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     Volume 9 Issue 18| April 30, 2010|

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Cover Story

The Case for Coal

It is 11.30 AM in Mirpur, Dhaka and the workers of Texmark Fashion are asleep on the job. It is peak season for the garments industry, and the factory should be buzzing with activity. But the massive circular knitting machines are silent and the operators are dozing at their posts.

Syed Zain Al-mahmood

“Our generator died," says Selim Nawaz, the Managing Director, sitting gloomily in his darkened office.

The estimated resources of 2.5 billion tonnes of coal in Bangladesh could ensure energy security in the medium to long term.

"It has been running almost continuously over the past week because of the erratic power supply. We've sent it for repairs, but we really can't afford to stop work at a time like this -- I don't know how we are going to meet shipment deadlines."

Things are bad, and Nawaz knows they are about to get worse. Power generation in the country now hovers between 3,800 megawatts (MW) and 4,300MW against the demand for around 5,500MW -- a shortfall that is disrupting daily lives and bringing the wheels of industry grinding to a halt.

"We must find an energy source since gas is running out," says Nawaz with the quiet desperation of a man whose world has been shaken. "I don't think things can go on like this."

While the energy crisis threatens to hold back growth and scare away investors, the government has been sitting on proven coal reserves of 2.5 billion tonnes in five different coalfields in Bangladesh. Experts say 1.4 billion tonnes can be easily extracted -- equivalent to 37 TCF of natural gas, enough to generate electricity for the whole country for 40 years.

As gas reserves dwindle, it is clear to most experts that coal is the way forward. But political inertia and lack of foresight continue to cloud the horizon. Bangladesh needs at least 13 million tonnes of coal a year for the next decade to generate additional power to meet its rising demand.

"At a time when we are thinking of becoming a middle income country, the power crunch is jeopardising all our hopes," says Dr Zaid Bakht, Research Director of the Bangladesh Institute of Development Studies (BIDS). "We don't have a lot of options when it comes to primary fuel sources. Coal is the cheapest fuel, and most countries use it to generate the bulk of their power."

Although slammed by environmentalists as 'dirty fuel', coal is making a comeback all over the world because it is abundant and cheap, and because new technologies have been developed to mitigate the degrading effects on the enviroment. At present India generates 68 percent of its power from coal, while the figure is 80 percent and 94 percent for China and South Africa respectively. China is building 544 new coal-fired power stations to meet an insatiable demand for energy, and South Africa this month won a $3.75 billion loan from the World Bank to help build one of the world's largest coal-based power plants.

Coal built the world's most developed economies, and fuels their growth today. By contrast, Bangladesh is using natural gas to generate 83 percent of its power -- a fuel that is considered to be much more expensive globally. Experts say it is a luxury Bangladesh can no longer afford.

According to Engineer Moinul Ahsan, former Managing Director of Gas Transmission Company Ltd (GTCL), coal is the only viable option if Bangladesh is to ease the energy crunch. "Gas reserves are running out. No new gas fields have been discovered over the last few years. We need to conserve our natural gas for purposes such as domestic use and the manufacture of fertiliser."

For an energy-intensive economy like Bangladesh, where paddy fields, mills and factories rely on steady supplies of competitively priced power, the dwindling gas reserves come as very bad news. Bangladesh has weathered the global downturn better than many richer countries, but the majority of people remain poor and unemployment and illiteracy is very high.

"To sustain the growth rates we need to create jobs," says Dr Zaid Bakht, "we have no choice but to build new generating capacity -- relying on what is our next most abundant and affordable energy source."

Engineer Ahsan points out that diesel is too expensive while solar power cannot be the primary source as yet.

"We have reserves of coal that could give us energy security for half a century or more. It would be madness not to go for coal!"

Bangladesh is no Saudi Arabia of coal, but it still has substantial reserves that would boost the country's drive towards sustainable development. According to most estimates, the reserve of coal is between 2,500 and 2,700 million tonnes -- which is equivalent to about 37 TCF gas.

