Energy, transport crises block FDI-German team for prompt coalmining development

November 10, 2009

News Report

The visiting German business delegation leader Peter Clasen has identified energy crisis and transportation problem as the major impediments to attracting foreign investment in Bangladesh. Addressing a press conference at Lake Shore Hotel in the city on Wednesday, Clasen attached great importance to the energy and inland water transports sectors and indicated German investors” cooperation in this regard.

The German business leader laid emphasis on coalmining development and said the government should take immediate decision on mining method of Fulbaria coal field. Coal-fired power generation can resolve the ongoing power crisis in Bangladesh, he said. Pointing to the bureaucratic red tape, another impediment, Clasen said: “Decision makers have to change their attitude to encourage economic life instead of regulating it. Essentially this means reducing red tape and wiping out excesses of bureaucracy with the government focusing much more than hitherto on improvements of infrastructure.”

German Ambassador to Bangladesh Holger Michael, who was also present at the press conference, said the government should send unambiguous signals about Bangladesh’’s openness to foreign investment and that it maintains political framework conditions, which are conducive to long-term invest. He said functioning of Parliament is of vital importance and all political parties represented and all elected MPs should contribute to make it effective.

Asked whether the current political and economic situation is conducive to attracting foreign investment, Michael said: “Bangladesh is on a good way to a stable democracy, but we want the government put emphasis on the implementation of the ”charter for change.” The German business leader lauded the quality of Bangladesh shipbuilding industry and said: “Quality and cheap labour have attracted Europeans to buy ships from Bangladesh.”

He laid emphasis on skilled manpower development and said mere cheap labour would not be the sufficient for attracting foreign investment, “technical quality of Bangladeshi labourers should have to be improved.” He suggested developing more vocational training institutions. Clasen said German companies would invest in development of small-scale power generation plants and also in development of the renewable energy.

The German companies in collaboration with the local partners would also invest in production of different electrical appliances. Md Saiful Islam, president of Bangladesh Germany Chamber of Commerce and Industry and Chairman of Western Marine Shipyards, was also present at the press conference. The eight-member German business delegation, arriving in Dhaka on October 25, will be staying in Bangladesh till October 30.

UNB reports: The German business and investment delegation Wednesday apprised Prime Minister Sheikh Hasina of their keen interest in investing in Bangladesh in sectors like gas exploration, coalmining, and renewable energy. Meeting the Prime Minister at her office Wednesday, the delegation led by Peter Clasen, Head of Bangladesh Section of OAV, the Network of German companies doing business in the Asia-Pacific countries, said they are especially interested to expand their trade and business in Bangladesh.

The Germans prefer Dhaka and Chittagong as their chosen places of investment, Prime Minister’’s Press Secretary Abul Kalam Azad told newsmen after the meeting. The delegation also expressed their willingness to help Bangladesh in modernising its agriculture system by building modern technology-based farms and imparting training to the farmers on processing organic food items.

Regarding renewable energy, the German team said Germany as an expert country in the sector can help Bangladesh introduce solar energy and biogas system in the country on a massive scale. Prime Minister Sheikh Hasina expressed her happiness following the German delegation’’s interest in making investment in Bangladesh. She told the delegation that following the restoration of democracy in Bangladesh through the December 29 parliamentary polls in 2008, a congenial atmosphere for investment is prevailing here now.

She said Germany can import ceramics, leather products and pharmaceuticals from Bangladesh. In this context, the Prime Minister mentioned that Bangladesh has already started exporting ships to Germany, the Netherlands and Denmark, opening up a new vista for the country’’s external trade. Sheikh Hasina observed that Bangladesh could not achieve its development at required level as its democracy could not run uninterruptedly in the past.

“Now the people have their own government and the democratic government is working relentlessly to ensure economic emancipation of the people,” the Prime Minister told the Germans. Sheikh Hasina said though Bangladesh has faced electricity crisis for the last seven years, the present government within the last few months has been successful in improving the situation through proper management and hard work.

“But the climate issues have appeared as a major threat to the development process of Bangladesh,” the Prime Minister observed. Sheikh Hasina said the government has chalked out various plans, including the launch of capital and maintenance dredging in the rivers, setting up embankments and land reclamation to face the challenges stemming from the global warming.

She said though the government is taking all possible preparations to protect its people from the natural calamities, it is not possible to face the climate-change challenges alone. Hasina also reaffirmed her promise to turn Bangladesh into a food-sufficient country again the way the previous Awami League government did it. The German delegation lauded Sheikh Hasina’’s leadership in the international forums and hoped that she would be able to free the people of Bangladesh from poverty and all other socioeconomic problems.

Hasina thanked Germany for its continuous support and assistance to Bangladesh since its independence in 1971 under the leadership of Bangabandhu Sheikh Mujibur Rahman. Principal Secretary to the Prime Minister MA Karim, Prime Minister’’s Office Secretary Mollah Waheeduzzaman, Ambassador Ziauddin and German Ambassador in Dhaka Holger Michael were present.


