Global Coal Management Plc (formerly Asia Energy PLC)



Overview

GCM Resources plc (GCM) is a London-based resource exploration and development company. Its principal asset is its undeveloped coal deposit in the Phulbari region of Bangladesh, the development of which is awaiting approval from the Government of Bangladesh. It also has investments in other companies with mining interests. The company's shares are quoted on the Alternative Investment Market (AIM). (Ticker code: GCM).

The Phulbari Coal Project is a substantial, world class coal resource that will support a long life, low cost mining operation. It is the only such deposit in Bangladesh that has been subjected to a full Feasibility Study and Environmental and Social Impact Assessment prepared to international standards. In partnership with the Bangladesh Government, civil society and the community, GCM is committed to developing the Phulbari Coal Project to the highest social and environmental standards. By doing this, GCM seeks to maximise the benefits of the Project for both the Company’s shareholders and the people of Bangladesh.

The Company (GCM) under its former name, Asia Energy PLC, was incorporated in England and Wales as a public limited company on 26 September 2003. Asia Energy PLC was admitted to the Alternative Investment Market (AIM) of the London Stock Exchange on 19 April 2004. Through seed capital raising and the subsequent placement of shares, some £14 million was raised.

In November 2005, following submission to the Government of Bangladesh of the Phulbari Coal Project's Feasibility Study and Scheme of Development, the Company placed an additional 7 million shares and raised a further £33 million.

GCM actively reviews investment opportunities in order to broaden its global investment portfolio.

Coal Project facts

■ Energy security and diversity – The Project has a unique role to play in addressing the country’s electricity shortfall as its development will provide the basis for a step change in the country’s electricity generating capacity.
■Regional development – The Project will provide 17,000 jobs (direct and indirect). In addition the development of new industries using the industrial mineral co-products from the mine will create thousands of more jobs. The living conditions of all affected people will be improved and their livelihoods will be restored and in many cases improved. As a result of year round irrigation, improved water quality, improved inputs and improved farming practices it will be possible to produce three crops per year with higher yields than at present.
■Huge economic impact – Phulbari will contribute 1% to Bangladesh’s GDP each year and pay US$7.0 billion in taxes, royalties and service charges to the Government over the life of the Project. The replacement of high sulphur imported coals and other hydrocarbons will have a positive effect on balance of payments and air quality.

In partnership with the Bangladesh Government, civil society and the community, GCM is committed to developing the Phulbari Coal Project to the highest national and international social and environmental standards. By doing this, GCM seeks to maximise the benefits of the Project for both the company’s shareholders and the people of Bangladesh.

Background

Bangladesh is one of the most densely populated countries in the world with some 162 million people living in an area two thirds the size of the United Kingdom or about the size of New York State. Less than one third of its population live in cities while the majority live in rural areas relying on a predominantly subsistence lifestyle. GDP per capita is around US$1,700 (ppp) per annum compared with a world average of US$10,500. Less than half the population have access to electricity. Bangladesh is a country of enormous potential. It has the eighth largest work force in the world and is included in the “Next Eleven” countries that, after the BRICs (Brazil, Russia, India, and China), were identified by Goldman Sachs as having the potential to become the world’s largest economies in the 21st century. It has enjoyed more than 6% economic growth in real terms over the last five years as well as substantial improvements in measures of human development. For example, between 1980 and 2006 life expectancy has improved from 48 years to 63 years and literacy rates have improved from 29% to 53%.

Bangladesh is one of the most climate vulnerable countries in the world with a significant proportion of the population living in remote or ecologically fragile areas such as river islands or cyclone prone coastal areas. Two thirds of the country is less than five metres above sea level making it vulnerable to the predicted effects of climate change.

Although Bangladesh is vulnerable to the effects of climate change, it is not itself a significant emitter of carbon dioxide. Per capita carbon dioxide emissions (0.3t/capita) are substantially below other countries in the region (Pakistan 0.9t/capita, India 1.4t/capita, China 4.9t/capita) which themselves are substantially less than emissions from developed countries (UK 8.9t/capita, USA 18.9t/capita). Even with the addition of the 4,000MW of electricity capacity which Phulbari coal could support, Bangladesh would still be one of the lowest emitters of carbon dioxide in the world, substantially less per capita than its neighbouring countries.


http://www.gcmplc.com/

"

August 12, 2008


Bangladesh draft coal policy sent to cabinet for approval
Energy Bangla reported that the energy division of Bangladesh sent a draft coal policy to the cabinet division to place it before the council of advisers for approval. Officials of the division are hoping that the much talked about draft policy would be placed before the council soon in any of its regular weekly meetings.

