Thu 31 Aug 2006
Most of us have had a rigorous education in science and research and yet I am amazed at how easy it is for us to forget that good policy must be based on knowledge and facts. The confrontation at Phulbari, to the best of my knowledge, was not provoked by Asia Energy. So let’s stop blaming them for it! Let me be VERY CLEAR: I for one, will NOT support a position that allows or condones an unruly mob to attack and destroy private property.
AEC is NOT mining the coal commercially - the infrastructure for doing so is completely absent (just so you know, I have visited the area twice a year for the past five years since and have seen NO evidence, of any commercial activity). It is engaged in ‘pre-mining’ operations and, according to its own website, awaiting the completion of a Definitive Feasibility Study. Whether or not the scope of its activities are in conjunction or in conflict with its license is something that I have no idea about. Nowhere in all these posts or field reports or newspaper articles have I seen an analysis or FACTUAL characterization of what it has done wrong. That is not to say that it has not exceeded its charter
- but I would feel a lot better if the experts and the reports actually cite and reference their case and/or violations.
Open-pit mining is not a novel concept. It is practiced successfully in many parts of the world. However, like most other forms of resource extraction, it can have severe environmental as well as social consequences. Modern mining techniques and regulations attempt, usually successfully, to minimize such impact. However, it is right for us to worry whether such would be the case in Phulbari. It would be easy for an insidious entity to take advantage of a corrupt government and wreak environmental havoc without fear of consequences. The principal issues at Phulbari are as follows:
(a) Is it economically feasible to mitigate the impact of the proposed open-pit mining? If No, STOP. If yes,
(b) Does Asia Energy’s proposal adequately cover such mitigation? If no, can the proposal be changed to cover such mitigation? If no, STOP. If yes,
(c) Can we depend on Asia Energy to follow through and complete such mitigation? If No, can we provide for ‘reserves’ or other mechanisms to ensure compliance? If No, STOP. If yes,
(d) Can we depend on existing governmental institutions to monitor and enforce compliance? If no, can a new or additional governance structures be set up to do so? If no, STOP, etc. etc.
There are many other issues: The issue of fair compensation to the affected people, the issue of a fair royalty and many more. As an aside, 6% royalty is not, prima facie, low or unreasonable. Nor is it unreasonable for a requirement that the proposed power plant purchase the coal at market prices. However, are they customary terms for a project of this nature? I do not know - and nothing I have read has attempted to analyze or compare the terms with other, similar deals. If the terms are not customary, then we should definitely consider the option of voiding the contract (or threatening to do so) and renegotiate for more favorable terms. For example, the GOB should enter into a long term contract for coal purchase based upon a combination of cost of production index and the existing long term contract rates (including renewal options). Perhaps that is how it is already set-up - does anyone know? Does anyone care? But these are not insurmountable issues.
Each issue ought to be factually analyzed and evaluated. A case in point, AEC always refers to the number of people affected (needing to be
relocated) being 40,000 and much of the opposition states a number 10x greater. Who is right? What is the FACTUAL basis?
The fact is that there are significant high quality coal reserves in Phulbari and Bangladesh has few other sources of fuel and power and is a poor country to boot. We can ill afford to sit still and just shake our fists at foreign investors. What is the environmental and economic cost of importing and burning low quality (high sulfur) coal from India as is the current practice? What is the environmental and economic cost of the fuel shortages that lead to the indiscriminate cutting down of forests for firewood? What is the economic cost of the chronic electricity shortages that plague our industry? If we are to claim a rational basis for our stance, we must seek out rational analysis and avoid piling on on rumors, innuendos and political agendas that we may not support. There is no doubt that a great many of the participants in these protests have agendas that are far more political than environmental orgs should ever be. I would not be surprised if many of these political leaders are secretly thrilled with the deaths at Phulbari because of the enormous political and media dividends that resulted from them. It would not be the first (or the last) time that we have seen callous disregard for ordinary lives on part of politicians.
Please, less politics, more science!
August 31st, 2006 at 10:53 am
The confrontation at Phulbari, to the best of my knowledge, was not provoked by Asia Energy. So let’s stop blaming them for it!
If you asked any Asia Energy personnel they’d say they were just doing their jobs – which they were. They just acted like any other foreign companies like Unocal in Hobigonj (re: Muhammad’s comment) who uses the loop holes made in the agreement to avoid responsibility.
The lapses lie heavily on the incompetence of GOB for giving them authority without taking proper measures. But hopefully the project was stopped (not canceled entirely) before colossal damage was done.