Date: 29  October 2009,  Bangladesh

German investors talk energy with Hasina

November 10, 2009

Unb, Dhaka

A high-profile German business and investment delegation yesterday apprised Prime Minister Sheikh Hasina of their keen interest to invest in sectors such as gas exploration, coalmining and renewable energy. Meeting with Hasina at her office, the eight-member delegation led by Peter Clasen, head of Bangladesh section of OAV, a network of German companies doing business in the Asia-Pacific countries, said they are interested in expanding trade and business in Bangladesh.


The Germans prefer Dhaka and Chittagong as their chosen places of investment, Prime Minister’s Press Secretary Abul Kalam Azad told reporters after the meeting. The delegation also expressed their willingness to help Bangladesh in modernising its agriculture system by building modern technology-based farms and imparting training to the farmers on processing organic food items.

On renewable energy, the team said Germany as an expert country in this sector can help Bangladesh introduce solar energy and biogas systems on a massive scale. Hasina expressed her happiness following the delegation’s interest in making investment in Bangladesh. She said Germany can import ceramics, leather products and pharmaceuticals from Bangladesh.

In this context, the prime minister mentioned that Bangladesh has already started exporting ships to Germany, the Netherlands and Denmark-opening up a new vista for external trade. Hasina observed that Bangladesh could not achieve its development at required level as its democracy could not run uninterruptedly in the past.

Date: 29  October 2009,  Bangladesh

Vast energy sources remain untapped, says FICCI-Power crisis blamed on indecision

November 10, 2009

FE Report

news_image_2009-10-19_7551Foreign investors continue to grumble over the country’s perennial energy crisis and demand uninterrupted electricity and gas supply to boost industrial growth. They said the country has significant energy sources, most of which remained unexplored due to indecision leading to the acute energy crisis.

“The country is not poor but poorly managed,” said the President of Foreign Investors’ Chamber of Commerce & Industry (FICCI) Waliur Rahman Bhuiyan at the chamber’s luncheon meeting at a city hotel Sunday. State Minister for Energy and Power Muhammad Enamul Huq was guest of honour at the function, which was also addressed by FICCI Vice President Steven N Wilson.

Pointing to the country’s energy supply crunch and its impact on the economy the FICCI president said the country’s industrial units especially the export oriented ones were bearing the burnt of the crisis as production had being badly hurt. “Some entrepreneurs have set up captive power units to have energy supply of their own,” the FICCI president said and added, “Those plants are also not working properly due to low gas pressure.”

“We have been demanding constant and sufficient energy supply over the past several years but to no effect,” Mr Bhuiyan added. The state minister assured the overseas investors of mitigating their energy problem with the implementation of, what he said, the government undertaken short, medium and long-term measures along with fast-track projects. “Improving power and energy sector is one of the major government pledges which will be executed in the current tenure,” said Mr Huq.

The government has already taken initiative to develop the energy sector, he assured. Some 752 megawatts (MW) of additional electricity supply would be added to the national grid by December 2009, some 1360 MW by 2012 and 1445 MW more by 2013-2014. He said the government has introduced daylight saving time, began distribution of compact fluorescent light (CFL) bulbs free of cost to ensure efficient energy use.

The government is also working seriously for setting up of nuclear and coal-based thermal power plants and augmenting renewable energy use to diversify the fuel sources for energy, the state minister said. The country is now reeling from an acute energy crisis with the power supply hovering around 3,700 MW against the peak hour demand for 5,500 MW, while the natural gas supply is around 1980 million cubic feet (mmcf) daily against the daily demand for over 2200mmcf.

“Bangladesh’s energy sector still remains unexplored to a great extent,” said the FICCI vice president. The country has been under a moratorium on exploration of energy sources, said Mr Wilson, who is also the President of Chevron Bangladesh.


Date: 19 October 2009, Bangladesh

Minister signals green after visiting German open-pit coal mining

November 10, 2009

Special Correspondent

The government on Monday requested Germany to assist Bangladesh to extract coal by the open-pit mining method. The commerce minister, Faruk Khan, called upon the German ambassador, Holger Michael, to provide some expert advice as the government is still in doubt about the possible impact of open-pit mining on the environment.

Holger met Faruk at his secretariat office and discussed investment in the renewable energy sector and dredging to deepen the rivers and increase their navigability. ‘We are examining the pros and cons of open-pit mining in the country which is densely populated and suffers from scarcity of land,’ Faruk Khan reportedly told Holger. Holger said that the German government would provide all technological and investment support to Bangladesh through the GTZ, the German technical agency.

From the very beginning of Awamileague government, a move regarding this, has been underway to use the open-pit mining system in the country, and the UK-based company, Asia Energy, has demanded to get permission to use the open-pit mining system at Phulbari coal field in Dinajpur.

State minister for environment Hasan Mahmud visited Germany on September 6-9, reportedly to acquire some knowledge of open-pit mining and coal-based power plants. An official of the environment ministry, who had accompanied the minister, told reporters on Monday that the minister’s visit was arranged by the GTZ and they had visited many coal-mines and power plants including that of German company RWE.