The countrys coal sector development, which has virtually remained stalled, is expected to begin once the coal policy is approved by the council. Special aide to the Chief Advisor, Prof M Tamim told Energy Bangla that this new policy will help to develop the coal sector of Bangladesh.

The policy has discouraged export of coal considering the demand for energy in the country, and suggested awarding of the exploration and development license of any coal field to a state-run entity, which will be able to take joint venture partner/partners through competitive bidding.

It has also recommended formation of a separate state-run entity, Khani Bangla to oversee the coal and mine related activities in the small scale pit mines to find out the viability of such mining method, and formation of a coal sector development committee to fix the royalty rate.

http://www.steelguru.com/news/index/2008/07/28/NTY0MDI%3D/Bangladesh_draft_coal_policy_sent_to_cabinet_for_approval.html

Draft coal policy for Mine Bangla
Proposal goes to cabinet today
Sharier Khan

The eighth draft coal policy that emphasises immediate government-led action in coal sector to meet the country's surging energy demand is likely to be placed before the caretaker government's cabinet today.

The draft proposes to set up a "mine Bangla" in line with Petrobangla by 2010 to spearhead different mining schemes. This government body will take strategic partners from private sector through open tenders for quick development of the schemes.

Other proposals include compulsory release of 20 percent shares of a mining venture to the local market as per the laws of the Securities Exchange Commission. When selling back, shareowners will be only able to sell those to the government at market price.

"Because of excessive revisions and inputs from a wide number of people, the draft policy now sounds more like a law than a policy," says a source. "And this was exactly the observation of the law ministry about the policy when the energy ministry sent the draft to the law ministry a few months back."

The draft policy tries to touch almost all aspects of coal development. "That is why the law ministry observed that instead of such a policy, the government should work on several laws instead of just one," the source adds.

The coal policy was first drafted in December 2005. The seventh draft was prepared by a committee to review the draft policy. Headed by former VC of Buet Prof Abdul Matin Patwari, the 10-member committee submitted its report to the energy ministry in December last year.

The ministry itself has also modified some of the contents. Only recently, the ministry has forwarded the draft to the Cabinet Division for approval by the cabinet.

Under this policy, private companies will not have sole ownership over any coal mining deal and must come as partners with a national coalmining company.

The draft restricts export of coal to be used as fuel, allowing exports of higher grade coking coal.

It lays out a detailed plan on how the government should handle rehabilitation and resettlement of communities that will be displaced by a mining project. The Patwari committee had suggested that the land acquired by a project be returned to the original owner upon completion of the project.

The land and the law ministries however deleted this part as it conflicts with the laws of the land. "Once the government acquires a piece of land, it can't be returned to the original owner. The government can however restore the land and allow its agricultural use," says a source.

The policy does not restrict open pit mining, as was initially demanded by some pressure groups. Instead, it identifies mining method as a technical issue, which should be decided on the basis of individual cases and technical viability.

The policy prioritises private partnership that puts highest emphasis on coal-fired power projects.

A 29-member committee led by the energy ministry will review coal sector master plan, royalty, the sector's development issues from time to time and give decisions.

By 2010, the government must frame a coal sector master plan, identify coal zones, review coal industry infrastructures and initiate restructuring measures.

It will also restructure the Bureau of Minerals Development and Geological Survey of Bangladesh and chalk measures to protect the environment and develop the legal frameworks for it.

The government will also have to chalk out a security measure for mines and a plan to reclaim land.

The draft recommends that the government decide on implementing an open pit mine as a "test case" in the northern part of the Barapukuria underground mine. If such a venture is "commercially successful", the government will review all technical aspects and take follow-up measures.

"There has been no study by any group about such an open pit mine in Barapukuria. How can this committee suggest this? Besides, who would invest for a test case if there is no guarantee of any profit?" asks another source.

"Again, technically you also need bigger land for an open pit mine. The Barapukuria mine area has a power plant and other structures. Then is this a feasible idea or just an undue idea?" the source quips.