Asia Energy is not blamed for the killings. Investigations are underway to find out why BDR started shooting.
AEC is NOT mining the coal commercially…
Not yet you mean. The large portion of the coal will be exported (India’s TATA already eyeing on the prospect), leaving only a small portion for BD.
It is engaged in ‘pre-mining’ operations and, according to its own website, awaiting the completion of a Definitive Feasibility Study.
They planned to start extracting next year according to their disclosure to AIM in LSE (London Stock Exchange).
Modern mining techniques and regulations attempt, usually successfully, to minimize such impact.
That’s exactly what we’d been discussing in the comments under the blog “Phulbari – another Kansat”.
The contract that BD had with AE did not include proper implementation plans.
It would be easy for an insidious entity to take advantage of a corrupt government and wreak environmental havoc without fear of consequences.
I agree with almost everything you wrote from this point on…
The way the political figures run their ‘business’ in BD – you can guaranty that Phulbari issue will loom in their focus for many more years to come, there will be people (subcontractors) trying to misappropriate money (like they did during Jamuna bridge project), not all of the displaces villagers will get the rightful compensation they deseved …etc….
And people like us (expats with a conscience) will keep on yapping evertime we smell injustice…
August 31st, 2006 at 11:12 am
Very very good blog Muhit bhai.
I have a concern about the timing of this movement.
I have no doubt that big chunck of the problem is inefficiency, shortsightedness, stupidity of the current government.
But,
This government is now a lame duck govt, they only have one month of tenure left.
No decsion was being planned within next one month or AEC was also not going to start a new phase or something like that during this time.
Practically all decision was postponed pending new government.
So suddenly happened this week to incite such a big explosion?
Who is the ultimate beneficiery of this Fulbari killing?
August 31st, 2006 at 1:03 pm
To Zafa:
1. I am not in a position to truly know or say if Asia Energy has ‘used loopholes … to avoid responsibility’. It is just that I have not read any SPECIFICS of a ‘loophole’ used and/or a ‘responsibility’ avoided by Asia Energy. Perhaps you or others are able to enlighten us.
2. When I say that Asia Energy is not mining coal commercially, I am speaking of the present continuous. We are all fully aware that their intentions are [or were] to do so in the future. The issue of where the coal is used is one of supply and demand and contractual agreements. It is customary for ‘for-profit’ businesses to sell their output to the most profitable markets - subject to contractual constraints. If there is a shortage of coal in Bangladesh, the market should reflect it (less a transportation cost differential with India) and supply will catch up. If GOB wishes to (and in my opinion, it should) establish a contracted minimum supply at a subsidized cost, it should put such terms in the contract with AEC. If the lack of such terms arose from corruption within the prior administration and continues with the current administration, advocacy groups should seek to void or reopen the contract through court action and public, democratic processes (such as voting for less corrupt representatives). But if the contract is a reasonable, arms length, customary contract (not flagrantly corrupt) then the question of where the coal is used is irrelevant as long as it is being sold at market prices, in accordance with contracted terms and the mine is in compliance with applicable operating regulations.
3. It is possible, even likely that the contract between GOB and AEC does not have proper implementation plans. It would be nice if someone could point them out with specificity so a reader can come to their own informed conclusion.
As it is, the events of the last few weeks, combined with our penchant for hartals (which another Bengali economist calls economic terrorism), will make any potential investor re-think their intentions. No one wants to find themselves stuck betwen a corrupt government on one side and a violent mob on the other. The premium for risk just went up. And through all of this, the sufferers will be the people of Bangladesh. We have neither the technology nor the economic resources to develop the Phulbari coal fields. If we are not careful, the result of a homegrown (or government led) effort could be corruption and environmental devastation on a scale far greater and unprecedented than currently imagined.
In the interest of full disclosure, I should add that a charity controlled by me owns a small parcel of land that may or may not be part of the Phulbari coal fields. It is likely that if the land is expropriated for mining, our charity will LOSE money. Moreover, the situation remaining in limbo has kept us from investing in infrastructure for fear that it may have to be dismantled later. So we are stuck! The mining may also affect my ancestral village (where I have no economic but plenty of sentimental interest). So, I’d personally be happy if the mining plans just disappeared. But it should not be about our personal interests alone. And you know something? Poll the villagers about what they want (without activists looking on and asking leading questions like “do you wanted to be cheated out of your father’s land?”) and you could be in for a NASTY surprise. There are a lot of HUNGRY folks out there who would like to see their way to more jobs and two bowls of rice a day.
