Coal policy needs finalisation now
There is no time to waste, urges S. M. Mahfuzur Rahman
Bangladesh suffers from a chronic deficit of power and fuel resources. Energy experts have different estimates on the demand for both power and energy resources, based on different assumptions on growth of the economy, associated rates of growth in industries, the transport sector, fertiliser use etc., and the expected expansion of the power supply to households. There are other estimates for availability of fuel resources and supply of power in the country. There are forecasts for periods as far as 2055. But, although estimates and discussions are necessary in finding a solution to the emerging energy crisis, the present situation suggests that instead of wasting any more time in those exercises, the country now needs to take immediate measures for facing it.
As Summit Power Chairman, Muhammad Aziz Khan, said in a recent seminar: "Because of the power deficit alone, the industries in the country are now suffering losses of Tk 2 billion everyday." At present, about 85% of the power generation in the country is gas- based, and in a roundtable discussion the Hon'ble Energy Adviser Tapan Chowdhury said that the marginal stock of gas could ensure energy supply for hardly 10-12 years.
The potential for alternative energy sources such as hydro-power, wind and solar power, biomass power, etc. is not very bright, and although there are some indications of exploring the possibility of nuclear power generation, Bangladesh does not seem to stand a chance because of a number of factors, including the issue of safety in treatment of uranium, the need for highly skilled technical and managerial manpower for such a project, the technology and equipment, the magnitude of investment in establishment of a nuclear power plant, imports and operation and, among the many others, the strategic access of Bangladesh to nuclear power, especially when the "big powers" are restricting access for almost every new entrant to the family of nuclear power holding countries.
It seems to us that after long years of inaction the government has now understood that, against the backdrop of quick depletion of gas reserves in the country, it is already late now, and that there must be some immediate steps taken to explore new energy resources. The government possibly realises that, fortunately for the country, coal has emerged as a potential resource to meet the emerging gap. We have committees working on the energy and coal policies.
It requires a good deal of research to find how and under what considerations the government could not finalise the coal policy earlier, but we highly appreciate that after at least six revisions the government has made a draft, formed a Coal Policy Review Committee, and asked the committee to finalise it after a review. We are happy to see that the review committee has put the draft on a website, inviting comments from all corners and requesting people from various walks to appear before the committee and express their opinions.
The draft coal policy says that the country does not have enough reserves of gas to produce the required amount of power it will need in the immediate future, and in order to ensure energy security in the long run use of gas in power generation and other purposes is to be gradually reduced and an increased use of coal is to be promoted.
There are estimates on how much of our power generation is based on gas, how much gas is used as raw material for production of fertiliser, as fuel for other industries and many different types of vehicles, and for domestic consumption.
Estimates are also there on what the present and potential gas reserves are, how long it may take to exhaust the reserves at the existing rates of extraction, as well as at enhanced rates because of increase in need for gas supply to all the sectors for economic growth, better welfare of the people, and protection of forests and trees that vanish in household ovens or the brickfield kilns.
It is not difficult for a reasonable analyst to come to the conclusion that the country is fortunate to have coal reserves, and that the government should decide to extract coal without delay. It may be noted that even if the decision to the effect is taken today, it will take at least 4-5 years to see the results.
We are in a dilemma: whether to extract or not to extract. What may happen if we go for the "not to extract" option? The most likely answer is: we will have to import energy resources and also import power to meet the domestic demand. In fact, we are already importing coal and people know that the coal we import is of poor quality and has high sulphur content, causing mechanical failures in the Barapukuria power plant and resultant environmental pollution. This point may be of some value in addressing the next issue on our preference for the method of mining. For the time being, we will only note that underground mining in Barapukuria has miserably failed to supply coal to the power plant according to the design of the project itself.
We have enough indications that people are actively thinking about import of gas and power from neighbouring countries, which is a difficult issue to handle. We can only raise questions: Is the option acceptable, especially if we think that this may make us more vulnerable because of dependence on other countries on such a strategically important commodity? Is Myanmar ready to export its gas and power to Bangladesh? Whether India has enough power of its own to export or, if Bangladesh agrees to import power from India, the latter will develop hydropower projects in Nepal and then market it in Bangladesh? There is another vital aspect: whose interest would be served more if we import coal or power, and stop thinking about extracting our coal, to step into the energy dependency trap?
One of the many reasons that are causing the delay in finalisation of the coal policy is the debate on the method of coal extraction in the country.
In a roundtable discussion on coal policy in June, ex-secretary and Power Development Board chairman, Quamrul Islam Siddique, said: "For extracting coal, the underground mining method (in Barapukuria) did not give us good experience." The opinion is based on the fact that there were accidents in the Barapukuria mine, the temperature in the tunnels does not allow the labourers to work efficiently. Ensuring proper ventilation and mine safety is technically very complex and costly, and there are the problems of flash flows of water, the proven threat of methane and carbon monoxide gas emissions, and spontaneous firing of coal. Underground mining, ultimately, does not have the benefit of not displacing the people and structures above the mine or not saving the agricultural land, since the extraction of coal from the coal bed produces voids beneath the
surface, and, because of the shallow depths of the mine, the land mass on the surface does not hold strong. The inevitable consequence is subsidence, and in case Barapukuria goes for ensuring extraction of even 15-20% of the coal reserves, the land mass on top will collapse. All these problems resulted in repeated deferring of the commercial production deadline, while extracting only 5-6% of the coal reserves, when the initial estimates said that the extraction would reach up to 25%.