The draft policy says till 2025 if Bangladesh's GDP remains as low as 5.5 percent, the country will need to add 19,000 megawatt additional power. On the other hand, if the GDP is as high as 8 percent, additional 41,000 MW power will be needed.

But at the same time, Petrobangla says production of gas, which has been the key source for power generation, will start to decline from 2011. This is where the country's coal should play a role.

It adds that to meet its power demands in a GDP growth rate scenario of 5.5 percent, Bangladesh will need 136 million tonnes of coal till 2025. If the GDP rate is 8 percent, then Bangladesh will need 450 million tonnes coal.

The draft says the country's existing four discovered coal fields of Barapukuria, Phulbari, Khalashpir and Dighipara can cater this need till 2030 or so.

http://www.thedailystar.net/story.php?nid=50253

Also on the eve of the Meeting !

Power sector in for grave crisis


Implementation of 14 power projects uncertain as Petrobangla drops gas commitment


Tuesday August 12 2008 00:56:38 AM BDT


The power sector is headed for a grave crisis as implementation of 14 proposed power plant projects with a composite capacity of 2,850MW has become uncertain with the Petrobangla withdrawing its commitment for immediate supply of gas.(The Newage)

Officials of Petrobangla at a joint meeting of energy and power divisions on Monday said it could at the moment supply gas to only three of the proposed plants 450MW Bibiyana independent power plant, 150MW Sylhet and 150MW Bhola plants.

They also said that they would supply gas to the under construction 11 short- and long-term rental power plants and seven out of 10 under construction small independent power plants, which are likely to be commissioned by January, 2009, as per Petrobanglas earlier pledge.

But, Petrobangla said, it would not be able to supply gas in near future to the 450MW Sirajganj IPP, 450MW Meghnaghat-III IPP, 450MW Bheramara power plant, 250MW Dhaka North Power Plant, 360MW Haripur, 210MW Khulna, 150MW Shikalbaha, 150MW Chandpur, 2x150MW Shiddhirganj, 150MW Sirajganj and 150MW Khulna plants, one unit of the under construction 2x120MW Shiddhirganj plant and three small independent power plants at Feni, Mohipal and Barabkunda.

Petrobangla, which had made the commitment to the Power Development Board in August, 2007 that it would supply gas to these plants between 2009 and 2012, backed away from the pledge asking the PDB to defer the projects by at least two to three years until gas supply could be ensured.

Of the power plants, power agencies have already invited tenders for the 450MW Sirajganj IPP, 210MW Khulna and 150MW Chandpur power plants. The government has also finalised lending agreements with Japan Bank of International Cooperation, Asian Development Bank and World Bank for the 360MW Haripur, 150MW Siddhirganj, 150MW Sirajganj, 150MW Khulna and 2x150MW Siddhirganj plants. The government has also awarded contracts to a Chinese company for setting up the 150MW Shikalbaha and three local entrepreneurs for installation of three SPPs.

Petrobangla in August 2007 also said that it would not make a commitment for gas supply to eight other power plants, including the 450MW Ashuganj power plant, 225MW Shikalbaha plant, 210MW Shiddhirganj second unit, 225MW Ghorashal plant, and 150MW Sylhet Gas Turbine. The Power Division did not proceed with the plants any further following the Petrobangla decision last year.

Petrobangla on Monday said it would supply gas to the proposed power plants in future if gas production in the country increased and new gas fields were discovered. Petrobangla currently supplies around 1,780 million cubic feet of gas against a demand for around 2000mmcfd. Power plants get around 650mmcfd against the demand for 850mmcfd.

It will be a severe blow to the power sector if Petrobangla does not supply gas to the proposed plants. Almost all of our projects have become uncertain which means we will not be able to install plants with a combined capacity of at least 3,000MW, said a PDB official.

He said that these plants were supposed to come into operation by 2012 when the demand for power would be more than 7,500MW.

At present, we produce around 3,300MW against the demand for around 5,000MW. We can produce around 3,800MW by January 2009 if the small IPPs and rental power plants come into operation and if gas is available to them. But after that only three power plants may come into operation, he said.

Power secretary M Fouzul Kabir Khan, who was present at the meeting, told New Age he did not think Petrobanglas refusal to supply gas to the power plants in the pipeline was final.