Best regards,
Muhit Rahman
August 31st, 2006 at 1:10 pm
True. Very true. And sad.
August 31st, 2006 at 3:42 pm
It’s all political and the mob its a joke can any mob who did the agitation can even spell
“COAL” or the name of the energy company if asked. It was not borned in oneday the people where all aware of that. Why they don’t protest when things like this start first? why there aren’t any board or advocacy group to make a study before all these happening?
Whats the literacy rate of our country and from when the uneducated un schooled un culutured people become so aware of their rights?
If we are that much educated and learned as a country than the two uneducated and un schooled lady like Hasina and Khaledah won’t be running as a prime minister, mainly Khaledah who didn’t have a college education at all she was even home thought by the senior leaders of BNP to read and write political speeches.
It’s just a joke. We will see the same company comes in different name next year to do the same project and at that time things will be fine.
The opportunity in Bangladesh is defined as not challenge or right timing is when your mama chaca are in Power.
When AWL was there we have seen all the foreign deals comes from AWL party families when BNP in Power all the foreign deals come from BNP families and party.
There should be an end to this AWL and BNP barabari.Enough is enough and also need to stop blaming and branding politics and political parties for everything.
Kawser Jamal
http://www.changeBangladesh.com
September 1st, 2006 at 10:39 am
At least someone made money off of Asia Energy:
http://www.cambrianmining.com/mainNews.aspx?id=17
September 2nd, 2006 at 12:51 pm
You are so right. There are people in and around Phulbari would love three square meals that the jobs in the coal mine will get them. Of course if you ask me “do you want the graves of your grandfather turned into coal mine?” I would give a different answer to “do you want your children and grandchildren to have a proper education and health care?”
You might want to read my posts in my blog [nazimfarhan.blogspot.com] about some arguements against AEC I keep hearing and what the real facts are.
September 2nd, 2006 at 4:34 pm
I like the byline less politics, more science.
More wisdom would hit the spot that im thinking off. Is anybody here into geology? save us!
Political agitations in Bangladesh ALWAYS result in people with guns going ape, people dying and then the blood capital invested in another protest with higher stakes and bad ‘international image’. I am sure that Anu Mohammad and the other bods were aware of this trajectory, maybe even we could foresee it.
is there a fund that you know of to help out the families of the deceased?
Energy investment brings out the worst in our national character, with us internet using aircon guzzlers in a compromised position.
coming back to wisdom, or science as you so faithfully asserted. We dont have much organised energy science/energy capacity from what i can see.
And wahts more we need to find or develop social processes through which technologies that arent harmful or corruptible can benefit our people.
for example
take the gas that the country is sitting on, that gushes out hwen people drill for water, that gas that some communities have successfully domesticated without much big engineering.
Can we think of ways to make it moresafetly extractable at such microscales, to make intermittent low level stores reliable and hence more usable in the ganj? Can we even map where the resources are? dont commerical methods focus on large scale economics rather than low level doability that dosent involve fat extraction consultancy and driling equipment?
this government, and its opposition us technology aquisition as an excusemake money, rather than an objective of its own science community.
What am i doing, posting on a site like this about someting as mundane as micro engineering.
Oh yes, now i remember.
Ive had it up to my neck with deconstructive analysis that ends with fluffy words like participatory, governance, decision making etc. For God’s sake why arent we ‘making technological options’, whats with the whining?
Yes i know economics and powerplay are important factors. But they incentivise the public, us, to explore then demonstrate graceful non alienating technological solutions.
microcredit chicken farms can only do so much.
rant over, for now.
September 7th, 2006 at 12:05 am
Mr. Muhit,
It is a very good article which I read in the daily star today. Thank you and mr Asif. You asked a question about the population of the project area in phulbari. yes..it it about 40000 not more than that. You can go to Google Earth and have a look at Phulbari..These area are comperatively less populated than other parts of Bangladesh. I personally visited all 107 villages in that coal mine area in the last one year. (Not with AEC). Local people dont want any open pit mine there only because they strongly believe that they will not get any compensation or will get little from the authoroties concerned. Environment is not a major concern to them because they are not much aware of any env. risks of an open pit mine. People of that area are very polite and peaceful but i think some interested corner created panic among them and then the recent sad incident took place which is badly handled by the Government. So, we have to consider any such type of investment proposal with less politics and more science.
September 7th, 2006 at 3:51 am
Less Politics, More Science
- what a load of balderdash!