Five coal fields have so far been discovered in the Northeast, namely Barapukuria, Khalashpir, Phulbari, Jamalgonj and Dighipara. So far, only the Barapukuria field in Dinajpur has been developed by the government under a Chinese supplier's credit. Commercial production of Barapukuria coal mine started from September 10, 2005, but from the beginning things went wrong, with the mine failing to achieve its production target. Most of the coal from Barapukuria mine is being used in the smallish 250 MW power plant.

Open cast mining is opposed by environmentalists who say it is harmful to the ecosystem. Photo: Star File

The British-Australian mining giant BHP struck coal in the Phulbari coal field, not far from Barapukuria in January 1997. BHP transferred its licensing and investment agreements with the Government of Bangladesh to Asia Energy Corporation (Bangladesh) Pty Ltd in 1998.

Asia Energy, formed mostly by former employees of energy giants BHP and Rio Tinto, established a coal resource totalling 572 million tonnes after drilling more than 100 exploratory holes. The company claims it has spent more than $20 million in exploratory costs. Asia Energy completed an Environmental and Social Impact Assessment that received approval from the Department of Environment in 2005.

The British energy company submitted a Feasibility Study and Scheme of Development for the Phulbari Coal Project to the Government of Bangladesh on October 2, 2005. But the battle lines had already been drawn.

Shahidul, a farmer in Phulbari, remembers well the day the coal company arrived on his land. "They came and asked if they could drill a hole in my paddy field. I told them I would require compensation for my crops, and asked for Tk.7,000. They paid up."

Phulbari is one of the poorest regions of the Northwest, populated by subsistence farmers, fishermen, and woodcutters. Soon word spread that the foreign company was paying good money. Morshed Manik, a local journalist, says the company set up a field office and an information centre where people could learn about the proposed mine.

Bangladesh currently imports coal that has high toxic sulphur content. Photo: Zahedul I khan

"They went from door to door conducting a survey to find out how many people would have to move. They talked about compensation, and assessed the amounts of money people would get. They waded into the ponds and streams and measured the quality of the water. We were hopeful that the mine would help develop Phulbari."

Speaking to The Star, locals said the company had paid compensation in full according to the demand of the locals while they were drilling the exploratory holes. But the goodwill gained from it was soon to be lost, and with it the possibility of smooth extraction of Phulbari coal.

"Some villagers began to fear that they would not get enough compensation for their land," recalls Shahidul. "A group of people came down from Dhaka and warned villagers that the company wouldn't pay. They said the entire district of Dinajpur would become a desert, and we should ask for compensation for 100 years of lost crops."

Anthropologist Manzur Mannan, who has lived with and studied the ethnic Santal people in Phulbari, suggests the reason for the nervousness. "Many people in that area live on government land -- Khaas land and forest land. They do not have title to the land. They were told by outsiders that without formal land deeds, they would not get any money."

Morshed Manik agrees. "We saw during government projects such as when roads were built, that people without claims to land didn't get compensation. There are a lot of people here who came from Chapai Nawabgonj, and live on land belonging to the forest department. We call them 'Hasua Mama' because they carry long woodchoppers called Hasua. These were the people who were most worried and protested most loudly. "

Documents obtained by The Star show that Asia Energy, in its proposal to the Ministry of Power, Energy and Mineral Resources, proposed paying compensation to anyone who was found living in the area during the survey. But locals say they did not know this at the time, and their nervousness was stoked by 'outsiders'.

Asia Energy's proposals show that the mining firm promised to compensate people for loss of land and businesses. This applies not only to landowners but also to the people who work on the land.

But locals were not convinced, and were swayed by groups that opposed the mine, a coalition of

The Barapukuria underground coal mine has seen large scale land subsidence.

environmentalists and left-wing politicians. On August 26, 2006 thousands of people led by the National Committee to Protect Oil, Gas, Mineral Resources, Power and Ports marched on the offices of Asia Energy.