They have requested us to defer some of the projects because of gas shortage at present. We will review their proposals and will sit with government high-ups to discuss what can be done for the power sector, he said.

Energy secretary Mohammad Mohsin said that they were forced to request the PDB to defer some projects. What else can we do when we are facing a severe gas shortage because of increasing demand for gas in industries and CNG stations, he asked.

Mohsin, however, said that most of these projects would get gas once Petrobangla would augment around 300mmcfd of gas by 2012 from different fields.

Thursday, August 14, 2008 12:25 AM GMT+06:00


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Ctg to get emergency gas, rental power plant
Advisers' council sends back coal policy to ministry
Staff Correspondent, Ctg


The Council of Advisers at its meeting here yesterday decided to provide 20 mcf (million cubic feet) additional gas and set up a 50-MW rental power plant for immediate and short-term solutions to the acute gas and power crises prevailing in Chittagong.

Chaired by Chief Adviser Fakhruddin Ahmed, the meeting also discussed the draft National Coal Policy and asked the energy ministry to place the draft policy again after scrutiny.

Held at Chittagong Circuit House, the meeting decided to set up a separate gas distribution centre titled Karnaphuli Gas Systems Limited (KGSL) to ensure smooth distribution of gas in Chittagong.

To resolve seat crisis in the educational institutions, the meeting decided to increase additional 19,000 seats through infrastructure development of six private schools and setting up of two new model school and colleges here at a cost of Tk 71 crore.

Different local issues like acute gas and power crises and waterlogging prevailing in the port city featured in the meeting where we have tried to give some immediate and short-term solutions to the problems, said Chief Adviser Fakhruddin Ahmed at a press briefing after the meeting.

Additional gas will be supplied to the industrial units that could not go into operation for want of gas, he said.

As a short-term solution to power crisis, we have decided to set up a furnace oil-run rental power plant, he said, adding, Though we know it will be a bit expensive, we have to look for an alternative way of producing power as an instant solution.

Regarding the proposal for setting up coastal township in Chittagong by the world leading steel manufacturer, Mittal Group, the chief adviser said the government is actively considering the proposal.

Talks with Board of Investment (BoI) and others concerned are going on, he said, adding, Since it's a huge project all the details need to be discussed thoroughly.

Briefing the reporters, Commerce and Education adviser Hossain Zillur Rahman said 20 mcf additional gas will be provided for Chittagong through two separate supply lines from Bangura and Bakharabad gas fields.

Of the 20 mcf gas, 10 mcf will be supplied to the already installed industrial units that could not go into operation while the rest will be required for producing 40MW electricity at the existing plants.

Besides setting up of the 50MW rental power plant under short-term solution, initiative was there to ensure smooth and equitable distribution of power through demand management, said the commerce adviser.

He said a Tk 95 crore project for infrastructure and drainage system and a Tk 22 crore project on garbage management are awaiting Ecnec approval.

The meeting decided to provide all out cooperation for implementation of the Tk 10,000 crore JBIC (Japan Bank for International Cooperation) project for construction of outer ring road in Chittagong.

Besides, we will hold talks with the Italian ambassador for reviving and immediate implementation of Madunaghat Water Treatment Plant to resolve the water crisis in the port city, said the commerce adviser.

The meeting thoroughly discussed and laid emphasis on implementing projects for construction and repair of six inter-district highway and roads in this region, he said.

Moreover, the meeting underscored the need for taking decision on priority basis on construction of Chittagong-Dohazari-Cox's Bazar (upto Ghundhum bordering Myanmar) railway track involving Tk 1300 crore.

The meeting also decided to take up project for setting up the CDA proposed IT tower.

To overcome the godown crisis in the port city, the meeting decided to set up seven warehouses in the city's Dewanhat area.

Besides, the meeting also decided to approve two projects (Gymnasium and Prof Yunus Social Science Building) of Chittagong University and construction of an annex building of Chittagong Circuit House, said the commerce adviser.

UNB adds: while visiting the construction site of the 3rd Karnaphuli Bridge in the morning, the chief adviser directed the authorities concerned to complete the bridge and its approach road at the same time.

He mentioned that some big bridges in the country had been opened to traffic without completion of its approach road. As a result, full benefits of the bridges could not be derived soon after those were opened to traffic.