Do you know the history of the so called “multinational” Asia Energy. It is a two bit created company, the type I can register in the UK for £100 or less. It was cooked up by ex-employees of BHP who bought BHP’s license for the site (now touted value of $27 billion) for A$100,000. And it raised its entire funds for evaluatory exploration through forward sale of its “ownership” of the mine in Bangladesh. You lament the drop in its share price. What you have not told your readers is that the share price dropped when the LSE suspended AEC shares, not AEC itself!
If you are such an advocate of AEC, perhaps you would care to analyse how is it possible that their submitted Environemntal Impact Study was approved within 25 days, when normally it can take anything upto two years? And is open pit mining the proper way in such a densely populated region? when Longwall mining nowadays can also recover upto 70% of in situ coal.
What AEC had in mind was a quick and massive profit through “farm-in” technique, whereby a project is created, signed and sealed for exploration with the host government, and then sold off at massive profit to genuine mining companies by carpetbaggers like AEC. This has happened in Bangladesh before - study the history of Cairn Energy and you you will see how it profited hugely by selling its interests in Sangu offshore gas field to Shell and Halliburton.
Less Politics, More Science is meaningless if the interests of those who are affected are not taken into account.
September 7th, 2006 at 6:36 am
Mr. Ahmed, perhaps you shoud re read the piece
http://www.thedailystar.net/2006/09/07/d609071501124.htm
what you mention about AEC is mentioned in the article. We are not advocates of the deal. The point is that the deal should be cancelled on correct merit and not because of the unfortunate deaths which was not AEC’s fault.
Similarly, the nature of the debate in bd needs to change.
Also both the writers who have written the piece have been involved in the financial industry in the US and UK for a long time. So when we say the that share sales were suspended, we know that the sales were suspended by LSE because of a request from the company to LSE. Also please catch up on some of the previous discussion on this topic at http://blog.drishtipat.org/index.php?s=phulbari
Thanks,
Asif
September 7th, 2006 at 7:26 am
Dear Asif,
Having worked in the UK/overseas energy industry (oil and gas)for the last 30 years, I have come to know a little bit about how these companies operate. And the more I learn their methods, the more I am apalled by the institutionalized exploitation of third world natural resources.
If you are looking at the “merits” of AEC’s proposal, you will find there are none. If Bangladesh was to use all the coal for its needs, the supplies would last 100 years. AEC would exhaust the reserves in just 20 years! Open pit mining is no technology at all. It comprises digging a huge hole in the ground with giant mechanical shovels costing $1.0m each. If this is to be the adopted method, then people of Phulbari would be able to do it themselves using picks and shovels; we dont need AEC’s for that.
AEC type plans are beginning to crumble around the world, and we owe a very big thanks to the people of Phulbari for their sacrifice. Look at Chad, Venezuela, Bolivia and similar countries that were exploited earlier, but are now fighting back.
The coal, and other energy resources in Bangladesh WILL be developed, but on terms and conditions that people of Bangladesh must specify. In the meantime we should stop feeling sorry for AEC et al. They tried the gamblers play - and failed.
September 7th, 2006 at 7:50 am
Mr. Ahmed:
Actually I do know the history of AEC - having read its prospectus on the AIM. And I agree with you (as we mention in our post/article) that it is a young, untested and undercapitalized outfit. We go on to question the circumstances that allowed it to assume the contract. Is that balderdash?
We do not ‘lament’ the drop in AEC’s share prices. Frankly, I couldn’t care less - except for the negative impact of the event on other, more legitimate companies’ ability to raise capital for investment in Bangladesh - and that is what we lament. Is such concern balderdash as well?
I quote the following questions that we raise in the DS article (which is an expanded version of the original post):
“Equally relevant are the qualifications of an entity such as AEC to embark upon and successfully complete a multi-billion dollar project. What were the preliminary as well as ongoing requirements for financial as well as technical and operating competence before the project was originally awarded? What are/were the limitations on transferring the project from one entity to another? Did the Bangladesh government review the qualifications of AEC before allowing the project to be transferred? What are the qualifications of the entities engaged to study and report on the environmental impact and the proposed mitigation? Is there [going to be] an environmental bond (guarantee) put forth that ensures compliance with all applicable laws and regulations? What are the penalty clauses and provisions for remedies? Which agency/entity is ultimately responsible for administering compliance and overseeing mitigation?”
Implicit in the above questions is our view that they have not been adequately raised and had they been asked, AEC would not have been found to be qualified.
If the above is balderdash, then perhaps we need, [drumroll] more balderdash!
I suspect that we are substantially of the same mind on these matters - and might achieve more by working together instead of sparring on the internet.