The official said that after Hasan Mahmud’s visit, he submitted a report to the government saying that they had seen nothing wrong in open-pit mining in Germany and that it was successfully generating electricity from coal. ‘We have collected still pictures, videos and other materials in favour of open-pit mining. We have seen that Germany was doing a tremendous job in operating open-pit mines. The RWE is producing around 7,000MW of electricity from the coal from two mines. We have seen nothing wrong with open-pit mining, but some people in Bangladesh are against the system as they do not want the development of the country,’ said official of the environment ministry.

The energy ministry last month recommended that Prime Minister Sheikh Hasina allow open-pit mining at Barapukuria coal-field, and she told the ministry to carry out a detailed study and present the findings to her after which she will decide what to do.


Date: 18 October 2009, Bangladesh

Coal less costly power source, says Mohammad Enamul Haque

November 10, 2009


The State Minister for Power and Energy Mohammad Enamul Haque said recently in generation of electricity from diesel and furnace oil is very costly. He termed coal as the only option for generating electricity at low costs and emphasised the need for its immediate extraction. Power generation has reached a point where the economy is seriously hampered for shortage of electricity by about 1,500 megawatts.

He said, production falters in many industries where gas is either a fuel or a raw material or both. Gas supply to some sectors has to be suspended to meet demands of others. The crisis is such that some big investment proposals for gas-based industries have been deferred for at least three years. This happens due to short supply of natural gas that fuels about 80 percent of power generation. The existing recoverable gas reserve is estimated to last a few years.

Against this backdrop, coal can be the best option for power generation. Solar, wind and nuclear energies are the other options but those would take longer time to harness in bulk. The country has a proven reserve of 2,086 million tonnes of quality coal, which is equivalent to about 19 TCF of natural gas. According to experts, this coal is enough to generate 5,000mw of electricity for up to 90 years. The local coal is safer as it contains less sulphur and carbon than the imported coal. It will also save about US$500 million that Bangladesh spends annually to import this fossil fuel. Bangladesh should therefore go for quickest possible extraction of the coal resource in a cost effective and environment-friendly way. Coal is still the source of world’s 30 percent energy. But a day may come soon when use of coal might be discouraged as part of global action to reduce greenhouse gas emission.


Date: 18 October 2009, Bangladesh

Now coal is the answer

November 10, 2009


The State Minister for Power and Energy has said generation of electricity from diesel and furnace oil is very costly. He termed coal the only option for generating electricity at low costs and emphasised the need for its immediate extraction. Power generation has reached a point where the economy is seriously hampered for shortage of electricity by about 1,500 megawatts. Actually, production falters in many industries where gas is either a fuel or a raw material or both. Gas supply to some sectors has to be suspended to meet demands of others. The crisis is such that some big investment proposals for gas-based industries have been deferred for at least three years. This happens due to short supply of natural gas that fuels about 80 percent of power generation. The existing recoverable gas reserve is estimated to last a few years.

Against this backdrop, coal can be the best option for power generation. Solar, wind and nuclear energies are the other options but those would take longer time to harness in bulk. The country has a proven reserve of 2,086 million tonnes of quality coal, which is equivalent to about 19tcf of natural gas. According to experts, the coal is enough to generate 5,000mw of electricity for up to 90 years. The local coal is safer as it contains less sulphur and carbon than the imported coal. It will also save about US$500 million that Bangladesh spends annually to import this fossil fuel. Bangladesh should therefore go for quickest possible extraction of the coal resource in a cost effective and environment-friendly way.


Date: 18 October 2009, Bangladesh

OGPC’s Road March: What For?

October 4, 2009

Engr Khondkar A Saleque

The “National Committee to Protect Oil, Gas & Port” (OGPC) held a road march from Dhaka to Cox’s Bazar in protest against what it said the present democratic government’s bid for leasing out some offshore exploration blocks in the Bay of Bengal for petroleum exploration. The government has overwhelming peoples’ mandate to rule the country for five years. Obviously they are mandated to take decision for exploration and exploitation of natural resources for fuelling national economy. There are government organizations responsible for carrying out assigned tasks and there are well-documented approval procedures to handle such issues. The parliament is very much active to talk issues of national interest and elected representatives can any time raise questions concerning national interest.

The nation is now suffering from serious energy crisis, fuel supply crisis. At this moment all patriotic citizens must support government efforts to explore national resources and create power generation facilities without creating any unnecessary barriers. Bangladesh has unexplored gas and oil in the offshore. It has substantial volume of high quality coal at shallow depths in around 100 sqkm in onshore area. But, energy security of 150 million people is at stake.

When the nation needs to explore natural resources for future energy security the OGPC wants ban on open pit mining for coal. They want all moves to lease some offshore blocks to selected IOCs in the Bay of Bengal.  At a time when nation needs quick access to own resources the self-destructive actions of a certain identified group of vested interest must not be taken lightly. Conspicuously this group remain silent when legal and illegal means are taken to import dump ash coal in Bangladesh from a neighbouring country or when India and Myanmar encroach our maritime boundary. They even do not bother about subsidence impact of Barapukuria mining. They do not talk about wastage of 34000 crore taka in uneconomic venture of underground coal mining at Barapukuria.