Morshed Manik recalls: "They were chanting slogans like: 'No to open mining!' And 'Leave the coal in the Ground!' After a rally in front of the local Urbashi Cinema Hall, where leaders like Anu Muhammad spoke, they marched on the company's offices."

After the protesters ignored warnings by the paramilitary BDR forces posted at the site, the magistrate in charge ordered the troops to open fire. Five people lost their lives.

Mokhles Comissioner, a local leader whose teenage son Tariqul was among the dead, blames the organisers for over-reaching. "I was agitating because I wanted better compensation," he says. "But I wanted no bloodshed. Phulbari became a victim of politics."

Mukul, local correspondent for the national daily Inquilab agrees that most villagers did not want the demonstration to turn violent. "We didn't really understand this violent politics. Nothing like this happened here before."

With hindsight, Mukul believes the mining company did not do a good enough job of informing locals about the exact steps they wanted to take to rehabilitate displaced people. "Maybe they didn't anticipate this level of mistrust."

Since the violent incidents of August 2006, Asia Energy has kept a low profile in Bangladesh. The field office in Phulbari was closed. The top management of Asia Energy in Dhaka did not respond to repeated requests for an interview.

  Asia Energy submitted an Environmental Impact Assessment that included water resource management.

Many observers believe the power crisis in Bangladesh is a tip of the iceberg hiding a much deeper crisis of decisiveness in Bangladesh's political arena. "We cannot make up our mind on how to extract our coal reserves," says economist Dr Zaid Bakht, "We cannot make a decision on how and when to conduct offshore drilling. We must remember that we are not reinventing the wheel. Other nations are using coal to generate power. We must have a constructive dialogue, and find a formula where the benefits outweigh the risks. Open Pit Mining yields 80 percent of the deposit while underground mining yields less than 20 percent."

'Not in my backyard' mentality has held back coal exploration.

There is strong resistance to Open Pit Mining from some quarters. Prof Anu Muhammad, member-secretary of the National Committee to Protect Oil, Gas and Mineral Resources, has made a name for himself by steadfastly opposing the involvement of foreign energy companies in Bangladesh. According to Phulbari locals, Prof Anu Muhammad has been at the forefront of the campaign to convince villagers in Dinajpur that Open Pit Mining would destroy their livelihood. He recently alleged that power generation at the Barapukuria power plant was being hampered intentionally to allow coal export from the mine.

Anu Muhammad, economics professor at Jahangirnagar University, is not convinced the benefits outweigh social and environmental concerns in case of Phulbari. He says studies in open pit mining in Pennsylvania in the United States, found that one river 160 kilometres from the pit was still poisoned three decades later.

"In a country like Bangladesh, with hundreds of small rivers linked like a huge net, polluted water can travel long beyond the mining area," he says. He is also concerned that a feasibility study was not done by an independent body.

Asia Energy says 80% of visitors to its information centre in Phulbari have been positive about the proposals. That figure contradicts Prof Anu's own findings, which show only 2% are actually in favour of the mine.

The Committee to Protect Oil, Gas, Mineral Resources, led by Prof Anu Muhammad, although long opposed to Open Cast mining, had supported Underground mining. But after problems arose with the Barapukuria underground mine, Prof Anu says he wants newer technologies.

"I don't understand why the government doesn't go for Underground Coal Gasification?" he asks. "It can provide 100% utilisation of the coal deposit."

Mining experts like Engineer Moinul Ahsan say the technique which turns the coal into gas without the need for mining is experimental and is not suitable for Bangladesh. "It would cause land to subside because of the void left by the gasified coal. There would be flooding and other problems. Gasification is only suitable for deposits where the coal is at a great depth."

Most experts agree that the method of mining will be determined by cost-benefit ratio. In certain areas, underground mining method would be beneficial for the nation, while in some other areas, open pit would be a better option.