Best wishes,
Muhit
September 8th, 2006 at 7:04 am
Dear Muhit and Asif,
I was not trying to be disparaging, just that your article (and others in DS, including that from a sub-editor) seemed to portray sympathy for an entity that does not deserve any.
Anyway, all that is in the past. I was very interested in your proposal to work together, and have a serious proposition - since you are in finance, and I am in technology - why not pool our resources to see if we can develop the coalfields in a more equitable way. There are large Bangladeshi companies who have enough resources to undertake energy development projects and we could work jointly with these companies.
Why not send me an email at my address if you think we could work together.
Rgds
Ahmed A.
September 8th, 2006 at 11:09 am
Latest on Phulbari:
http://www.bangladeshobserveronline.com/new/2006/09/08/economic.htm
The government-formed committee is likely to submit its report next week. The committee is to submit its comments on the feasibility report and scheme development at Phulbari coal-mining site. This review committee was formed on November 17, 2005, with 12-member headed by Professor Nurul Islam of BUET.
The committee was assigned to report in a month of it’s formation with recommendations on the underground water management, operational technique of mining in view of socio-economic perspective of the proposed coalmine site at Phulbari, Dinajpur. The Department of Environment gave environmental clearance to the company in September last year.
September 8th, 2006 at 11:39 am
I have been following the discussion and discourse for the last couple of days on the recent event in Phulbari. Lot of issues were addressed and discussed by many. Since the recent op-ed piece by Muhit Rahman and Asif Saleh initiated this healthy discussion among us, I am going to try to address some of the issues raised in their write up. To stay focused, I have cut and pasted certain statements from their article and offered my response following each of the statements below. Since I did not copy the whole article (there is no point doing so either), it is possible that I have missed on some important points raised by them and might have lost connectivity in their argument. First of all, there is not much argument (I think) among the BEN/BAPA members that policy, planning, and decision with regard to any project should be based on facts, logic, science, and people’s interests in mind. Unfortunately, this is not a common practice in Bangladesh, as we know.
Muhit & Asif: For those of us who have had a rigorous education in science and research, it is distressing to see how easy it is for us to forget that good policy must be based on knowledge and facts.
Response: As I already mentioned above, this would be ideal. However, to the best of my knowledge, at the time when an agreement was signed between the GOB and BHP in 1994, allowing the BHP to carry out a feasibility study for coal development in Phulbari, there wasn’t any coal policy in place in Bangladesh that would allow setting ground rules. Since there was no prior experience in coal mining in Bangladesh at the time, and since no policy existed, basing them on knowledge and facts wasn’t a consideration. The BHP backed out of the agreement and AEC took it over in 1998. They do not have prior experience in open-pit mining. Apparently, they didn’t have much capital either. It is not known (publicly) what were the criteria, qualification, and consideration that the GOB took into account (if any) when they allowed the transfer to take place. In other words, this decision was not based on knowledge, facts, and existing policy guidelines.
Muhit & Asif: While Bangladesh government makes a mockery of its relationship with foreign investors, it is time to ask the question whether the jubilation of this “people’s victory” will prove to be spectacularly hollow and devastating.
Response: As per our constitution, any mineral resource found in Bangladesh belongs to the country and her people. The people of Phulbari are the owner of the coal and they should be considered as the major stakeholders in any deal that involves mining of this resource and a huge discomfort (dislocation, rehabilitation, degraded environment, etc.) in their lives. However, the people were never consulted at any phase of the decision making and signing the agreement with BHP or AEC. No government lead by the major political parties (BNP in 1994 and Awami League in 1998) actually considered the people to have any role in this decision. When people found out via media, press, and other sources, they were skeptical and unwelcoming of the decision. More they learned, more furious they became of the plan submitted by the AEC. As per the coal development plan submitted by the AEC, the GOB would have received only 6% royalty, and the AEC will be allowed to export up to 66% of the mined coal (I don’t want to go in gory details here – most of you probably know the extent of the proposed deal anyway). First of the, the GOB representative Mahmudur Rahman even termed this plan as “anti-people” and put the blame on previous government (as they always do). The People in Phulbari were united across political boundaries. It appears that the left wing parties in Bangladesh played a major role in organizing the people to stand for their own rights, and together they forced the GOB to change its agreement with the AEC. In other words, the GOB is not making any mockery with the foreign investors; they were forced to cancel the anti-people agreement. People of Phulbari are rightfully celebrating their victory that they gained at a huge cost. This victory may prove to be hollow and devastating in the future should another government in the future take control of the people’s resources and secretly curb out another deal in which people’s interests will be ignored (as it has happened in the past).