Some so-called left leaning political leaders and some columnists have also joined the chorus. These politicians should try to win election and speak in the elected Parliament. In the backdrop of above let us discuss the situation in some depths.

Bangladesh proven gas reserve is running out although there should not be any genuine concern that our entire gas resource is going to be exhausted. Bangladesh is still the least explored country. Vast onshore area and almost the entire offshore remain unexplored. So far there has been no serious attempt to explore for petroleum in the deepwater. Most of our major gas fields like Titas, Habiganj, Bakhrabad, Kaillastilla, Rashidpur, Feni, Chattak and Haripur were discovered by international oil companies. Our own OGDC (now Petrobangla) and Bapex discovered some small gas fields. Then again IOCs discovered Sangu, Bibiyana, Jalalabad, Moulavibazar and Bhangura gas fields. Our own capacity was never grown to any stage that we could invest and explore for oil & gas applying modern technology. But at the same time there is no denial that no genuine efforts were made to professionally make our own companies competent.

Government of Bangladesh is not in a position to make significant investment in exploration and exploitation of natural resources. So it mostly relied on lending of development partners to develop discovered resources and IOCs to explore petroleum resources. Continued negligence to BAPEX has reduced the company now to a weak and sick company not capable to accomplish assigned tasks with required urgency. It can not carry out offshore exploration. We have no option but to engage IOCs for it at this stage.

We should have started offshore exploration at least from 1990s. But even two democratic governments since 1991 till 2001 did not take necessary initiatives. India and Myanmar carried out extensive explorations and discovered some major resources. Bangladesh started its efforts in late 2005. The draft PSC was updated professionally. Offshore exploration is a pure gamble. So any PSC document must have required incentives to attract IOCs. Updated PSC draft is still available in the websites. PSC document is not a document on which a Tom, Dick or Harry can make comment professionally. An elected government does not require to seek people’s opinion every now and then on all issues. In addition the political government has its responsibilities to implement its election pledges.

But, certain quarters are misleading people. It has been ensured that an IOC will be able to export 80 percent of its portion’s gas (not from the share held by Petrobangla) in LNG form only if Petrobangla refuses (which is highly unlikely) to buy it.

But, the OGPC is telling people that the IOCs will own 80% of the gas of offshore discovery. It is a deliberate misinterpretation of PSC provision; it is a propaganda to drum up peoples support. IOCs will offer production sharing split from 50%-80% to PB. IOCS will also offer its share of gas to PB. It is only if PB refuses to buy gas then  IOCs may export 80% of their share of gas in the form of LNG. In the present situation such situation will not arise as PB desperately needs gas.

It is a crime to misguide people. The road march of OGPC was not to serve people or country’s interest but to serve interest of neighbouring countries, which want to create barriers for our offshore exploration.

OGPC also opposes exploration of our own high quality less polluting coal in the most technically appropriate manner to extract maximum resources. They challenged Engr Mahmudur Rahman in 2005-06, they challenged Dr M Tamim in 2007-08 and now they are challenging Sheikh Hasina government. Who are they? Some paper tigers, some failed politicians, some parasites. Other than making sarcastic statements every now and then did they make any substantial contribution ever in the development of energy sector?

Bangladesh has five discovered coal-fields in greater Dinajpur and Rangpur districts. The mines actually cover about 100 sqkm. About 3 billion tonnes explorable coal are there which if properly mined can generate about 20,000 MW power for 25 years. For the energy security of 150 million Bangladeshis it is a massive resource. Modern mining methods adopted in many countries can perfectly address all myths and propagandas, can manage professionally all impacts.

Bangladesh imports polluting inferior quality coal from neighbouring country. This coal is seldom used even in that country. They dump it to Bangladesh, which pollutes our environment. Coal merchants and the beneficiaries make huge profit. Our self styled patriots of OGPC do not speak against them. If BAPA is so much concerned about environment then why they do not protest against import of dirty coal?


Date: 01 August 2009, Bangladesh

Khalashpir Coal Mine Project-Hosaf’s sketchy study raises questions

October 4, 2009

Govt spends $95,000 for review of study by ex-consultant of Hosaf

Sharier Khan

The techno-economic feasibility study for Khalashpir coal mine project by Hosaf Consortium has finally been trashed by a foreign consultant questioning the study’s scientific basis, methodology and raising a host of other questions, sources said.

British consultant IMCL in the first of its kind review of a coal mine feasibility study notes that there are fundamental geological issues regarding the Khalashpir deposit which the company must address before framing realistic and financially viable mining business plans.

The consultant found that Hosaf had done inadequate geological work and had deployed no accredited geologist for the job. Its study offered no detailed outline for environment or resettlement issues, and all these work should be done again before submitting such a study report.

