MAC: Mines and Communities

Asia Energy Defends Bangladesh Project Amid Protest

Published by MAC on 2006-04-18

Asia Energy Defends Bangladesh Project Amid Protest

Planet Ark Bangladesh

18th April 2006

DHAKA - UK-based coal miner Asia Energy Plc said its proposed Bangladesh coal project stood to reap more than US$21 billion for the economy over 30 years, a figure which has raised further criticism of the investment.

The Phulbari coal mine it planned to start work on later this year would add one percent a year to Bangladesh's gross domestic product (GDP), the company said in a statement late on Sunday.

"The direct effect on GDP is expected to be US$7.8 billion over the life of the project and the indirect or multiplier effects are expected to be US$13.7 billion," it said, quoting a report by international professional services company GHD.

The Phulbari project is a 15 million tonne per annum open pit coal mine in north-west Bangladesh. Asia Energy will also double the capacity of a 500 megawatt (mw) coal-fired power plant.

Asia Energy intends to spend an estimated US$3 billion in capital on the mine and power plant and an additional US$10.4 billion in operating costs over 30 years.

Bangladesh's previous government had initially agreed to the projects, but the present administration has yet to give the go ahead due to growing protest from experts and environmentalists.

"They (Asia Energy) are giving inflated figures to get approval for mining the field," Abu Ahmed, professor of economics at Dhaka University, told Reuters on Monday.

"There would not be much of a multiplier effect as the agreement stipulates that the company can export coal at its will. If the coal field was owned by the Bangladesh government there would have been more multiplier effects," Ahmed said.

"Also, the company did not disclose what would be the environmental losses or how much money they will earn as profit."

The open pit mining project was expected to displace at least 50,000 at Phulbari, in Dinajpur district.

The government's Energy and Mineral Resources adviser, Mahmudur Rahman, heightened the debate last month, by saying that Asia Energy's agreement with the past government was against the interest of the country.

"Instead of giving out truth, the company started producing exaggerated figures on Bangladesh's potential profit. It is nothing but only their marketing policy," Ahmed added.

Mahmudur demanded that those who had entered the agreement with Asia Energy be punished.

Asia Energy refuted the allegations, saying that the deal was "properly negotiated and legally signed on the basis of the law of the land."

"The project is expected to contribute significantly to the development of the Bangladesh economy by adding up to 10 percent to the country's energy supply by 2015," GHD said.

Story by Ruma Paul


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