Muhit & Asif: The debate on Phulbari AEC investments should have happened on facts.
Response: But it did not happen based on facts, logic, science, and (most importantly) people’s interests in mind. Lots of facts are generated by reputed economists in Bangladesh where they showed how the people and the GOB will not gain even a fraction of the profit and benefit that the AEC would have from this deal. As Dr. Nazrul Islam already pointed out about the cost/benefit analysis done by prominent economists of Bangladesh, most of which do not favor this deal with AEC. The GOB has proposed to increase the royalty to 16% from 6%. Another fact remains, the AEC was not going to sell the coal in domestic market (because there is no need and demand for it as yet). Then the question remains, if there is no market or need in Bangladesh, then why can’t we wait till there is a market and need in the country? The AEC should never be granted the ownership of the resource (people are the owner). As many of you may remember, following the Phulbari tragic event, numerous newspapers (including the Guardian) mentioned that AEC had the ownership to the coal in Phulbari. The GOB never made this point clear as to what is the reality. This lack of transparency and accountability lie in the heart of the turmoil in Phulbari.
Muhit & Asif: Nowhere in all the internet posts or field reports or newspaper articles have we seen an analysis or factual characterization of what AEC has done wrong.
Response: It is not clear how and why AEC claimed the ownership rights of the coal resources in Phulbari. As per the GOB, AEC only had the right to carry out a feasibility study. Apparently, the GOB did not grant any mining permit to AEC, let alone the ownership. However, AEC continued to maintain that they were operating in Phulbari within the context of agreement with the GOB. So, it can’t be said that AEC were doing anything wrong (if they did then the GOB needed to rectify them, but the GOB never corrected AEC for making a “false” statement about their rights and ownership), but it can be said that they were not doing everything right. For instance, after repeated request to AEC, they did not make their feasibility plan public. I requested them on numerous occasions to provide us (BEN) with an electronic copy or CD of the feasibility plan so that we could analyze it and give our opinion. They agreed to do so and then backed out with lame excuses. If AEC were playing by the same review process that they would in their own country then they wouldn’t play this hide and seek game with their plan. The GOB is never transparent or accountable to her people, but AEC could be. By being transparent, inclusive of the local people in their decision making, and accountable, they could gain trust of local people, but they failed to so. Since they were not granted any permit to mine, they probably did not need to maintain any field operation office and activities in Phulbari.
Muhit & Asif: Is it economically feasible to mitigate the impact of the proposed open-pit mining? If No, STOP. If yes, 2. Does Asia Energy’s proposal adequately cover such mitigation? If no, can the proposal be changed to cover such mitigation? If no, STOP. If yes, 3. Can we depend on Asia Energy to follow through and complete such mitigation? If No, can we provide for “reserves” or other mechanisms to ensure compliance? If No, STOP. If yes, 4. Can we depend on existing governmental institutions to monitor and enforce compliance? If no, can a new or additional governance structures be set up to do so? If no, STOP.
Response: Your suggestions are very logical, but the GOB didn’t follow this logic in its decision making.
Muhit & Asif: Equally relevant are the qualifications of an entity such as AEC to embark upon and successfully complete a multi-billion dollar project.
Response: Amen. But the GOB did not do that. It is not clear what considerations were in play when the GOB allowed the transfer of the agreement from BHP to AEC in 1998. As Muhit has pointed it out (I believe in a separate positing), the AEC doe not have much background, experience, qualification, and capital (except the proposed Phulbari project) under their belts.
Muhit & Asif: Did the Bangladesh government review the qualifications of AEC before allowing the project to be transferred?
Response: Don’t have much evidence that point in that direction.
Muhit & Asif: We have neither the technology nor the economic resources to develop the Phulbari coal fields on our own. If we are not careful, the result of a homegrown (or government-led) effort could be corruption and environmental devastation on a scale far greater and unprecedented than currently imagined.
Response: Since we do not have current market or need for the entire reserve, we don’t need to mine the coal in Phulbari immediately. Besides, no attempt was made to raise capital internally and to train our people to mine on their own. I am sure that Bangladesh has the man-power and the knowledge base for coal mining. I am also not against FDI all together, but they need to be done properly and keeping the interests of people and country in mind. I am not convinced that the deal with AEC was done based on facts, logic, science, proper policy framework, and cost/benefit analysis. The question of environment seems to have taken a back seat when the agreement was made with AEC. Currently, there is not much rules, regulations, acts, and laws pertinent to coal mining in place in Bangladesh. With very strict rules, regulation and laws in place (and proper enforcement of the same), the environmental degradation in many parts of the world, including in the USA, is staggering. Do you really think that Bangladesh will be able to handle the environmental degradation following surface coal mining when there are no proper rules or enforcement in place, let alone the priority of the GOB? The people in charge of formulating such rules and regulations are trying to come up with proper policy and legal framework to handle these issues in the future, but they are not in place yet. Shouldn’t we wait until such laws are in place, at least on paper?
