Over the last 3- 4 years some kind of consensus has developed among all stake holders of Bangladesh that exploration and exploitation of Coal resource is the main feasible option for long term energy security of Bangladesh. Every one realise, Bangladesh do not have required capacity to explore and exploit coal resource. We do not have technology, required technical and managerial capability. Moreover no Bangladeshi private or public company can make such a huge investment for coal mining. We have 5 discovered coal mines and have potential to discover some more. We have GSB, BMD, and Mines & Minerals Directorate of Petrobangla. But we do not have any active practising mining engineer in Public sector. In last 25 years our lone coal mining effort is Barapukuria Underground mine under Chinese supplier’s credit. This mine also is suffering from chronic problem. Even this morning media has report alarming subsidence propagation in mine command area.
The most suitable mine for open pit mining is now suffering from wrong strategy, flawed mine design. The other mining effort at Phulbari is also in stalemate situation. In last three years Bangladesh saw 7 different coal policy drafts. Inexperienced theoreticians, ill motivated ant development group serving interest of coal mafia syndicates are instigating people will ill conceived propaganda. Policy makers are confused; energy think tank is unnecessarily debating over issues which are exclusive domain of line professionals, technical personnel involved in mine planning, design and operations. . There are significant evidences in Coal world of economic mining in situations similar to Bangladesh. Bangladesh energy situation is pushing country to frustration, economy is stagnating. Still we have made our coal mining contingent upon adoption of coal policy. We have Energy Policy. PSMP, GSMP which talks about a lot of coal utilization. Yet we wasted about 4 years debating unnecessarily over coal policy. This write up will focus on salient aspects of coal policy. There will be reference to situations in different coal countries, references to discussion with Bangladeshi mining experts working abroad, Bangladeshi expatriates academicians doing research on mining related issues.
Draft Coal Policy: Analytical Review:
In the introduction the updated draft policy has mentioned that the after 2011 there will be major crisis of fuel supply as the remaining proven reserve of natural gas will not be enough to meet the demand unless some major discovery is made in the meantime. The draft report also mentions that a minimum of 26TCF Natural gas (Equivalent to 1000 Million Ton of coal) will be required to meet out demand considering a 7% GDP growth every year. The draft rightly suggested for conserving our fast depleting Natural Gas reserve for supply to CNG, domestic, commercial, industrial and existing gas based plants. The report also mentioned that our 5 discovered coal mines have an estimated resource of 3300 Million ton. Of the Coal at Jamalgonj is lying very deep 650-1100 Meter below surface. It is not possible to mine this resource in traditional mining method. In this scenario Draft policy suggested to introduce coal and other possible fuel to gradually phase out natural gas in sectors other than CNG, Industry and Fertilizer) to ensure long term energy security. There is recognition of fast track coal resource development and it has been said the the coal policy would facilitate that and when approved it would an integral part of comprehensive National Energy Policy.
Observation:
If we compare our Gas reserve – resource against coal reserve – resource there can not be any argument why we must not go for fast track coal exploration in the most modern and technically appropriate well proven method to recover maximum resource. This writer strongly belives that if we can carry out appropriate reservoir study and reservoir management our discovered gas resource may expand, we will discover some major resource in offshore and onshore frontiers. But natural gas is too expensive to use in value destructive sectors. There is no logic to burn it for power generation when other fuel can be made available. Even gas to fertilizer production may also come under serious scrutiny. 4 our of 7 Urea fertilizer plants use fuel inefficient ammonia and Urea process. Cost of production even with subsidized natural gas is much higher. There is no point in running NGFF, PUFF, UFFG and Even ZFGL. Gas is to supplied to them at price much less than economic price and again fertilizer is also sold at much less than it’s cost of production. Only CUFL, JFCL and KAFCO have relatively modern process and much more fuel efficient. The old plants must be replaced with new plants .To meet immediate gas crisis all but 3 fertilizer plants can be shut down. Importing fertilizer from world market will be much cheaper provided fertilizer import can be free to genuine importers. But before such decision is taken alternate job arrangement for trained professionals of fertilizer plants must be ensured. About 150MMCFD gas can be saved now can be extremely useful for industries. Coal is agreed major fuel for long term energy security. It was intact recognised as such in National Energy Policy. We do not feel that separate coal policy was not really required. But as significant time and efforts have been dedicated it should be approve soon after carefully trimming and brushing its self contradictions and inconsistencies.
