Energy Div Asked To Move Against Asia Energy Deal

Energy div asked to move against Asia Energy deal

Aminul Islam, NewAge

30th September 2006

The Prime Minister's Office on Thursday asked the Energy and Mineral Resources Division to take 'necessary steps' to scrap the agreement with the UK-based Asia Energy on Phulbari coalfield in Dinajpur.

The PMO move came one month after the Rajshahi mayor, Miznur Rahman, signed an agreement with the protesters at Phulbari for the cancellation of the contract with the Asia Energy and expulsion of the company from Bangladesh.

A PMO order, signed by a director, Shafiur Rahman, directed the division on Thursday to 'take necessary steps to implement the agreement that Mizanur Rahman signed on behalf of the government with demonstrators on August 30', sources in the Prime Minister's Office said.

When contacted, energy secretary AMM Nasir Uddin told New Age on Friday he received the PMO letter and the division would take steps on the agreement the Rajshahi mayor signed.

'We will scrutinise legal aspects for scraping the agreement with the Asia Energy,' he said.

When asked whether the deal could be scrapped during the tenure of the present government, Nasir said, 'We will try to complete the procedure [to scrap the deal] as soon as possible, but all depends on the legal aspects.'

Sources in the Prime Minister's Office said the order was issued after Mizanur Rahman had forwarded a letter a few days ago requesting the PMO to take steps to cancel the government deal with the Asia Energy and expel the company from Bangladesh as per the agreement he signed with the protesters. The mayor sent a similar letter to energy secretary AMM Nasir Uddin.

Mizanur Rahman signed the six-point agreement on behalf of the government on August 30 at Phulbari in Dinajpur four days after the non-stop violent agitation, in which five were killed in police firing, against the Asia Energy's proposed open-pit mining of the coalfield.

Anu Mohammad, member secretary of the National Committee to Protect Oil, Gas, Mineral Resources, Power and Port that spearheaded the movement against the company in Dinajpur, signed the agreement on behalf of the demonstrators.

Nasir on Tuesday sent a letter to the principal secretary to the Prime Minister's Office, Kamal Uddin Siddiqui, asking what the division should do regarding the mayor's letter.

A number of experts of a technical committee, which scrutinised the Asia Energy's development scheme (mining plan) and the agreement the government signed with the company in 1998, told New Age the government could 'easily' scrap the deal with the company if it wanted.

The committee, headed by Professor M Nurul Islam of the Bangladesh University of Engineering and Technology, submitted its report to the government on Sunday.

'If the government announces it does not approve the development scheme of the company, which proposes open-pit mining, the agreement with the company will lose its validity,' said an expert.

'We have already mentioned in the report on the scheme that it should not be approved on any count - legal, technological, financial, environmental and institutional.'

He said there was hardly any chance that the company would win any international arbitration if it wanted to go to any international court when the government scrapped the deal, as there were numerous loopholes in the agreement.

The original agreement on Phulbari was signed with the BHP in 1994 and it was handed over to the Asia Energy in 1998 with the same condition.

He said the agreement was handed over to the Asia Energy in 1998 in violation of the mining rules as the exploration licence with the BHP expired in 1997 which was given to the company for three years.

Although the existing mining rules during the period said the royalty rate should be 20 per cent, the agreement with the BHP was signed with a royalty rate of 6 per cent in 1994.

In 1995, amendments were made to the mining rules and the royalty rate was fixed at 6 per cent.

It found the agreement was signed with the Asia Energy in 1998, but no gazette notification was issued in this regard till 2006, although mining rules said gazette notification would need to be made immediately.

He said the development scheme of the company proposed mining in an area of 6,500 hectares although as per the rules it should have proposed mining in an area of about 400 hectares.

'So the government has every right to disapprove the development scheme the company submitted and ultimately scrap the deal with the company,' he said.

The company did not submit the guarantee money of about Tk 2,000 crore with the development scheme that the company submitted to the government in 2005 although as per the rules it was supposed to deposit three per cent of the development cost.