The CA was informed that the construction of 950- metre long and 24.47-metre wide bridge over the Karnaphuli is expected to be completed by July 2009, two months ahead of schedule.

The bridge is under construction at a site between Bakulia and Shikalbaha on the Chittagong-Cox's Bazar highway.

The total cost of the bridge along with 1.5 kilomtre approach road and 2.6 kilometre service road is Tk 590 crore of which Kuwait Fund for Arab Economic Development (KFAED) provided Tk 372 crore, while the rest Tk 218 crore was financed by the Bangladesh government.

The chief adviser expressed satisfaction with the progress of the construction work and hoped that the bridge would be opened to traffic well ahead of the schedule.



http://www.thedailystar.net/

a few more news clips out now very similar to the one above, and it would look as if they want to sort it out ! Just a small part of one of them !

The council, headed by the chief adviser, Fakhruddin Ahmed, at a meeting at the Chittagong circuit house, discussed the policy draft and the changes the Energy Division made to the earlier draft of the advisory committee of former BUET vice-chancellor Abdul Matin Patwari.

Although a number of advisers questioned whether the interim government which has only five months in hand should adopt such a sensitive policy, the council unanimously felt that a coal policy was needed to immediately address the growing energy crisis, said sources present at the meeting.




http://www.theindependent-bd.com/details.php?nid=93744

Cairn's Bangladesh field 'running dry'



Previous PreviousNext Next View GalleryPublished Date: 15 August 2008
By Hamish Rutherford
BANGLADESHI officials claimed to be caught by surprise yesterday after Cairn Energy, which operates Sangu, the country's only offshore gas field, warned the reserves could be exhausted by the end of 2009.
Mohammad Muqtadir Ali, a director of the state-run oil, gas and mineral corporation, Petrobangla, reportedly said the Scots company had told it that the reserves were being exhausted fast. "We have been frustrated by this information but will sit down with Cairn next week to try to sort out the problem," he said.

A spokesman for Cairn, which has been operating the Sangu field since 1998, declined to comment.

The company has warned in the past that the Sangu field is beyond peak production and it has reportedly told the Bangladeshi government informally of the probable timescale of production.

Cairn has explored unsuccessfully for other gas fields off Bangladesh in recent years.

Elsewhere the firm is recruiting more than 300 experts to help in the project to build a major pipeline to transport oil from its fields in the Indian state of Rajasthan to the coast.



http://www.scotsman.com/business/Cairn39s-Bangladesh-field-39running-dry39.4394009.jp

is this a personal diary then smiler

Aye ! as you can see I have been in GCM for a long time .... their is about 4/5 who post /hold on this thread

http://www.dailynews.lk/2008/08/18/fea03.asp

Share price has more than halved from its peak...now 146p

And ?

http://www.theindependent-bd.com/details.php?nid=94100

100p on the way

OK ! There always One on every Board !

Contingency Actions for Chittagong.
Saleque Sufi
Monday, 08.18.2008, 04:22pm (GMT)




Council of Advisors of the interim Care Taker Government of Bangladesh in its first ever historic cabinet meeting outside the Capital at Chittagong held on 13th Ausgust 08 has taken some very critical decisions in desperate efforts to salvage the major port cum industrial city from serious energy and water crisis. They say that some of these are short term, some mid term and some long term measures. The main problem that has almost reached crisis point is the energy crisis gas supply crisis. Shangu Gas Field which came into production in 1998 is alarmingly depleting in less than 10 years of production. The present daily gas supply to Chittagong is believed to be about 50MMCF short of meeting the existing demand. Shikalbaha Power plant remains out of operation.Raujan is forced to be run on 50% capacity, new gas connection to industrial consumers and CNG refuelling stations are kept pending. The gas crisis and consequential power shortage has very alarmingly impacted on business and commerce and is causing immense miseries to the people of the region. Among other notable problems are water supply problems, water logging due to lack of drainage, road and rail transport bottlenecks. Let us now try to have a feel what the advisors did in the meeting.