Open-pit mining does have some adverse effects in terms of displacements and dislocations, just like the Jamuna Bridge project or development of large scale satellite towns like Uttara or Purbachal have them.
One way of looking at the issue is: if we consider the adverse effects unmanageable and there are no ways of compensation and rehabilitation, then we should forget about extracting the mine resource and wait for dependence on foreign supplies or for a situation when only candles can help.
The alternative is: review all the already conducted series of studies on such issues and if needed, challenge the findings in the interest of soundly protecting the interest of the affected people and carry out more investigation to resolve the problems.
Other problems of open-pit coal mining are the probable damages to environment by lowering of ground water table or polluting ground, water, and air by coal dusts, acid mine drainage with proliferation of sulphur, etc. Use of coal in power plants is often discouraged for emission of carbon-dioxide. However, there are known and tested technologies to protect environment from these types of adverse effects.
Our submission is twofold: in case of extracting the coal: (a) ensure application of the right technology to prevent the probable environmental damage, and (b) organise public demonstration of the probable environmental hazards and the technology to be applied for minimizing them and also, for making people understand how much of the apprehensions are reality and how much of them are sources of confusion and myths.
Prof. M. Tamim of BUET said in the above-mentioned roundtable discussion: "We all know the results of Tk 15 crore deep shaft mining. We have no fund, no manpower and no technology. I think open pit mining should be given a chance with due attention to three aspects: relocation, environment and revenue, which in fact are issues of negotiation for settlement and not barriers to open pit mining i.e., the existence of problems on these issues do not mean that we should go for underground mining or abandon the idea of extracting coal."
It appears that the experts involved in preparing the draft Coal Policy are aware about almost all of the above issues and Clause 5.2 of the draft reflects it by indicating that the open-pit method is to be tested first in developing one coal mine and using the experience on how do the dewatering and infiltration systems work in maintaining water tables and ecological balance, how to keep the environment pollution free, what to do for reclamation of lands, how to implement the rehabilitation of the displaced people, how to monitor the socio-economic situation and what can be done for development of public awareness.
The proposed Coal Policy says that the government sector would be given priority in exploration, extraction and marketing of coal but at the same time the private sector investors would also be encouraged. It further says that joint ventures of local and foreign private investors would also be encouraged to develop large coal mines and establish coal fired power plants. The draft document uses licensee/leasee as the mining implementing company but it is not explicit as to whether this party should be a government, joint venture or foreign company.
A careful reading of the terms and conditions for the licensee/ leasee that are explained in details in various pages of the draft document gives one the impression that it should be a private company that should issue shares of value equal to at least 25% of the capital (authorised or paid up: not defined) in phases (taking how long: not defined again) since the first day of its going to commercial extraction
of coal (why not from the beginning of allowing such investment in implementation of the project). However, if transfer of technology is taken into consideration, establishing joint venture companies would be a more suitable option for coal mining in Bangladesh.
The draft policy has indicated that there is practically no scope of export of coal from Bangladesh and I agree with many who think in the spirit of not exporting coal from the country. My concern is more on creating the grounds for use of coal than to allow the investors to say that in order to be financially viable, they must extract a minimum of this much amount of coal and if they cannot sell it within the country they are to export it. We urge the government to think of establishing several coal fired power stations, each of a capacity 1000 MW or more, and briquette factories, production of liquid petroleum from coal and side by side with extraction of coal, developing a plan of marketing coal to industries, brickfields and households.
The draft Coal Policy suggests establishment of Coal Bangla as a Petrobangla-type institution for development of the coal sector and the document mentions that the institutional development of Coal Bangla with proper infrastructure and trained manpower and the formulation of the mega-plan for the country's coal sector by the organisation would take at least five years after the adoption of the Coal Policy.
One valued member of the Coal Policy Review Committee had publicly said that it would take 15 years to prepare local manpower. Idea of "Coal Bangla" thus contradicts to the background statement in Section 2 of the draft Coal Policy, where it says that: "In consideration of the energy security of the country, it is necessary to formulate and implement plans of establishing coal fired power plants on emergency basis."
Also, we all know that Bangladesh is a breeding ground of institutions and Coal Bangla would only be another addition with top heavy bureaucracy and avenues for misuse of funds, while the existing energy sector management units of the government can be reorganised to create agencies for monitoring and supervision of developments in the coal sector.
In conclusion, I would like to quote from the draft Coal Policy that: "Development of coal sector and its growth are inevitable in the greater interest of the country's population and the goal of utilisation of coal should be integrated development and development of a sustainable socio-economic environment in the whole country, especially in its north-western region [which does not have many development projects]."
Development of coal zones of the area can contribute to achievement of a double-digit growth rate of the economy and taking any wrong decision on the issue would be very costly for the whole nation.
S. M. Mahfuzur Rahman is Professor, Department of Finance, University of Dhaka.