The IMCL, which used to be represented by Hosaf in Barapukuria coal mine project from the nineties and had worked for Hosaf in the same Khalashpir project a few years back, was appointed a few months ago for such a unique review through a tender floated during the last caretaker government’s tenure. Interestingly, the Hydrocarbon Cell of the energy ministry that deals with oil and gas-related policy issues gave the appointment.

The cell last week made a presentation on the IMCL review to the energy secretary and formally submitted the full review to the ministry Sunday. Khalashpir coal field was discovered by Geological Survey of Bangladesh (GSB) in 1989.

The then BNP-led alliance government on October 11, 2003, secretly gave Hosaf the licence to explore Khalashpir coal zone in 2,500 hectares of land. Hosaf applied for mining lease for the area in the same year for mine development.

Hosaf does not have mining experience. The company in association with Shandong Ludi Xinwen Mining Group of China in July 2006 submitted the feasibility report to the Bureau of Minerals Development (BMD) with a plan to develop an underground mine. The report was prepared by China Jinan Mining Development Corporation engaged by Hosaf. During the study, Hosaf took help of Geotech-India, NamNam of North Korea, Geo-Mineral Engineering of China and IMCL.

Many officials and experts had then pointed out that the Hosaf study was a copy of that for Barapukuria coal mine project in which it acted as the local agent, questionably, for all the contractors involved. “The Techno Economic Feasibility Study was prepared mainly on the basis of Geological Survey of Bangladesh’s (GoB) geological reports published earlier and subsequent exploration work (no internationally acceptable standard was followed and the exploration activities were carried out without any kind of monitoring by the GoB),” one expert said.

The experts also questioned quality of the study and claimed that Hosaf had drilled only three boreholes to come to its conclusions. But the company claimed to have drilled 14 boreholes. Even Hosaf’s own claims do not stand as a strong basis for such a study as the feasibility study of Asia Energy was done on the basis of 108 such holes. Hosaf’s study remained shelved, but the BMD did not cancel its licence for Khalashpir coal zone. The caretaker government last year initiated the process of reviewing Hosaf’s study through the Hydrocarbon Cell. The caretaker government had awarded several power contracts to enterprises owned by Hosaf chief Moazzem Hossain, who is an accused in the sensational corruption case concerning Barapukuria coal mine.

Some officials expressed surprise that the government spent about $95,000 to pay IMCL for reviewing a private company’s feasibility study. “When Asia Energy submitted its study report, the government formed a committee headed by Buet Professor Nurul Islam to review that study. There was no cost involvement. But the Asia Energy study was much bigger and detailed that needed professional scrutiny. The Hosaf study is visibly a sketchy report,” noted an official.

Explaining why Hydrocarbon Cell was given such a job when it should have been done by the BMD, one source said, “ BMD did not have enough funds to carry out a review. Hydrocarbon Cell had some Norwegian donation.”

IMCL observations
Sources said IMCL in its review suggested that additional drilling should be carried out by a reputable and proven drilling contractor with modern and well-maintained equipment, who is qualified to operate in accordance with Joint Ore Reserve Committee (JORC), an internationally acceptable coal resource assessment code.

The review says previous boreholes that yielded unacceptable levels of core recovery should be re-drilled; an additional exploration must be carried out in accordance with internationally acceptable standards such as JORC utilising downhole geophysical logging in every hole as Hosaf drilled holes without logging; samples should be taken, logged and prepared as per JORC and supervised by a JORC- accredited senior geologist; analysis of collected samples should be undertaken by at least two accredit international laboratories observing the standard rules of analysis.

IMCL further says some coal samples indicate that coal at Khalashpir might have metallurgical coking properties and should be re-tested with fresh samples; underground mining would be preferred method of coal extraction particularly with respect to the surface environmental and social considerations; the Hosaf study’s production design parameters are out of date with respect to current longwall technology, or inappropriate to meet the overall production targets; spontaneous combustion and air temperatures are likely to be the dominant underground environmental issues which interact, and it is to be reflected in the design process.

The company should have made environmental and social impact studies for construction, operation and mine closure stages, and the relevant department has to consult the local people to consider problems threatening the environment in and around the mine, the review says. Further professional studies are needed to address hydro-geological issues including hydraulic conductivities and aquifer behaviours. There is no information about Acid Mine Drainage in the study, IMCL notes.

Mining subsidence impacts should be addressed during Environmental Impact Assessment (EIA) and engage the local population and all stakeholders in open discussions to ensure that land owners and workers are fully informed at all stages of project development and implementation; the surface layout of the study is based on Barapukuria mine surface facilities. Many of these facilities are unnecessary, IMCL observed.

Hosaf’s study
In its study, Hosaf claimed that Khalashpir coal reserve occurs at depths between 257-480 metres with an estimated total reserve of 451 million tonnes — proven 277 m tonnes and indicated 174 m tonnes. Of the reserve, seam I, II and IV are considered to have a potential for mining 277 m tons.

The IMCL review puts this estimate at 337 million tonnes for seam I, II and IV, showing that Hosaf’s assessment is grossly different. Hosaf suggested underground mining with initial production target of two million tonnes a year, which would be raised to four million tonnes in the 10th year of production.

