no option of awarding licence to foreign companies as far as natural resources are concerned.
   If mineral resources are handed over to any foreign company fully or a lion's share is handed over to them, leaving some nominal share with a government company then the ownership of the people over mineral resources cannot be established.
   In Coal Policy, it has been stated that so long Coal Sector Development Committee is not formed and their recommendation does not come into effect the royalty will be considered as 5 per cent for underground mining and six per cent for open pit. According to paragraph 13.2, price of the coal at mine mouth will be 70 per cent of international price. Remaining coal must be procured at international price. It is difficult to comprehend what would be our gain if we extract coal destroying environment, fertility of the soil and stability of the region. If we need to procure coal from domestic market at international price then there is no need for the companies to export coal.
   It is mentioned in the draft coal policy that the role of public sector will be given priority for the development of coal sector. Still an option has been left to take the assistance of private companies or foreign private/public companies to ensure energy security or to avoid energy crisis for future. In this connection, it is imperative to state that our experience about the role of foreign companies in gas sector is not encouraging. In coal sector, there is a Chinese company working for long time in Barapukuria. China is one of the largest coal producing nations and have a great deal of experience in the development of coal mine. Still, it is not being possible for this company to supply coal for a mere 250 MW capacity of power plant. This experience provides us the information that mere involvement of a foreign company is inadequate to ensure energy security if other factors are not given due consideration.
   Which method will be suitable to extract coal depends on the depth of coal seam, its quality, different strata of earth crust, geophysical and environmental factors. If the coal seam is close to the surface then open pit mining method can be applied. In this method, coal field is divided into several pits. In one pit, coal seam is exposed after removal of overburden. Coal, after being extracted by underground or open pit method requires washing in coal preparation plant where mud and stones are separated. The more these waste materials are removed, the higher the market price for coal. This again has a negative impact on environment because it adds to the environmental pollution further, which would create havoc in densely populated areas.
   Historically, coal mining has been a dangerous activity. Open cut hazards are principally slope failure. In the case of underground mines it is mostly roof collapse and gas explosions. In underdeveloped and developing countries danger of mining activities increase manifold than developed countries for mine workers. In China, about 6027 mine workers died in accidents in coal mines in 2004, which in United States were 28. Chronic lung diseases, such as pneumoconiosis (black lung) are common among miners, reducing their life expectancy. Every year, 4000 new cases of black lung in the USA and 10,000 new cases in China are common due to this disease. Coal mining causes adverse environmental impacts. These include, release of methane, a greenhouse gas, interference with groundwater and water table levels, impact of water use on flows of rivers and land, dust, surface subsidence, damaging infrastructure, rendering land unfit for the common usage of the area.
   Coal mining can cause water pollution called acid mine drainage (AMD). AMD occurs when the pyrite reacts with air and water to form sulphuric acid. If AMD is not controlled properly, this may cause damage to surface, ground water, soil and cause severe degradation to environment. Still, AMD remains a large problem, emanating from coal mines abandoned in the United States prior to Surface Mining Reclamation Act of 1977.
   Coal mining produces methane a potent greenhouse gas. Methane accounts for nine per cent of greenhouse gas emissions created through human activity. Methane has a global warming potential 21 times greater than that of carbon dioxide on a 100 year time line.
   In the United States of America, Surface Mining Reclamation Act (SMCRA) has been introduced since 1977. SMCRA is a federal law that regulates environmental effects of coal mining in the United States. SMCRA has two main parts: regulation of active mines and reclamation of abandoned mine systems.
   It may be mentioned that according to the existing law of USA open pit mining method is prohibited in densely populated areas. It is widely accepted that implementation of certain laws possible in the United States would be impossible in Bangladesh. We have not yet become successful in recovering compensation from IOCs for the accidents of Magurchara and Tangratila.