Background and Present situation:
Draft policy echoed constitutional provision that people of the country is the owner of all resources. For the benefit of the country and nation we need to ensure best possible utilization of coal resource. The draft policy expressed optimism that about 2247 Million Ton of total in situ Coal reserve (1053 Ton of Jamalgonj excluded) of which 884 Ton is proven of the coal mines discovered in the North- Western part of Bangladesh can play the most important role in meeting the energy demand of Bangladesh. It also suggested for expeditious actions in planning and implementing coal based power plants. The policy quoting from Nexant produced Power Sector Master Plan 2006 stated that 19,312 MW will be required by 2025 considering a GDP growth@5.2% and 41,899 MW will be required for a GDP growth @8%.
The draft policy also mentioned about Wood and Mackenzie produced Gas Sector Master Plan -2006 which also considered a GDP growth @7.9%. PRSP and MDG also require Bangladesh to target such growth rate. To facilitate such an ambitious growth best possible utilization of available natural resources is a must. Natural gas alone can not do that. Coal must play major role here. Draft coal policy has suggested that there is no scope to consider export of coal in this situation.
Observation:
Our intellectuals fall back on consultants reports which they consider most authentic. The Power system master plan is in operation since long .The 2006 version is an update. May I politely ask could we follow PSMP? Are we following GSMP of Wood and Mackenzie? These plans have projections, these plans having financing options; these plans have restructuring and reform recommendations. We have followed these also .Mere quoting of figures to justify our perceived agenda is jugglery. We will need massive Foreign Direct Investment for coal mining and coal fire power generation to go anyway near to figures quote here for power requirements. We definitely require expanding domestic market to absorb economic mining volume of coal as investors will not invest if their money with profit is not returned in accordance with cost benefit analysis. So export restriction will be contingent upon market growth. No major investor will be interested to risk borrowed capital in a trouble tone Bangladesh where the rate of return through marketing the coal will not be guaranteed. So market development is a major issue .If there is large market obviously export will be out of context. Bangladesh will get steam coal and Coking coal. Coking coal has very limited market here. Coking coal and other by products will be exported in any case.
Present Status of Mining:
Bangladesh entered coal age with a target of mining 10lakh Ton coal annually and producing 250MW perday power from mine mouth plant at Barapukuria.The draft report recognised that it failed to attain desired target due to complex geological reality of the mine.
Response: Barapukuria is a shallow depth, multiseam coal mine. Poor roof support, strong aquifer presence never supported underground mining there,. Still Government allowed a Chinese Company CMC to go for underground mining there. A Mining engineer who worked in BMCL opine that the mine design and engineering was flawed and feasibility report did not address all possible risks and impacts of mining, it also di not add cots of all mitigation measures. In any underground mine subsidence is inevitable. We wonder how this could escape everyone attention .Why mitigation management measures and costs were not part of feasibility report. This mine experienced many different problems and ultimately limped for several years. The present recovery limit is much less than originally estimated. The mine subsidence has already started. According to a mining expert who recently visited Barapukuria the present adhoc subsidence mitigation measures are inadequate. Major mine collapse anytime can not be ruled out. Government should actively reconsider continuation of such ill conceived, poorly planned and unprofessionally managed mining at Barapukuria. Draft Coal policy could have addressed this.
Government Role in Mining:
Draft coal policy considered Government as major player in coal sector development. It also recommended for joint venture and private (Local –Foreign) – public sector partnership for coal sector development if government consider is necessary as contingency measure to confront future energy crisis an ensure energy security.
Observation:
What capacity Government has to undertake Coal exploration? Do we have money, technical resource, technology? What is our experience with Barapukuria mining utilizing Chinese Suppliers credit? What Petrobangla mines & Mineral Directorate could deliver? Why major mining giants would risk massive investment in a high risk country with novice Bangladeshi Public sector? We must have a strong mining regulator which with transparent policy creates level play ground for private and public sector to develop mines, set up mine mouth coal based power plants. Government role here must be facilitator only. Foreign investment is also required for the greater interest of the country. There should harmony among technology, economics and politics here.