Regarding underground mining risks and environmental impact assessment, the study said the spontaneous combustion and subsidence risks are high, including high methane emission and high underground mine temperature hazards. But it gave no details of management plans for the mining hazards and environment issues, stating ‘proposed damage and hazards, reclamation plan etc have been duly undertaken.’


Date: 08 August 2009, Bangladesh

Time to Ignore National Committee for Protection of Oil, Gas and Ports

October 4, 2009

Saleque Sufi


One very disturbing news appeared in media report. So called National Committee for Protection of Oil, Gas and Ports (OGPPC) of Bangladesh has announced a program to seize Petrobangla Head Office on 2nd September ,2009as a mark of protest to lease out offshore blocks to IOCs for exploration of Petroleum.

It may be mentioned here that

On August 24, Bangladesh approved offshore oil and gas exploration deals with the two companies in three sea blocks in the resource-rich Bay, although the deals stipulated that they would not be permitted to operate in any disputed waters in the areas.

The media report says

The group, calling itself the ‘national committee to protect oil, gas, mineral resources, power and ports’, said the prime minister’s approval of offshore oil and gas exploration deals in the Bay of Bengal to two international companies, ConocoPhillips and Tullow Oil plc, ran counter to her pre-election pledges.

“The government is trading on the nation’s assets by allocating oil and gas rights in the Bay to a multinational companies,” Sheikh Shahidullah, the group’s convener, told reporters at a press briefing at Mukti Bhaban in the city.

“We won’t let a single drop of oil or gas leave the country,” said Shahidullah.

In addition to the planned siege at state-owned Petrobangla’s Kawran Bazar headquarters, Shahidullah said protests would also be held out at UNO offices around the country.


Present Government of Bangladesh is given mandate to rule the country for 5 years. They are accountable to the nation through sovereign parliament. There are specific government organisations responsible for dealing with Energy issues. Petrobangla and Energy Ministry are responsible bodies to explore and exploit all natural resources for energy generation. Elected Peoples representatives are mandated to take decisions. Prime Minister is also the energy minister. She and her cabinet are jointly responsible to the parliament. There are set rules and policies to deal with energy issues. Draft PSC that formed the basis of recent Award was formulated by line professionals, scrutinised and vetted by eminent Energy Lawyer, vetted by Ministry of law and approved by relevant government authority. The IOCs were selected through open transparent competitive bidding. Any true energy expert having hands on experience and knowledge of PSCs in operation elsewhere will opine that draft PSC based on which the approval for ward is made is pretty standard practised everywhere. Moreover PSCs are not yet signed. There is scope to negotiate all issues.

Moreover, the issue will definitely come out for discussion in the parliament and in the parliamentary standing committee. Myanmar, India, Thailand, Malaysia, Indonesia, Philippines, Vietnam have engaged IOCs are PSC. It is nothing unique for Bangladesh.

But this group of vested interest backed up by parasite political parties are creating hue and cry. They recently staged road march. In Bangladesh hundreds of unemployed people crowd around when snake charmers play snakes or monkey charmers play monkeys. So road march also attracted some on lookers. The fact that some people came to see them on the way does not mean that they support tem. So there is no reason to believe that OGGPC agitation has any public support. They are getting money from some NGOs to serve the cause of some neighbouring countries who do not want Bangladesh explore in the Offshore.

Media report also Quoted a leader saying

“The present government has decided to allow 80 percent export of our resources by multinational companies ConocoPhillips and Tullow Oil on a tender based on the anti-public interest model, devised during the tenure of the previous unelected government,”

This statement is complete misinterpretation of PSC provision. The term export in LNG plants or Chemical plants does not always mean export to foreign countries. Whatever usually goes out as end product of a chemical plant is technically termed as export. We have a multinational KAFCO plant. When KAFCO sales Urea Fertilizer to Bangladesh Government it is termed export also.

IOCs winning offshore blocks will first carry out seismic surveys and extensive study of resources base on which they will carry out exploration. The question of setting up LNG plant will only come up if there is a significant discovery (5-6Tcf). The LNG plant may be set up in Bangladesh onshore or offshore. If any IOC discover a gas field 200KM from Bangladesh coast the offshore pipeline will be very expensive investment. But anyway say LNG plant is built and say 80% of ultimate recoverable reserve is dedicated for LNG plant how does it harm Bangladesh. In this 80% significant portion will be Bangladesh share of gas which IOCs have to buy at international price.

IOCs will have to take Petrobangla approval for exporting LNG to any one and also about the price. Why Bangladesh can not be the export destination as Bangladesh is already thinking about LNG import in any case. IOCs will take about 9 years to reach that stage. By that time situation will change. Bangladesh may build LNG terminals and Regasification plants at Chittagong and Mongla to import LNG. Coal may become main source of power generation .Regional power grid may set up.

IOCs will invest their borrowed capital to risk ventures .Offshore drilling is always a gamble. There are chances to loose many and win few. If IOCs do not have required incentives then why they should come to a country like Bangladesh?

