Coal master plan is fine, but what about adopting a national policy?
Shahiduzzaman Khan | Sunday, 10 August 2008
THE government has taken up a programme to make electricity available for all by 2020 when the demand will reach 17,800 MW. To reach that level Bangladesh needs to enhance electricity generation by 1000 MW annually. The country will not be able to generate such huge quantity of electricity without exploitation of coal.
Now the government has planned to adopt the country's first Coal Sector Master Plan (CSMP) for proper utilisation of the country's large coal reserves and ensure energy security in the coming years. Such plan will be formulated in line with the proposed national coal policy to expedite coal sector development.
Proposed coal policy of the country, which has not been cleared by the law ministry as yet, has stressed the need for adoption of the CSMP to overcome the country's energy crisis. It is also aimed at achieving the ultimate target of coal production in phases within the next two decades. If adopted it will be the third such master plan to develop the country's energy sector after the already adopted Power System Master Plan (PSMP) and Gas Sector Master Plan (GSMP).
The government is now concentrating on coal extraction to feed the coal-fired power plants as the prospect of future gas-fired power plant is diminishing due to dwindling supply of natural gas. The energy ministry has already told the stakeholders of its inability to supply gas to eight planned large and medium gas-fired power plant projects having a total proposed generation capacity of 1,700MW. Electricity generation of around 700 MW is also now being hampered due to gas supply shortage.
The country has around 2.5 billion tonnes of coal reserves, equivalent to 60 trillion cubic feet (TCF) of gas, and most of this reserves remained untapped. Currently, the country generates only around 250 MW of electricity from coal from its lone coal-fired power plant at Barapukuria. More than 80 per cent of Bangladesh's electricity is generated from natural gas, while nearly 5.0 per cent from coal and the remaining 15 per cent from hydro and liquid fuel.
Due to absence of any concrete plan the country's prospective coal sector remained untapped for years and sole dependency has been on natural gas for almost all sorts of energy demands. The country's coal has potentials to generate electricity of around 15,000 MW in next 15-20 years if the coal reserves are properly utilised. Despite having huge coal reserves Bangladesh imports 3.0 million tonnes of coal with high sulphur annually from India only due to government indecisiveness. Bangladesh generates only 5.0 per cent of power from coal, whereas the ratio is 79 per cent in Australia, 78 per cent in China, 49 per cent in Germany, 69 per cent in India, 92 per cent in South Africa, 50 per cent in the USA of the total electricity generations.
Meanwhile, country's law ministry refused to give much-awaited vetting to the draft coal policy. The ministry suggested that the energy ministry should formulate an act instead of a policy. In support of its contention, the law ministry said the existing Mines and Mineral Rules 1968 is an age-old act and has not been amended as yet to boost development of the coal sector. Some sections of the draft coal policy, the law ministry pointed out, contradict the existing rules. Under the draft national coal policy licences for exploration or extraction from any coal-field will be awarded through open tenders, whereas the existing rules say that the licences would be awarded on first-come-first-served basis.
Besides, the law ministry contends, the draft policy says that a proposed coal sector development committee will fix the royalty rate whereas the mining rules say that the royalty on coal extraction would be 6.0 per cent for open-pit mines and 5.0 per cent for underground mines. Riding on the government signal to get going for coalmining a number of international companies were waiting for adoption of the national coal policy for the last several years.
But the energy ministry said that an act is necessary for a specific issue but it (ministry) was working to woo development of the coal sector as a whole by formulating the national coal policy first. The energy ministry during the last several years was preparing only the national coal policy and held several billion dollars investment proposals pending sensing that adoption of the policy would be enough to give go-ahead to massive-scale development of the country's coal sector.
Such a sudden decision caused further setback to the already pending foreign investment proposals worth around US$ 5.0 billion to develop the country's coal sector. The companies eyeing on adoption of the coal policy for their investments include UK-based GCM Resources (formerly known as Asia Energy), Indian business conglomerate Tata group, South Korea's Luxon Global and US-based Global Vulcan Energy. Tata has already decided to withdraw its $3.0 billion investment proposals from Bangladesh.
