But local coal experts and energy ministry adviser Mahmudur Rahman stressed that no compromise would be made in the policy at the cost of national interest, rather strategies are to be formulated so that both sides benefit from deals under it.

The Ministry of Power, Energy and Mineral Resources and Petrobangla organised the consultative workshop on the draft coal policy, facilitated by Infrastructure Investment Facilitation Centre (IIFC) and attended by experts, academics and representatives from private and public sectors.

The proposed quota in the policy that would limit the quantity of coal for export -- initially to two tonnes for every one tonne sold domestically and progressively to one tonne for one tonne -- could place a potentially serious burden on the financing of a coal mine, said a statement of Asia Energy, which is seeking government approval for Phulbari coal mining.

Such a restriction could render a mine sub-economic, especially because the policy proposes that all locally used coal should be sold in local currency, while the enormous capital costs of mining are mostly in foreign currency, it said.

Moreover, the proposed variable royalty of 16 percent on coal for export on top of corporate taxation and import duties on equipment is extremely unattractive, Asia Energy viewed.

Under the existing legislation, Bangladesh levies six percent royalty on all coal mined in open pit system.

The company was critical of the proposal of mandatory construction of coal-fired power stations by the mine developers, saying, "This will add significant technical complexity and financial risk to coal mine projects."

The policy should attract the best coal mining companies to develop coal-mining sector to encourage IPPs to become involved in developing coal-fired power plants, it suggested.

Aldwych International, a power development company planning to be a partner of Asia Energy in constructing and operating a 500 MW coal-fired power plant at Phulbari, thinks the plant operators expect to freely negotiate coal prices for long term supplies directly with the coal mine operators rather than being regulated by a third party.

Aldwych's Project Director Crispin Holliday in his statement said power plant size, capacity factor and tariff arrangements should be negotiated on a case-by-case basis, considering technical and open market commercial factors.

"Private investors would like to see the coal policy building on the principles enshrined in the existing documents including the National Industrial Policy and the Foreign Private Investment Act, particularly in providing a sustainable environment based on free market principles and light handed regulations," he noted.

Mahmudur Rahman said the policy would be finalised through a consultative process and made transparent to ensure energy security of the country and attract foreign investment in coal sector.

"Coal sector is new in Bangladesh. We also do not have enough capacity for mining. So, I would encourage International Oil Companies (IOCs) to discover and extract resources from the virgin fields," said the adviser, who was the chief guest at the programme.

Energy and Mineral Resources Division Secretary ANM Nasiruddin pointed out a number of conditions for coal mining that include priority of local demand, reasonable price, job creation, import substitution and financial guarantee in case of any disasters before the companies involved leave the country.

"We want foreign investors will prioritise local companies as support service providers in mining," Nasiruddin said. He hoped foreign companies would be practical and would not put forward conditions as was done by some companies in the past.

Dr Badrul Imam, professor of geology at Dhaka University suggested avoiding aggressive approach in case of open pit mining. "After one mining, the companies should wait and evaluate the impact of the open pit method. Then they should take steps for the next one," he said.

Asia Energy has been lobbying for open pit mining in Phulbari coal field, claiming it ensures 90 percent extraction of coal while underground mining ensures 20-25 percent and runs the risk of subsidence leading to huge loss of lives.