MAC: Mines and Communities

Coal Policy To Be Sent To Cabinet Next Week - Geologists And Economists Oppose The Policy

Published by MAC on 2006-06-02
Source: New Age ()

Coal policy to be sent to cabinet next week
Geologists and economists oppose the policy

New Age, Dhaka, Bangladesh

2nd June 2006

The Energy and Mineral Resources Division will send the draft of the proposed coal policy to the Cabinet Division next week for approval although geologists and economists have opposed it.

'The law ministry has already vetted the policy and we have completed all procedures to send the policy to the Cabinet Division next week,' said an official on Thursday.

The Cabinet Division will place the policy that will allow export of 50-60 per cent coal with an increased royalty, before the cabinet meeting, headed by the prime minister, he said.

Geologists and economists, however, said the country's energy security will be under threat if the policy is approved as it will allow more than half of the country's coal to be exported.

If the policy is approved, any company will be allowed to export double the volume of coal that would be consumed in the country. This provision will remain for the first 10 years after the coal policy comes into effect, said energy officials.

The company will be allowed to export the same amount of coal that would be consumed in the country annually 10 years after the policy comes into effect.

It means the ratio of domestic consumption and export will be 1:2 in the first 10 years and 1:1 after 10 years.

The policy also provides an option for the method of coal extraction - shaft or open pit. Apparently this would be decided taking into account the environment, geographical structure, health and social and economic impacts and maximum extraction of coal.

The policy has also introduced a variable royalty rate for coal exports instead of a fixed rate.

The royalty for coal export from open pits will be around six per cent if the price of one tonne of coal in the international market is $25 per tonne or below, and for an increase of every $3 the rate will increase by about one per cent.

As per the current price of $50 per tonne in the international market, the royalty will be around 16pc.
For companies using the shaft method, royalty will be about five per cent if the coal price is $25 or below, and will increase by one per cent for an increase of every $3.

The proposed policy has stressed on foreign investment and made it mandatory for companies to set up power plants at the coalmines.
'The proposed coal policy has encouraged aggressive extraction of coal to facilitate foreign companies to export coal from Bangladesh. The policy is export oriented,' said former power development board chairman Nuruddin Mahmod Kamal, who is also a geologist.

Economist Anu Mohammad of Jahangirnagar University said, 'How would the energy security of the country be ensured if the government allows 60 per cent coal to be exported?'

He said the policy pointed that there was little domestic demand of coal. 'If there is indeed little demand, why should huge amounts of coal be extracted displacing thousands of people and destroying the environment?'

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