However, critics say the draft policy does not pay much attention to the scope and necessity for developing and harnessing alternative energy sources, including renewable ones. Yet, coal can only be one ingredient in a country's energy mix. The coal policy has to be an integral part of an overall comprehensive energy strategy covering all existing and potential renewable and non-renewable energy sources. For example, Bangladesh has rich potential for solar, wind, and tidal energy. Bangladesh may also consider the potential of modern bio-fuels.
The current draft coal policy does not embrace open-pit coal mining method as the only viable option for extracting the coal. The amount of royalty for exporting or selling of coal by private companies has also been raised from 6% to 20%. To ensure public ownership and participation in coal resources, all private coal-mining companies will have to enlist 25% of their resources in the share market.
In order to minimise degradation of water, soil, air, and human health, it is extremely important to formulate strict rules, regulations, acts, and laws, keeping local socio-economic, geologic, and environmental settings in mind. The draft policy refers to the Equatorial Principles and World Bank Standards as applicable norms for coal mining in Bangladesh. However, these principles and standards are written in generalised terms, and are not enforceable in, or applicable to, a particular country.
What Bangladesh needs to do, given the fragility of her environment and dense population, is to formulate a strong legal framework similar to or stronger than those in India or the USA in order to control environmental degradation, monitor compliance, and enforce rules and laws applicable during all phases of coal mining.
The energy division, however, decided in principle not to ban the coal export, as officials feared that it would have a 'negative impact' on foreign investment in the coal sector as Bangladesh did not have enough funds needed for coal extraction. Facing severe criticism over the policy, some officials of the energy division proposed that the coal export formula could be dropped and instead there could be a clause stating that coal could only be exported by taking government approval after meeting the long-term local demand.
Many experts appear to remain upbeat on coal export. They said the coal reserve should meet the country's demand for 50 years, and then the country will think of exporting coal. There should be no provision that will allow export of coal without meeting the local demand. In other words, although some experts recommended a complete ban on coal export, some government officials want to keep the option open.
The apparent tussle between the law ministry and energy ministry is delaying the much-awaited approval of the draft coal policy and causing a great deal of uncertainty among overseas entrepreneurs willing to invest in Bangladesh. There is no time left to prepare an act now. The draft coal policy should be debated and approved with necessary modifications. The nation cannot afford to see the continuation of such a footdragging.
szkhan@thefinancialexpress-bd.com
Now the government has planned to adopt the country's first Coal Sector Master Plan (CSMP) for proper utilisation of the country's large coal reserves and ensure energy security in the coming years. Such plan will be formulated in line with the proposed national coal policy to expedite coal sector development.
Proposed coal policy of the country, which has not been cleared by the law ministry as yet, has stressed the need for adoption of the CSMP to overcome the country's energy crisis. It is also aimed at achieving the ultimate target of coal production in phases within the next two decades. If adopted it will be the third such master plan to develop the country's energy sector after the already adopted Power System Master Plan (PSMP) and Gas Sector Master Plan (GSMP).
The government is now concentrating on coal extraction to feed the coal-fired power plants as the prospect of future gas-fired power plant is diminishing due to dwindling supply of natural gas. The energy ministry has already told the stakeholders of its inability to supply gas to eight planned large and medium gas-fired power plant projects having a total proposed generation capacity of 1,700MW. Electricity generation of around 700 MW is also now being hampered due to gas supply shortage.
The country has around 2.5 billion tonnes of coal reserves, equivalent to 60 trillion cubic feet (TCF) of gas, and most of this reserves remained untapped. Currently, the country generates only around 250 MW of electricity from coal from its lone coal-fired power plant at Barapukuria. More than 80 per cent of Bangladesh's electricity is generated from natural gas, while nearly 5.0 per cent from coal and the remaining 15 per cent from hydro and liquid fuel.
Due to absence of any concrete plan the country's prospective coal sector remained untapped for years and sole dependency has been on natural gas for almost all sorts of energy demands. The country's coal has potentials to generate electricity of around 15,000 MW in next 15-20 years if the coal reserves are properly utilised. Despite having huge coal reserves Bangladesh imports 3.0 million tonnes of coal with high sulphur annually from India only due to government indecisiveness. Bangladesh generates only 5.0 per cent of power from coal, whereas the ratio is 79 per cent in Australia, 78 per cent in China, 49 per cent in Germany, 69 per cent in India, 92 per cent in South Africa, 50 per cent in the USA of the total electricity generations.
