Coal policy and its extraction process

Shahiduzzaman Khan The government has been in a dilemma for quite a long time over the process of coal extraction and the adoption of country's first coal policy. Due to lack of policy direction on the issue, generation of electricity is getting costlier and a number of investment proposals are now lying in a stuck-up state. Finance Minister AMA Muhith, as recent reports in the media recalled, made strong pleas for a coal extraction plan to generate electricity in his last year's budget speech. He also suggested then for creating mass awareness about the method of extraction, especially in favour of a open-pit mining method, after the finalisation of the coal policy. However, Prime Minister Sheikh Hasina early this year was reported to have said that the coal deposits would be kept reserved for the next generation. Imported coal, she then reportedly stated, would be made available to generate electricity to meet the rising demand. But a month later, the Prime Minister said in parliament that her government had plans to set up coal-fired power plants after extracting the coal from the country's five coal mines. Back in 2006, the Prime Minister at a public meeting at Phulbari expressed her stand against open-pit coal mining. After the firing incident at Phulbari that resulted in three tragic deaths of the peaceful protesters, the then government suspended Phulbari coal mining project that was earlier due for implementation through open-pit mining method by Global Coal Management (GCM), a UK-based company. There is, according to some experts, no instance of open-pit coal mining in a fertile area having a high population density and a huge water layer over the coal deposits. The government's plan for installation of domestic coal-based power plants with a total capacity of around 12,000 megawatt (MW) will require extraction of more than 30 million tonnes of coal a year by open-pit method. It, they said, will not be possible to meet the demand by extracting coal by an underground method of mining which will produce only five million tonnes of coal a year from the five coal deposit fields in Bangladesh. All such developments have been compounding the confusion, making it apparently difficult for the government to take a firm stand. In fact, the government's statements, being at times of the contradictory nature, about coal extraction have also been providing inconsistent signals, causing the potential investors to shy away from making investments in a critical energy-related area like that of coal, Bangladesh. As of now, quite a number of foreign companies are reported to have shown their intention to extract coal by open-pit mining in Bangladesh. But indecision and dilly-dallying on the part of the authorities stand as stumbling blocks to going for any kind of mining, be that by open-pit or underground method. Even some state-run local companies came forward to go for coal extraction from the reserves. Bangladesh Coal-based Power Generation Company Limited -- a subsidiary of Power Development Board (PDB) -- sought licences for coal extraction from, at least, two of the coal deposit sites to feed their planned coal-fired plants. Barapukuria Coal Mining Company Limited -- a subsidiary of Petrobangla -- also wanted all the five coal deposits for coal extraction. But they were not given licences. It is very unlikely for the government to take any clear policy-stance on exploitation of the country's coal resources in the next fiscal, in view of the general election that is due to be held around either at the end of December in 2013 or at the beginning of 2014. Under the given circumstances, the government is most likely to bid for time to take a decision on the national coal policy. The extraction of coal will take, at least, a period of three to four years to fulfill all conditions and formalities, even after a decision on the national coal policy is taken. Pragmatic experts do appreciate the need for undertaking coal-fired power generation projects -- no matter whether coal is extracted the country's own reserves or the requirements for it are met through imports -- in order to help overcome its critical constraints on the energy-related supply-side problems. However, many are now questioning as to why the present government wasted so much time to decide on importing coal to operate the coal-fired power plants. About four and a half years are now passing since its assumption of office. And the country's coal policy has been hanging in the balance for the last eight years! In fact, foot-dragging on formulation of the national coal policy has otherwise blighted the prospects for reaping the benefits out of a number of pending foreign investment proposals worth billions of dollars. After the announcement by the Prime Minister about importing coal for the purpose of using it for power generation projects, many countries expressed their willingness to export coal to Bangladesh. For that matter, India, South Africa, Australia and Indonesian coal miners have reportedly been in the queue. The decision has opened up scope for India to export its coal, though its being of inferior quality compared to those by other likely foreign suppliers to Bangladesh. Here, transportation cost is also one relevant point for consideration. Thus, though the coal of South Africa is of high quality, its import cost is relatively higher for Bangladesh. The country's gas reserve -- which has so far been the key source for power generation --is on the wane. As such, the alternative for exploration, exploitation and exploration of country's coal resources merits a serious re-think. In the backdrop of dwindling gas reserve, experts are now recommending for installation of coal-based power plants as the country has enough deposits of quality coal. Instead of setting up such power plants on its own in the public sector that has a poor record of performance, a decision in favour of encouraging the private sector to take up the job deserves a priority attention. There are indications that many local entrepreneurs are interested to install coal-based power plants. There is no good logic to keep coal unused for years together when power shortage is stunting the country's economic progress, provided the task of rehabilitation of the affected persons can be properly addressed. The coal industry of Bangladesh is still at its infancy with its known reserves being estimated at 2.7 billion tonnes of coal, out of which 1.4 billion tonnes are recoverable. In a gross domestic product (GDP) growth rate scenario of 8.0 per cent, Bangladesh needs 450 million tonnes of coal a year to generate its required amount of energy. Country's five coal fields, having proven reserves, can definitely cater to its needs beyond 2030. As such, the government - it does not matter which party or alliance is in power - has little options to manoeuvre other than approval of the national coal policy and going for coal extraction at the earliest. szkhan@dhaka.net