Mushfiqur RahmanFinance Minister A M A Muhith in his budget speech on June 06 stated that his government had prepared a report on coal policy. ‘However, we would like to leave this report for decision to be taken by the next government’ added the minister.

The ‘coal policy’ was first drafted in late 2005 following the initiative of the Energy and Mineral Resource Division of the government. Since then several versions of the ‘coal policy’ have been drafted and government appointed. Sector specialists consider the ‘coal policy’ to be irrelevant as specific laws and regulations are present in the country for coal sector development. The government can make amendments to the existing laws and rules for updating the legal instruments for ensuring safe and economic coal mine development, securing interests of all the stakeholders. Unfortunately, the government has not so far chosen that logical option. Rather, the draft ‘coal policy’ has been shelved for several years and all the initiatives for coal sector development from the discovered coal fields are withheld in the name of the absence of a ‘coal policy’.

In the meantime, the government has signed a number of contracts for building coal-fired power plants which are expected to get coal supplies from import sources. Bangladesh ports have limitations for large-scale coal import. Also, carrying the large volume of coal from the ports to the projected power plant sites will be difficult. So far not a single import coal-based power plant has been built in the country. The imported coal-based power if generated will not be cheap comparing to the existing power tariff in the country.

The Finance Minister logically has placed the argument that ‘if we extract our coal from our own mines and ensure smooth supply, our dependence on import will gradually diminish’. But he considers that the selection of mining method for local coal mine development, including the decisions for rehabilitations of the project-affected people and management of environment and impacts on the groundwater layers due to mining, are the issues to be resolved prior to the mining decisions.

The Energy Division has assigned the government trust, Institute of Water Modelling (IWM) to conduct a hydrological study for a possible open pit mine development in the northern part of Barapukuria coal field. IWM is scheduled to submit its report by 2014. So it appears the government had decided earlier not to make any decision on large-scale coal mining within its current tenure.

Some people may consider that the coal market is now stable and compared to 2008-2009 period, its price is significantly low. A number of coal mines in Australia and UK shut down their operations because of low prices. It is wise to recall the similar experience of the late 1990s when low prices of coal for a number of years compelled shutdown of several coal mines. As a result, shortage of coal supply became obvious and in 2008, a tonne of steam coal was sold USD 130 to 150 (FoB). So, we should not bank on today’s relatively cheap coal. We should rather get ready for the next wave of price rise of coal.

GCM Plc., the licensee and lease holder for the Phulbari coal field located in Dinajpur district, claims that it has extensively carried out feasibility study for open pit coal mine development there. The company further claims that it has completed 230 studies covering various aspects of coal mine development and coal utilisation for Phulbari field. GCM studies include environmental and social impact studies and management, hydrogeological and hydrological studies and impact managements for interventions should an open pit mine is developed there. Unfortunately, relevant government organisations have not assessed independently the status of these reports. GCM has been waiting for the government’s decisions and no initiative has been taken from the government side to communicate the decisions to the company on the project or its future.

Bangladesh desperately needs primary fuel diversity for power generation. The Power sector Master Plan says that 50 per cent of the total generated electricity should be based on coal-fired power within 2030. The same document of the government stipulates that approximately 11,000 MW power should be generated from coal supplied from the domestic mines. It is a common knowledge that for finalising the ‘coal policy’ to awarding the mining contracts and making the mines operational are the activities which would take several years. Also, supplying approximately 33 million tonnes of coal requiring for generating 11,000 MW power from domestic coal will be a challenging task. Surely, the Finance Minister’s announcement in his budget speech for the fiscal year 2013-2014 would challenge the implementation of the government’s Power Sector Master Plan within 2030.

Mushfiqur Rahman, a mining engineer, writes on energy and environment issues. [email protected]