   Asia Energy made arrangements for some Bangladeshi journalists to visit some open pit coal mines in Germany. Bangladesh cannot be compared with Germany because of its geological structure, aquifer depth, rain, flood, natural calamity is fundamentally different between the two countries. Population density in Bangladesh is 1079 per square mile and in Germany 232. Population densities in other countries where open pit methods are prevalent are 3 in Australia, 139 in China, 363 in India, and 32 in United States. In Bangladesh, there is no thinly populated area where large number of people from mine places can be transported. Both surface and ground water is largely interconnected in Bangladesh. In order to keep the mine dry in Bangladesh, enormous amounts of water will have to be pumped out which would lower water table. High permeability of soil in Bangladesh further accelerates the lowering of water table while in Germany soil is mainly impervious and the water bearing aquifer is lower in the ground.
   Let us once again consider coal export as it has been mentioned in the draft Coal Policy. In the draft, it has been demonstrated that for the production of electricity within the period of 2005-2030, about 825 million tonnes of coal is required and within the period of 2005-2035, about 1,200 million tonnes of coal is required. The proven reserve in four mines in Bangladesh is 884 million tonnes. In coal policy, it has been demonstrated that if only underground method is adopted for all the mines then the extracted coal will meet the demand till 2021. If the mining method is mixed, i.e. open pit for relatively shallow depth mines and underground for relatively deep mines coal will last till 2027. Paragraph 5.2 of the policy states that if in future substantial gas reserve cannot be explored, there will be gas shortage by 2011. In order to meet the demand of electricity production till 2030 the requirement of coal will be 825 million tonnes and till 2035 it will be 1200 million tonnes. There will not be any remainder for other usage of coal. Still paragraph 6.5 mentions that coal export can be reconsidered ensuring energy security for 50 years. These two statements are fundamentally contradictory.
   About coking coal it has been mentioned in the policy that after transforming coking coal into coke, surplus coke can be exported. The policy proposes that iron ore can be imported and transformed into sponge iron, direct reduced iron or pig iron and supplied to steel industries. When there is a looming possibility of coking coal it is very much essential to bring Chittagong Steel Mills into production.
   Coal resource can be very precious for this country. This resource should not be sacrificed for corporate interest. We need to attain the capability of utilizing these resources. We need to enhance our technological and financial capabilities. We have to explore the areas where we can utilise these resources to their last drop.
   In some reports it is questioned whether Bangladesh's coal is a resource or just a reserve. Taking into consideration the destruction of environment and other assets on the surface, if production cost of coal is more than importing it, then we cannot call it a resource. In China, there are coal deposits of about 1 trillion tonnes which will continue to last for 100 years. In India, coal deposit is about 240 billion tonnes which is 250 times more than that of Bangladesh. It is difficult to comprehend why our policy makers want to distribute this limited resource to multinational companies with nominal royalty. The United States attempts to grab all resources around the world hoarding their own mineral resources.
   If, geological complexities, financial limitations and above all human disaster, which will occur due to the development of coal mines in these densely populated areas are taken into consideration then it can be clearly seen that there is a dire necessity of active research of Bangladeshi coal mines. If, in our universities, undergraduate and post-graduate curricula are introduced, within next 10 years we will be able to create our own experts. Abundant data and information should flow to people so that their prospect is visible to them. Opinions of all walks of life such as scientists, engineers, economists, lawyers, environmentalists, journalists and other experts, local people and commoners should be accommodated. Our coal reserves are not present in such amounts or such favourable locations that these will bring prosperity to the nation right at this moment which would have a qualitatively positive impact to common people's lives. We need to wait for more technological development, like, coal gasification might once become economically viable. To materialise the prospect of coal mines of Bangladesh it is necessary to correctly identify the problems. Research regarding coal mine is very dynamic in the world. Probably the solutions of our problems lie on future advancement of technology. At this moment, any act against natural forces with technology which is not suitable for our geophysical complexities may cause human disaster for which we will be liable to our future generations and moreover lose the prospect of better usage of coal in Bangladesh.
   The writer is member-secretary of the Progressive Engineer's and Architect's Forum. The article is based on a paper presented at a seminar on January 25, 2008 at the Dhaka Reporter's Unity.

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