Formation of a separate Gas Marketing Company in the name of Karnaphuly Gas Systems Ltd (KGSL) has been approved to more systematically address the gas supply and marketing problems of Bakhrabad Gas Systems Ltd. Decision has been taken to set up a furnace oil based 50MW contingency power plant to bring into commercial use within 6 months. Decision has also been taken to increase about 20MMCFD Gas supply to Chittagong area 10MW to be used for generating power and the remaining 10 MW to be used for supplying gas to industries and CNG stations kept stand by for gas supply. Decision has also been taken to implement Modunaghat Water project expeditiously. As part of construction of Trans Asian Railway Network, it has been decided to improve the rail link from Dozajari to Coxsbazar and extend it to Gundum, the Myanmar border. Another important project approved in the meeting is the construction of two regulator vaults on the river Kranaphuly to improve water logging in the city. Several other issues creating more opportunity of aspiring youngsters getting improved education in schools expanding the infrastructures, expansion of Dr.Yunus Social Science building at Chittagong University, modernisation of Chittagong port plant quarantine project have also been given go ahead. No decision was taken on few other very important issues. Draft coal policy which created storm on the cup of tea, Billion Mega Investment Proposal of UK based Indian company Mittal Group and 4 lane Dhaka Chittagong highway did not get approval for further detail examinations.



The Chief advisor and his council of advisors must deserve thanks and appreciations for taking this unique initiative to hold the meeting outside Dhaka and address the specific problems of a very important region. Chittagong is our principal port of entry gateway. Most of our trading export and import routes through Chittagong. It is also our major industrial city. It also led Bangladesh in almost all historic movements. The commencement of liberation war was proclaimed from Chittagong on behalf of our Father of the Nation on 26th March 1971. The beauty of the east has enormous treasure; unique natural beauty which attracts tourists from all over the globe.Coxs Bazar, Technaf, St Martin,Rangamati, Kaptai, Chimbuk have superlative natural beauty which if appropriately developed for tourism can earn billions of dollars every year.Chittagonians dominated all the post liberation Government. The immediate past BNP led Alliance Government had 8 Minsters from Chittagong. They were all very influential. Yet Chittagong remained deprived. For reason unknown Chittagong did not get proper attention as far as its reliable energy supply is concerned. The Bakhrabad Gas field was primarily developed to cater Chittagong market. The multimillion dollar Bakhrabad -Chittagong Transmission System, South East Bangladesh Gas distribution Network was successfully accomplished on time to create long term Gas/Energy Security Infrastructure in Chittagong region. But the very unprofessional production management of Bakhrabad Gas Filed and later of Shangu offshore Gas Fields led to unforeseen rapid depletion of both the gas fields causing the present unbearable sitautaion.One must acknowledge that most of the present situation must be attribute to the failure of Petrobangla and Energy Ministry to professionally manage Gas production and supply. The Ashuganj Bakhrabad Gas Transmission Pipeline was constructed in 1997-98 by Hasina led Awami League Government as top priority national project to overcome the crisis of Gas supply in South East Bangladesh which was caused by unprofessional gas system operation by Khaleda Zia led BNP Government from 1991-96.In 1998 Shangu off shore Gas field was also brought on stream. Commencement of Production from Jalalabad Gas field, Beanibazar, Salda and Meghna Gas field created security of supply in national Gas grid. But the good works of Awami League Government could not be maintained by Hawa Bhavan influenced Khaleda led BNP Jamat alliance government in 2001-05.Cairn influenced Petrobangla and EMRD to inflate investment unnecessarily in Shangu, very unprofessionally attempted to produce about 200MMCFD from the tiny gas field ignoring the recommendation of Petrobangla reservoir specialist. Rapid depletion of Shangu field was observed. But following unfortunate death of Quazi Shahid the last of the Petrobangla patriot was gone.Ciarn kept on making futile attempts to increase production. It only increased cost but production dipped. In 2004 Shangu used to produce 140 MMCFD and now in 2008 it can hardly deliver 50MMCFD.Shangu was always a trouble maker. From 2003-05 when the author operated the national gas grid had to spent many sleepless nights managing the crisis due to forced outage of Shangu.Now Cairn thinks Shangu may deplete by 2009 and they want to invest more for compression and other efforts to increase production. Cairn several times before took Bangladesh for a ride. It has already become the sorrow of Chittagong. It will be better to discuss Shangu in details in another write up. The author knows about few more scandals of Shangu.

Chittagong demand is about 300 MMCFD now .If we add another 30mmcfd for rest of BGSL System then the total daily demand is 330mmcfd. But in the present situation the maximum supply is 280mmcfd.