Muhit & Asif: “For me as a foreigner it looks that Bangladesh rejects development and wants to remain poor forever: how good is it to have over 500 million tons of coal underground if it is never going to be mined and the government doesn’t get the royalties and taxes it could get and it doesn’t provide the country with a new source of foreign currency and it doesn’t help to reduce the shortage of electricity the country has been suffering for so long.”
Response: I don’t think we need to be too concerned about one foreigner’s condescending view point. No one wants to remain poor. With all our limitations, our real strength is our people and they have achieved lots of successes in the face of lot of adversities. We (BEN/BAPA and all other forward-looking forces in Bangladesh) need to help our people to understand issues better and to protect their own environment.
September 8th, 2006 at 3:48 pm
Take a look at this piece in Prothom-Alo
http://www.prothom-alo.org/mcat.news.details.php?nid=MjAwNA==&mid=Mw==
September 10th, 2006 at 5:08 am
Dear Muhit, Asif, Zaman and Sharmin
When I used to study in Pakistan (Sargodha Air Force School), the Pakistanis used to make fun of us Bengalis - “you are all talk and no action”.
Thirty years on, nothing has changed - we still talk and talk.
Sharmin has rightly shown via the Prothom Alo article that while protecting our natural resources is a laudable effort, it is not the end - there has to be a follow up development plan, which seems to be non-existent.
I have tried to interest BEN-BAPA memebers in other ways to see if they had ideas on development. The response, sadly, was very poor. It seems we want to carry out development through armchair analysis and making “recommendations”. Unfortunately, who will carry out these recommendations, is never looked at. It is the proverbial “who will bell the cat?”
You cannot plant a seed without getting your hands dirty. There is too much talk and theoretical discourse - all wonderful stuff to show academic knowledge - but it will not produce one ounce of coal (or oil or gas or food for that matter).
Take up my challenge. Contact me to put your theories to the test. Let us try to come up with our own development plans. You will be surprised how easy it is to develop energy resources - I am doing it on the world’s largest offshore oil field in the Caspian Sea in Kazkhstan!
Waiting to hear from you all.
Ahmed A
a.ahmed@agipkco.com
September 11th, 2006 at 5:52 am
Dear Mr. Ahmed,
I am very much heartened by your proposal for being proactive. Muhit bhai and I am involved with BEN in a some ways as well. I think their energy panel is the best group to start working with. I am uploading their draft energy proposal here. Please get in touch with Nazrul Islam (s_n_islam@YAHOO.COM )( so that he can include you in the mailing list for your feedback.
The link to the proposal is here
This is the third draft and not the final proposal. Also I suggest we continue the discussion in this thread as well for follow ups.
September 11th, 2006 at 6:00 am
Anu Muhammad on Phulbari — post cancellation
http://www.meghbarta.org/nws/nw_main_p01b.php?issueId=6§ionId=30&articleId=150
September 11th, 2006 at 6:46 am
Dear Mr. Ahmed:
I e-mailed you directly - but the e-mail was returned as undeliverable. Please feel free to contact me at muhit@cinci.rr.com. Being in finance, I am used to looking at and evaluating projects. Being originally from Bangladesh, I am, on the one hand eager to see local projects take shape and yet on the other, used to being disappointed in many ways.
I would be very happy to review, and if appropriate, collaborate on projects that you have in mind.
Best,
Muhit Rahman
September 11th, 2006 at 11:22 am
Dear Asif,
Dear Muhit
It was a great pleasure to receive your positive responses. Lack of finance has always been our Achilles heel, so any project will have to depend vitally on your wholehearted support.
(Muhit - I am beginning to realise now you are from Arcade Partners - ref your article on the last antics of the “Energy Advisor”).
I am aware of BEN-BAPA’s activities, but their Energy Strategy is too broad based to be implemented. People in Petrobangla and Hydrocarbon Unit (HCU) are well aware of what needs to be done - it is the bureaucrats and ignorant ministers who will not let them work.