Meanwhile, country's law ministry refused to give much-awaited vetting to the draft coal policy. The ministry suggested that the energy ministry should formulate an act instead of a policy. In support of its contention, the law ministry said the existing Mines and Mineral Rules 1968 is an age-old act and has not been amended as yet to boost development of the coal sector. Some sections of the draft coal policy, the law ministry pointed out, contradict the existing rules. Under the draft national coal policy licences for exploration or extraction from any coal-field will be awarded through open tenders, whereas the existing rules say that the licences would be awarded on first-come-first-served basis.
Besides, the law ministry contends, the draft policy says that a proposed coal sector development committee will fix the royalty rate whereas the mining rules say that the royalty on coal extraction would be 6.0 per cent for open-pit mines and 5.0 per cent for underground mines. Riding on the government signal to get going for coalmining a number of international companies were waiting for adoption of the national coal policy for the last several years.
But the energy ministry said that an act is necessary for a specific issue but it (ministry) was working to woo development of the coal sector as a whole by formulating the national coal policy first. The energy ministry during the last several years was preparing only the national coal policy and held several billion dollars investment proposals pending sensing that adoption of the policy would be enough to give go-ahead to massive-scale development of the country's coal sector.
Such a sudden decision caused further setback to the already pending foreign investment proposals worth around US$ 5.0 billion to develop the country's coal sector. The companies eyeing on adoption of the coal policy for their investments include UK-based GCM Resources (formerly known as Asia Energy), Indian business conglomerate Tata group, South Korea's Luxon Global and US-based Global Vulcan Energy. Tata has already decided to withdraw its $3.0 billion investment proposals from Bangladesh.
However, critics say the draft policy does not pay much attention to the scope and necessity for developing and harnessing alternative energy sources, including renewable ones. Yet, coal can only be one ingredient in a country's energy mix. The coal policy has to be an integral part of an overall comprehensive energy strategy covering all existing and potential renewable and non-renewable energy sources. For example, Bangladesh has rich potential for solar, wind, and tidal energy. Bangladesh may also consider the potential of modern bio-fuels.
The current draft coal policy does not embrace open-pit coal mining method as the only viable option for extracting the coal. The amount of royalty for exporting or selling of coal by private companies has also been raised from 6% to 20%. To ensure public ownership and participation in coal resources, all private coal-mining companies will have to enlist 25% of their resources in the share market.
In order to minimise degradation of water, soil, air, and human health, it is extremely important to formulate strict rules, regulations, acts, and laws, keeping local socio-economic, geologic, and environmental settings in mind. The draft policy refers to the Equatorial Principles and World Bank Standards as applicable norms for coal mining in Bangladesh. However, these principles and standards are written in generalised terms, and are not enforceable in, or applicable to, a particular country.
What Bangladesh needs to do, given the fragility of her environment and dense population, is to formulate a strong legal framework similar to or stronger than those in India or the USA in order to control environmental degradation, monitor compliance, and enforce rules and laws applicable during all phases of coal mining.
The energy division, however, decided in principle not to ban the coal export, as officials feared that it would have a 'negative impact' on foreign investment in the coal sector as Bangladesh did not have enough funds needed for coal extraction. Facing severe criticism over the policy, some officials of the energy division proposed that the coal export formula could be dropped and instead there could be a clause stating that coal could only be exported by taking government approval after meeting the long-term local demand.
Many experts appear to remain upbeat on coal export. They said the coal reserve should meet the country's demand for 50 years, and then the country will think of exporting coal. There should be no provision that will allow export of coal without meeting the local demand. In other words, although some experts recommended a complete ban on coal export, some government officials want to keep the option open.
The apparent tussle between the law ministry and energy ministry is delaying the much-awaited approval of the draft coal policy and causing a great deal of uncertainty among overseas entrepreneurs willing to invest in Bangladesh. There is no time left to prepare an act now. The draft coal policy should be debated and approved with necessary modifications. The nation cannot afford to see the continuation of such a footdragging.
szkhan@thefinancialexpress-bd.com