GCM's Phulbari coal exploration scheme awaits govt approval

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Nizam Ahmed
Indecision on the part of the government has kept the London-based GCM Resources Plc hanging around in Bangladesh for nearly six years since the firm submitted its scheme to explore Phulbari coalmine, following a decade-long thorough study, officials said on Wednesday.
The contract signed with the firm in 1994 has a provision for the government to grant approval within three months of the submission of the feasibility study and development scheme.
"The scheme was submitted on October 2, 2005. But we are still awaiting the approval," Gary Lye, chief executive officer of GCM Resources in Dhaka, told the FE.
It is the time for the government to give the approval as the country needs fuel to generate power and move the country forward, Gary said.
The approval was being delayed only due to bureaucratic red tape. Further delay is likely to make the power shortage more acute resulting in bleak prospect for Bangladesh to become a cherished middle income country by 2021.
The government should prod the bureaucracy to remove all bottlenecks from issuing the approval as soon as possible, the GCM CEO said.
Meanwhile, the government opted for import of coal to meet the requirements until the coal is extracted from home fields. At the same time it was also mulling to go for commercial exploration of the energy resource.
"Imports of coal to meet immediate requirement and exploration of the resource for future needs, both are important to us. But we need to know more positive and negative aspects of explorations," Towfiq-e-Elahi Chowdhury, adviser to the prime minister on energy affairs, told a seminar in the city on Wednesday.
A number of relevant energy experts, analysts, businesses speaking at the seminar arranged by the Energy & Power, a leading weekly on energy issues, demanded extraction of coal as quickly as possible.
The observations of the energy adviser implied that the government would take some more time to reach a decision on extraction of coal, said a participant at the seminar.
The energy authorities in Bangladesh have recently opted for exploration of coal as primary fuel in generation of electricity as the recent oil-fired quick and rental plants have proved the concerns to be much costly.
Meanwhile, the Bangladesh Power Development Board (BPDB) has started moving actively for implementation of a plan to set up 13 coal-fired power plants at seven different locations to generate up to 7,800 mega watt (mw) electricity by 2015.
Despite a proven reserve of 3.0 billion tonnes of coal in five fields, country now extracts around 1.0 million tonnes annually in Barapukuria coal field only. The coal extracted from Barapukuria is used in a 250mw power plant at the minesite
The authorities are mulling to import coal to feed these coal-based power plants as the government is yet to decide for exploration of coal from home fields, BPDB officials said.
"The Phulbari coal can support generation of up to 4,000 mw of electricity from plants to be set up at the mine site at lower cost," GCM Resources CEO Gary said.
The mine will reduce poverty in "Monga-hit" northern region, develop infrastructure, help improve foreign reserves and also balance of payment for the country, Mr Gary added.
GCM will invest some $1.5 billion in exploration of the coalmine, where $59 million was invested till June 2011.
The company as per the agreement will pay $7.0 billion in terms of taxes, royalties and duties, Gary said.
"The coalmine, with an estimated reserve of more than 570 million tonnes, will contribute at least 1.0 per cent of GDP per annum throughout its 35 years life."
Following approval, coal will be available within three years and power will be generated shortly afterwards. The mine will produce coal for 35 years, according to excerpts of the GCM study report.
GCM has already resettled some 16,000 people at Phulbari town, out of some 40,000 people enumerated to be affected in the process of open-pit mine development.
"No one will be required to move until receiving compensation packages," a confident Mr Gary said.
The reserve constitutes high quality thermal coal to the extent of 60 per cent, with low ash metallurgical coal -- also known as semi-soft coking coal -- making up 20 per cent.
The remaining thermal coal is also of good quality and will have applications in industry and power generation.
The coal seam thickness varies between 20 and 65 metres at depths between 165 and 270 metres and 99 per cent of the open-cut mining reserve is contained in two thick coal seams, separated by a stone band that is typically 1-2 metres thick.
The coal will be extracted by the open-cut mining method, using trucks and hydraulic excavators as this is the safest and most efficient approach for the thick Phulbari coal seams and general geological conditions.