People have right to ask who are OGPPPC? Some identified agitators backed up by some parasite political parties. These satellite political parties can not win any election unless supported by major alliance. They cry for communism and socialism which is dead horse. Even our neighbours recently bade good bye to it.

This group agitated people of Phulabri and still trying to fan up trouble in mine belt. When major opposition BNP, Jamat and others are not telling anything why this group is opposing government efforts? It is due to the agitation of OGPPC energy crisis has reached at this stalemate stage.

What are their logic of of opposing commencement of exploration in our territorial water when India and Myanmar are doing it unchallenged. Are they not serving our neighbours cause creating impediments?

Our coal is sweet and almost sulphur free. Most of these are lying at mineable depth by surface mining. Resources under surface is owned by Government .If owners of surface are adequately compensated then who are OGPPC to oppose any move to mining in the most economic method.

Our neighbours dump polluting poor quality coal to Bangladesh which they even do not use in their country. If one travels along highway from Joydevppor towards Kaliakoir from November to April one can see how dirty coal is polluting our environment. Has anyone heard OGPPC talk about Environment pollution by using dirty imported coal? Intelligent people can understand what they are up to. These guys do not want Bangladesh explore most of its coal by the most economic method.

The OGGPPC program against government action must be dealt with properly.Peole must realise these are the people whom are serving b neighbours interest and not Bangladeshi interest. Bangladesh will not be benefitted by leaving 80% of its coal underground, Bangladesh will not gain anything if our offshore prospects remain unexplored and neighbours drain all.

Business communities, investors want Energy. Bangladesh can not come out of vicious circle of poverty if massive investment is not made. That is possible if Energy Situation improves, Energy situation will improve if we only explore and exploit our natural resources. We need IOCs and IPPs work here through transparent policies.

Many people shout on the street. But there are no reasons to listen to all as long as Government remains accountable to people through parliament.

Government must read the writings on the wall. People have started coming to the streets for power, gas . OGPPC type agitators’ will misguide them. These guys are Energy Criminals – modern version of War Criminals. They are no less responsible for the present energy crisis. Time has come for sufferers of energy crisis to resist trouble makers the agitators who are acting as agents of neighbours to oppose Government moves to explore and exploit our energy resources. These guys are empty vessel paper tigers.


Date: 30 August 2009, Bangladesh

Energy Sector Heading for Crash Landing?

August 25, 2009

EP Analysis

The elected government with massive mandate in the last general election spent almost 7 months in office. It is sheer irony that the government is still grappling with strategy for resource exploration to fuel power generation for sustained economic growth. The nation is suffering from severe energy crisis, power load-shedding. 

There are little or no reason to believe that the government is really serious about positively approaching in its efforts to revitalize almost non performing energy sector management when one reads the following news headlines of media.

  • Petrobangla comes under JS body fire.
  • Petrobangla gets hammered for not taking steps for exploration.
  • Cabinet Committee sends back for fresh scrutiny oil, gas & metro rail projects.
  • JS panel suggests speedy approval of coal policy.

These reports refer to lack of appropriate efforts of Petrobangla for exploration and development of potential energy resources, indecision of government policy makers to approve offshore exploration efforts of Petrobangla and protracted delay in finalizing coal (essential or non essential) to explore and exploit countries substantial coal resource.

Petrobangla is mandated to deal with exploration and exploitation of gas, oil, coal and other mineral resources. It works on behalf of Energy & Mineral Resources Division of the Ministry of Power, Energy & Mineral Resources. All its actions are seriously impacted by bureaucratic chain of the government.

The news headlines refer to two parliamentary committees — Public Accounts Committee headed by MK Alamgir MP and Standing Committee on Power, Energy & Mineral Resources Ministry headed by Major General (Rtd) Subid Ali Bhuiyan MP. The other news refer to indecision of Cabinet Committee for Purchase headed by Finance Minister M.A Muhith.

The country is suffering from serious power load shedding. Effective Power generation capacity now is about 3800-4000MW against daily demand of 5500MW. About 90% of power is generated from natural gas. Gas is also used for fertilizer production, industrial, commercial, domestic use and for CNG. Gas demand now is 2100MMCFD against which effective production is about 1800MMCFD. There is some apprehension that the proven gas reserve may deplete by 2015 if no new gas fields are discovered and brought into production.

It is also true that almost entire offshore and significant areas on onshore have not been explored yet. Even the known gas reserves have not been thoroughly appraised as yet.

Bangladesh possess about 3 billion tonnes of high heating value, low sulphur and low ash coal reserve in about 100Sq KM area in the greater Rangpur and Dinajpur area.

Bangladesh Awami League in its election manifesto declared that by 2011 it will add 1500MW new power and by 2013 another 3500MW. This means that by the end of their tenure the countries total power generation capacity would reach from 3800MW to 8800 MW. To achieve this it was expected that it had accomplished some homework. It is not out of context to consider that some policy makers read the draft coal policy and offshore exploration PSC.  But judging from present stalemate situation over coal policy finalization and hesitant attitude of the government to approve PB recommendation for engaging IOCs for offshore exploration it appears that there were very little or no homework done.