While we have been focussed on Phulbari, a bigger plunder is looming on the horizon. There are plans underway to give the offshore blocks to selected companies by the FDI champion on same underhand deals as AEC. And these transactions will be impossible to monitor as no records will be made public. And why should we worry about this - we should, because it is a certainty there is oil and gas on our offshore blocks. The area is identical to other hydrocarbon areas like the Gulf of Mexico, the Delta Region in Nigeria, and the Gulf of Maracaibo, Venezuela. And, just 60 miles south of Teknaf, prolific Gas deposits are being found offshore Myanmar (Shwe Fields).
I believe a strong presentation on the Technical-Financial capabiliites of us expatriates needs to be presented to the ordinary people of Bangladesh. Through them, we will be able to force the Government to accept our services - which the bureaucrats will otherwise sabotage.
Let me contact you separately with some of my ideas.
Best regards
A. Ahmed
A.Ahmed@AgipKCO.Com
Ahmed517@blueyonder.co.uk
February 7th, 2007 at 5:41 am
Talking about Asia Energy
Based on whats gone on before the troubles started at Phulbari, I will guarantee Asia Energy have a long way to go. They have invested and spent quite a lot of money for the high quality coal in the vast footprint at Phulbari. They have hyped up lots of figures which are suspects and questionable.They have also gone forward,in my opinion, prematurely and without participatory EIA. Otherwise yes Phulbari is potentially a major national asset which should be exploited for suatainable development of Phulbari and Bangladesh. I am fully aware of the details we have been talking about. The stakeholders of Phulbari do not wish to be exploited and victimesd like the ones in their neighbourhood at Barapukuria.
April 14th, 2007 at 12:44 pm
Following the recent troubles with regards to this project, does anybody believe in the longer term that AEC will get the approval from the interim government and local people for this mine?
With the backing of the World Bank for its construction and the constant power black outs in the country, isnt it an essential project for Bangladesh?
April 21st, 2007 at 10:23 am
Asia Energy plans to resume operation: Govt in dilemma
By UNB, Dhaka
Fri, 20 Apr 2007, 13:45:00
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Asia Energy has started pursuing the caretaker government to revive its operation in the Phulbari coal mine, official sources said.
But the government is in a dilemma over the issue of Asia Energy as a very complicated situation has been created after the two ministers of the immediate past BNP-led government reached agreement with the residents of the mine area.
According to official sources, global chief of the UK-based company, which has been renamed as Global Coal Management (GCM), visited Dhaka and met with the influential persons of the caretaker government. This chief executive of Asia Energy also held meetings with Energy Adviser Tapan Chowdhury and Finance Adviser Dr AB Mirza Azizul Islam to convey some messages from the company’s top management. The sources said the Asia Energy official requested the Energy Adviser and other Bangladesh policymakers to settle the issue as soon as possible.
The government policymakers explained the country’s political situation and asked the UK company to wait for another few months, at least until the proposed coal policy is approved by the government. Sources said the UK government has also urged the caretaker government to settle the dispute over the Asia Energy issue.
They said the British High Commissioner in Dhaka also met Chief Adviser of the caretaker government to discuss the proposed investments by his country’s investors. He also conveyed his government’s position on Asia Energy and the planned investment in Bangladesh by other British companies.
With such developments, the sources said the Energy Ministry moved for finalising the proposed coal policy and also initiate settlement of the issues quickly.
Energy Adviser Tapan Chowdhury recently told reporters that his ministry would take decision on Asia Energy after finalising the proposed coal policy.
He also disclosed his ministry’s plan to accommodate the opinion of the country’s energy and coal mine experts in the proposed coal policy.
Asia Energy was awarded Fhulbari coal mine through a deal in 1998, under which the UK company was allowed to explore coal. But the company conducted a feasibility study in 2005 determining the coal reserve at 572 million tons and also submitted a development proposal to the government for open cast mining to extract coal, prompting the local people to resist the plan at any cost. During their agitation in August 2006, several people were killed in firing by the law enforcers and Asia Energy suspended its operation in Phulbai area.
Finally, two ministers of the then BNP-led government signed an agreement with the local people assuring them that the government would cancel the deal with Asia Energy.
Following the incident last year, the government sent both the agreements-the one signed with Asia Energy and another signed with the local people-to the Law Ministry seeking its advice to take further action. But the Law Ministry is yet to give its opinion. Now these two agreements put the government in a dilemma about taking further decision.
Experts said if the government decides to cancel the deal with Asia Energy, it would send a negative signal to international investors. On the other hand, if the government ignores the agreement with local people, it may lead to another unrest among the local people.