Bangladesh: draft coal policy violates constitution, is anti-people, say economists, experts

Bangladesh: draft coal policy violates constitution, is anti-people, say economists, experts

by Daily Star, Dhaka

11th March 2006

Economists and energy experts at a dialogue yesterday said the draft coal policy violates the constitution as it seeks to award the coalfields to foreign investors on a royalty basis.

They said the policy, which has been prepared without consulting the people, is basically export-biased and lacking in terms of national interests. As it has been drawn up without linking the National Energy Policy, it may lead to a serious energy crisis in near future, they added.

Held at the National Press Club, the dialogue on proposed coal policy was organised by Bangladesh Economic Association (BEA) and Citizens Commission on Gas, Oil and Coal.

The draft policy prepared by the Infrastructure Investment Facilities Centre (IIFC) has never been discussed in parliament, whereas article 143 (1) of the constitution says all resources underlying any land or territorial waters vest in the people.

The application of royalty clause will jeopardise the 'ownership' of the property as per the constitutional provision, energy expert Nuruddin Mahmud Kamal said, presenting a paper on 'Proposed Coal Policy: An analysis'.

The already energy-deficient country depends heavily on natural gas, the reserve of which is set to be used up by 2015. Therefore, coal development is a welcome relief. But the formula for exporting coal at the ratio of 1:2 during initial period and 1:1 thereafter appears to be export-biased, Nuruddin Kamal said.

Unless an acceptable demand forecast of coal is prepared, its optimum utilisation cannot be ensured to achieve a sustainable energy security in the country, he said, adding that the energy hungry countries like USA or India do not think of exporting energy, but import.

Coal export can be accommodated only after meeting the domestic demand for energy and if open pit mining is allowed, Nuruddin Kamal, also a member of the Citizens Commission said, adding that this may prove a recipe for disaster and the entire north-western region may get isolated from economic activities.

"Coal, petroleum products, natural gas and hydroelectricity are the main commercial energy sources of the country while electricity is the major secondary energy. So, framing coal policy without linking it with the other energy resources is not practical," Kamal, former chairman of Power Development Board (PDB), added.

The present policy does not offer any direction as to how it will fit into the national energy policy, he said, adding that it has put energy security on the back burner. "Such contradictions need to be removed from the policy."

Terming the dealings in the environmental aspects as 'built-in bias', the paper said the draft policy seems more concerned with open pit mining as could be observed from different provisions in terms of rehabilitation and reclamation of land.

It said the refilling of the excavated area in the mining sites would make it hard for the ecology to return to its near original position in future. "These have not been addressed adequately in the policy," it reads.

Terming the commercial aspects 'too premature', it said fixing the coal price upfront may not be an ideal way to attract foreign investors. A low return of the six-percent royalty proposed in the policy will be of no use for the country, rather it will make some foreign investors rich, the analysis said.

The draft policy also does not hold the foreign investors liable in case of defaults that may cause national losses, the paper noted suggesting contracts of profit or production sharing, along with royalty.

The provision that the investor will determine the mining method is also wrong, said BEA General Secretary Dr Abul Barkat, adding that the method must be approved by the government.

He noted that the Citizens Commission on Gas, Oil and Coal may consider preparing an alternative coal policy considering the total energy reserve in the country.

Going against coal export in the wake of short reserve of energy in the country, Dr Badrul Imam of Dhaka University said from now on Bangladesh should think how it can import hydroelectricity from Nepal and Bhutan in future.

Presided over by BEA President Dr Kholiquzzaman Ahmad, the dialogue was addressed also by Professor MM Akash of Dhaka University, Dr Mustafizur Rahman of Institute of Development Studies, Golam Murtoza of Saptahik 2000 and Golam Kibria of Bishwa Sahitya Kendra.