Geological Characteristic of our of Coal Belt:
Darft Coal policy recognises that like rest of world both open pit and under ground mining can be done in Bangladesh. But it considered that mining in Bangladesh is relatively difficult in consideration of the location of discovered cool reserves, geology, social and environmental impacts. In support of its concern the draft report includes the following;
Our Observation:
Underground mines need strong roof support which is absent in our case due to soft silty water bound overburden. The subsidence is an inevitable consequence of underground coal mine in such situation. Barapukuria underground mine is a live evidence So on primary consideration underground mining in our shallow depth mines in primary consideration can not be preferable option. In surface mining water management is always an issue. In modern mines water treatment and reinjection/ recycling mostly address this concern
Our Observation
All infrastructure construction has some impacts. Road, bridge, railway, gas fields, power plants, industries cause involuntary relocations. Fortunately or unfortunately almost entire coal resource is concentrated in a relatively small area. This can be considered more of a v blessing than problem. The situation is unique in all cases. Risk assessment and mitigation measures can be replicated. Underground mining will be more in appropriate here. Open pit mining in more than one place will be essential to meet the demand of future power plants and other use. Proper water management will reduce impact of water pumping related impacts. Simultaneous reclamation of land will progressively restore mine areas to original or better state. Proper compensation, relocation and resettlement of affected population and arranging alternate work opportunities of affected people in mine related activities will reduce social impacts. A significant portion of mine royalty that government will earn can be pumped back to social and community development and welfare activities in the mine area. Setting up of special economic Zone will more than offset the concerns.
Coal Sector Development for Energy Security:
Draft coal policy has following statement for above.
About 450 Million will be required to meet the demand of coal fired power generation projected for Power Generation from 2005-2025 in accordance with PSMP update 2006 considering a GDP growth @8%.Of the projected 41,899MW coal based power would contribute 32,837MW. For this 75 Million Ton coal will be required annually.
Draft policy calculates 375 Million ton coal for 5 years after 2025 and 750Million Ton for the next 10 years. With this 1200Million ton coal requirement has been foreseen in draft coal policy.4 shallow and medium depth coal mines have current proven reserve of 884 Million Metric Ton. Open pit coal mining can yield 795 Million coal from the 4 mines which can cater coal demand for all coal based power plants conceived in Nexant survey till 2030 if no new coal plant is set up after 2025. On the other hand if underground mining is adopted for all mines considering 25% recovery the coal can support power generation till 2021.
Observation:
We have already fallen behind to meet projected targets conceived in PSMP Update 2006. Our past proven experience indicates underground mining at Barapukuria is not feasible considering cost benefit analysis. Bangladesh offcourse has no experience of surface mining. But those of us who have opportunity to visit some open pit mining operations, interact with Bangladeshi Expatriate professionals Woking in mines and seasoned mining pros of BHP Billiton, Rio Tinto can assure that major mining companies can address all impacts. Even the calculation of draft coal policy indicates that surface mining will facilitate meeting of coal fired power demand for at least 14 more years. Exploration may discover some new coal mines, some major offshore fields in the meantime. Bangladesh may also have extensive solar and other renewable source. Regional power and energy grid may also set up. What is required here is extensive benefit cost analysis of all mines to demonstrate the relative advantages and disadvantages of two methods of mining.
Objective of Coal Policy:
Draft coal policy includes the following objectives:
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Development of coal resource as essential part of national energy policy in the greater national interest.
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Appropriate development of discovered coal mines in the North-Western region of Bangladesh to ensure maximum recovery.
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Declare the potential coal reserve area of North-Western region of Bangladesh as Coal Zone and identify the region as the potential coal based power generation The aim of coal utilization would be zone so that it can be driving force for national economy.
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The objective of coal utilization would be to ensure sustainable socio economic development of the entire country and especially comprehensive development of North West Bangladesh.
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Geological Survey of Bangladesh (GSB) Directorate will conduct extensive exploration to discover new coal mines.Strengethen GSB and create special fun to finance its exploration initiatives.
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Strengthen the activities of Bangladesh Mineral Development Bureau for development of and regulatory control of coal industry.
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Guarantee the utilization of coal for power generation, reduce dependence on gas and restrict reliance on imported petroleum products.
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Set up Coal Bangla as an independent government body to develop and manage coal and other minerals development.