All mining methods carry side effects, but many countries still consider Open Pit mining as the best option because of its efficiency. Many developed countries which have environmental concerns at the top of the agenda are allowing increased coal production.

For example, nearly half of all British coal is mined using Open Cast methods against just 12% 10 years ago, and this is expected to increase significantly.

Bangladesh would need to generate 20,000 MW of power to serve all of its population by 2020.

Many experts suggest the caricature of multinational mining companies driving bulldozers through idyllic village communities in their ravenous search for valuable minerals may no longer be true. Energy companies these days are much more willing to open the corporate coffers -- providing schools, medical care and infrastructure in an attempt to project a socially and environmentally responsible image. There is a new understanding that a cleaner environment means better business in the long run.

Presently the only coal areas investigated in more detail are those of Barapukuria and Phulbari. As these deposits have to be regarded as nearly one unit, experts say it is necessary to set up a master plan for their future development.

The main success of the project is inevitably linked to the mobilisation of the villagers. "They do not rely on technical issues," says Dr. Hossain Monsur, chairman of Petrobangla. "They must get the feeling that they have a real vision for their future, welfare and prosperity."

Most analysts feel the government must engage politically to solve what is primarily a political problem in Phulbari. The concerns about the environment and the livelihood of the locals must be balanced against the urgent need for national economic development in order to find a palatable trade-off. The time for coal has arrived. “Leave it in the ground!” is no longer an acceptable slogan.


Prof Dr Hossain Monsur is a professional geologist and an expert on mines. He has been serving as

Prof Dr Hossain Monsur

Chairman, Petrobangla since January 2009.

Is a consensus emerging that coal is the answer to our energy crisis?
Consensus can be a tricky word in Bangladesh, but I think most people now realise that the energy crisis is crippling us, and we must search for an alternative to natural gas. Our natural gas reserve is limited, and frankly, we have not used it very wisely. Worldwide, natural gas is considered an expensive fuel. We don't have enough wind power to run wind farms on a commercial basis. Solar power can contribute a small proportion, but it cannot be a primary energy resource. So, we must think seriously about coal, which is widely used for power generation all over the world.

But there is a lot of debate about the best method of extracting coal?
There are two main methods: open cast and underground pit mining. The best method will be dictated by the nature of the soil, the depth at which the coal seam lies, and the surrounding environment. Open cast mining yields 90% of the coal deposit, and it is suitable where the coal is not at a great depth, such as Barapukuria and Phulbari. Underground mining allows recovery of less than 20% of the coal deposit, and it is used where the coal is at a great depth.

Some environmental groups have opposed Open Cast mining saying it is harmful to the environment?
When we started Barapukuria, some people said open cast was bad and all problems would be solved if we did underground pit. But now we have seen the problems that arise with underground mining. We have experienced a lot of issues with Barapukuria, such as land subsidence, flooding etc. It is now clear that both forms have environmental and socio-economic problems. So when we take into account the cost-benefit ratio, it seems Open Cast mining would appear to be the best option.

Villagers around the Barapukuria mine are agitating for compensation since the soil has subsided over a large area around the mine. But originally there was no plan to acquire large tracts of land, and so it seems there was no plan for rehabilitation or compensation?
The Barapukuria mine wasn't handled properly from the start. There was no comprehensive plan in place to mitigate the probable after-effects. But the government is very sympathetic towards the affected people, and is actively considering a compensation package. A coal city may also be built to accommodate people who may be displaced.

Opponents of Open Cast mining say Gasification underground may be an option?
There is no example of gasification being commercially successful anywhere. I don't think we should be the guinea pigs for experimental technology. Many people are giving opinions right and left who are not technically sound. We must stick to tried and tested methods. We don't have resources to waste.

Will Petrobangla maintain oversight of mitigation and rehabilitation measures in case of future mining activity?
We will do it if the government asks us to do it. We look after the Barapukuria mine. So we have the capability to look after others. But ultimately it is the government's decision.


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