Government has spent almost 7 months in office.. The present situation does not give positive indication that government can achieve its election vision of adding new power to national grid. They cannot have required fuel; they can not complete installations of required power plants.

Parliamentary committee for public accounts has put Petrobangla on sword. But what Petrobangla can do without appropriate government support? Petrobangla has little role in signing lopsided deals with IOCs, Petrobangla has limited capacity to recover compensation from defaulters of blowouts. Why Parliamentary Committee dies not ask Energy Minister, Advisor to PM what happened to Enquiry Committee Report on Magurchhara blowout? How that issue was managed? Why Occidental was let off the hook when the PSC had provision for scraping their PSC for non-performing minimum obligation at the time of blowout?

PB had its limitations. It could not retain its trained professionals. Its capacity eroded over time due to massive brain drain. But did this government in 7 months perform any efficiency check? Did they engage appropriate professionals in key Petrobangla positions? What professional track records senior executives of PB have to manage PB in crisis period? Only experienced PB professional having extensive technical track record is sidelined in administration. Who is to answer this?

Petrobangla took appreciable initiative within its humble resources to update PSC for offshore exploration with professionals and assistance of international consultants. It was viewed and endorsed by notable lawyer Dr Kamal Hossain. The draft tender document and draft PSC got approval of the government. PB followed all recognized transparent route of tendering, tender evaluation and approval process. The caretaker government could have taken decision. Considering very aggressive exploration campaign of neighboring countries Bangladesh should have commenced its part much earlier. But the caretaker government lacked guts to take decision and left it for elected government. It took over 6 months for a advisor led government to take the offshore exploration PSC award case to cabinet committee to Council Committee after endorsement of PM as Energy Minister. But unfortunately it bounced off. Can one blame Petrobangla for it? Even if government takes positive decision soon on offshore exploration it will not be possible to get benefit in less than 7 years and that too depends on discovery of gas.

The only major option is to explore discovered coal resource. The coal exploration efforts are stuck in the quick sand of coal policy. When a country has Mines & Minerals act and Mines & Minerals rules why did we need coal policy? Do we have separate hard rock mining policy, gas policy or oil policy? Will we have iron policy, lime mining policy? How Barapukuria Coal mining could start with out coal policy?

If one checks the 9th draft of coal policy achieved after 4 years of struggle of non coal miners one can discover it is an extensive research paper having so much inherent conflicts and contradictions. Usually a policy is a brief concise document discussing energy security, investment and resource mobilization, implementation agency structure, impact management and resettlement and rehabilitation issues of mining. When we have mines and minerals acts and rules the initiative to formulate coal policy was to frustrate mining efforts which theoreticians could successfully do putting the nation in the present energy crisis. It is encouraging that parliamentary standing committee realizes the necessity for finalizing coal policy urgently and commences mining.

But one thing we must remember Bangladesh has almost zero capability of mining itself. It even does not have enabling core technical or managerial group to efficiently monitor activities of a world-class mining company. There is no opportunity to learn mining technology in the country. The only operating mine in Barapukuria is a technical and financial disaster.

Coal policy cannot dictate technical aspects of mining – like mining technique, mining methods, and rate of mining. Economics will dictate mining method. If the extent of the resource recovery justify investment of all require costs in a particular method including all cots of impacts management, relocation and rehabilitation of impacted community that method must be applied. Investor will have its own economics. It will have its own plan for recovering investment. No coal policy dictates what should be the rate of recovery. Once commercial coal mining starts it is impossible to change mining rate. Hence down stream local market must have capacity to absorb mined resources. Coal is self-burning.

We should also remember our coal has only 0.5% sulphur and very little ash. The coal, which is imported from across the border has much higher sulphur and ash content. It is polluting our environment while our sweet coal remains buried. Conspicuously the section of our civil society opposing mining does not object to import of dirty coal from neighboring country.

A media report also quoted Energy Advisor’s discussion with US Ambassador seeking technical help for coal mining. He reportedly said about challenges of strip mining given the fact the coal seams are at least 200m below the surface and extensive water pumping is required to reach there. He off course pointed out subsidence impacts of underground mining.  Modern mining technology can even reach much higher depth with appropriate water management. Water is considered as another mine resource, treated and is used for community supply, round the year irrigation and refilling the aquifer. Advisor possibly wants to train Bangladeshi professionals utilizing SARRIE resources. That will be extremely useful. But Bangladesh must immediately start mining education. Some smart boys and girls after HSC exam result must be offered scholarship to study mining engineering, mining technology on condition of serving Bangladesh after education and training.

Time is fast running out for the government. It will be impossible for them to reach anywhere near its energy sector vision if it fails to start coal mining and exploration for petroleum in a proper way by December 2009. For this they must evaluate the performance of present energy sector management without bias and engage truly committed professional to mean business. People with failed image and dark past record of hobnobbing with energy sector mafias will lead energy sector to further disaster.


Date: 01 August 2009, Bangladesh