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Create infrastructures and develop skilled human resources for proper management of coal industry,
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Explore feasibility of Coal Bed Methane and encourage its extraction.
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Mine Peat Coal and encourage setting up of peat coal base power plant and industry.
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Formulate Coal Sector Master Plan utilizing state of the art technology for ensuring compliance of Health, Safety and environment acts and policies.
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Select local/foreign private sector developers through transparent competitive bidding as partners of joint venture [partner of public enterprises for coal exploration and development in addition to governments own investment.
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To take expeditious legal and administrative actions to protect environment from impacts of coal mining, to ensure other socio economic safeguards and to reclaim the affected lands.
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Encourage government and private organisations to set up coal based power plants.
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Encourage to set up coal based industries.
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Further develop power transmission infrastructure from coal zone to power growth centres.
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Improve communication infrastructure of the country for smooth marketing of coal.
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Strengthen appropriate education, training and research facilities for accelerated development of coal sector.
Formulate / Amend the relevant provisions of mine and minerals act-1968(Updated) of Mine and Mineral Resource (Control and Development) Act 1992 in accordance with coal policy.
Observations;
There are very little observations but to agree with the objectives as long as the entire policy is appropriately designed and structured to achieve these objectives.
The proposal for setting up Coal Bangla is felt impractical considering performance of other public sector enterprises. Rather Petrobangla Mine & Minerals Directorate should be appropriately strengthened with appropriate professionals. There should be a strong functional single regulatory body for entire energy sector. Bangladesh Energy Regulatory Committee should be single regulator. The expertise of BMD should be merged with BERC. GSB can continue to remain entrusted with exploration and discovery of new mines. Mine sector should be open for private sector investment. Government can not afford to risk investment with very little technical and managerial expertise of its own. Major mining companies will be reluctant to form joint venture with Bangladeshi companies which have no proven track records. Bangladesh Energy Regulatory commission can create level play ground for private and public sector companies through transparent regulations . There can be attractive incentives in the policies for private – public sector partnership.
Use of coal as commercial fuel for Energy Security:
Draft coal policy includes the following:
** The role of different government and private organizations for coal control, mining, financing, social and environmental impacts management.
** Analysis of advantages and gains of each coal using enterprises.
** The nature of involvement of each enterprise.
** Government intakes like tax, rent, fees, royalty,
** Development of the country especially north-western region.
** Requirement of Investment from different source.
Draft policy also mentioned that Coal mining will be done in the light of Coal Sector master plan as per requirement of domestic market. Mining can not be done from more than one mine in one region or more than one phase of one mine in unplanned manner. EMRD will take initiative to formulate and Implement Coal Sector master plan taking into consideration of local demand of coal for power generation.
Observation:
Draft coal policy has contradicted its own objectives, visions here and has become inconsistent. To meet the demand of power sector as per projection of PSMP coal production will be required from all 4 mines identified mineable in this policy. These must produce almost simultaneously. Only technical reasons can restrict whether or not mining from more than one phase will be require or feasible from a particular mine to meet the demand. When we have a Energy Policy, PSMP, GSMP and will be having a coal policy in that situation we need another Coal Sector master plan? Will it not be another beauracrat way of wasting time energy and efforts? Mine Developer will invest risk capital to recover investment and make profit. They will submit their cost benefit analysis in their feasibility report. They will mention rate of recovery in safe and technically justifiable manner. It will be injudicious to restrict mining and include such a self contradictory provision in coal policy. No major mining company will be encouraged to invest in Bangladesh if this provision is included in the policy.
All out efforts to develop coal as commercial fuel on top priority basis to relive presently overstressed natural gas for power generation, industrial and commercial use. This is required to reduce dependence on imported petroleum products as well.
In accordance with Energy Policy from now on all power plants must be coal based. Other environment friendly use of caol would also be encouraged.
Encouragement will also be given for producing Urea, Petroleum Products and Petrochemicals utilising state of the art technology.
Observation:
Good idea. But elsewhere in the draft policy it has been mentioned that the present proven coal reserve can support our power requirement only upto 2035 if that too if open pit mining is permitted in 4 mines. Here again draft coal policy provisions may not allow two mines in close proximity to adopt open pit mining at the same time. All 4 mines are not far part. We believe such provisions in draft coal policy self contradictory and inconsistent.
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