The present deficit of gas supply is about 50 mmcfd. It is not clearly understood what the additional 20 MMCFD gas supply that the Advisory council decided will mean. Will it reduce the deficit? Or it will be extra over after the deficit is met? In that situation Chittagong region needs about 70 MMCF additional supplies not 20 MMCF as the decision indicates.



Let us look at the Gas Production, Transmission and Marketing Situation of the day when the Advisors met at Chittagong.



The national Production was 1796 MMCF against the capacity of 1838 MMCF. Petrobangla report indicates the supply was 1813MMCF.The report also indicates BGSL System got 289MMCF while Rauajan Unit 1 and Shikalbaha remained shutting down due to gas supply shortage. In this situation it is very difficult to ascertain how 20MMCF additional gas supply for Chittagong will bring any relief for the City in the crisis. Moreover Shangu is fast depleting ominously. Hope some people are not making joke here. If Shangu really depletes by 2009 all gas for Chittagong will require to be transmitted from National Grid mostly from North Eastern Gas fields. This will require installation and commissioning of Pipeline Compressors at Muchai and Ashuganj and construction of another Transmission pipeline from Bakhrabad to Chittagong.

Production:



BGFCL:



Gas Field
Producing Wells
Production Capacity
Production on 13th August 08

Titas
14
405
393

Bakhrabad
4
34
33

Habiganj
9
246
241

Narshingdi
2
35
35

4
29
720
702




IOCs

Operating Company
Gas Field
Producing Wells
Production Capacity
Production on 13th August 08

Cairn
Shangu
6
60
50

Chevron
Jalalabad
4
230
183


Maulavibazar
4
100
80


Bibiyana
12
450
525

Niko
Feni
3
05
03

Tullow
Bhangura
2
70
70

4
6
31
915
911




SGFL



Gas Fields
Producing Wells
Production Capacity
Production on 13th August 08

Sylhet
2
07
04

Kaillashtilla
6
97
98

Beaniazar
2
18
0

Rashid poor
5
53
51

4
15
175
153

Beanibazar
Shut Down
For
Maintenance






BAPEX



Gas Field
Producing Wells
Production Capacity
Production on !3th August08

Salda
2
11
10.6

Fenchuganj
1
17
19.4

2
3
28
30.0




From 16 producing gas fields of three national and 4 International producing companies the production of the day was (30+153+911+702=1796 MMCFD)



Against the above production scenario the marketing situation on the day read.



TGTDCL:



Sector
Demand
Supply

Power
601
494

Fertilizer
156
110

Others
..
707

Total

1312




Ghorashal Power Plant Unit 1, Horipoor PB Plant, Tongi Power plant and Urea Fertilizer Plant Ghorshal remain shutting down.



BGSL:

Sector
Demand
Supply
Comments

Power
106
28
Deficit 78MMCF

Fertilizer
115
105
Deficit 10MMCF

Others

151
Significant suppressed demand




From the above figures it is evident that 20MMCF increase from whatever source may be to Chittagong area will o nothing compare to the requirement. Moreover by the time this 20MMCF comes into effect Shangu may deplete further as Cairn has indicated its probable demise by end 2009.From the above analysis it is not understood what the promise 20MMCF additional gas is going to change the present diabolic gas supply situation in Chittagong. The persons who worked out this must have tried to fool the nation. It does not require the Advisory Council meeting to take this decision.GTCL system operator can always divert this gas from the System line pack. It is pity that Gas Sector management now has to wait for Advisory council meeting to take this decision.



The decision to set up 50MW power plant on furnace oil is OK.But from the experience of other recent Contingency Power Plants implementation one has reason not to believe that the plant may not come into operation in 6 months as visualise by Dr Fakhrudin and Company.



There have been talks that to comfort energy supply to Power plants and residence gas supply to industries may remain suspended during Iftar and Shehri. Who will ensure that? Is it practically possible? The only possible way to create some flexibility in Chittagong gas market is to shut down CUFL for a while and use that 50MMCF gas for power generation and Industrial use. Shut down of ZFCL may help Titas System but it wont help Chittagong at all. Bakhrabad Chittagong Transmission pipeline can not carry the additional gas. Advisory committee should have decided to create additional Gas Transmission infrastructure for meeting the present and emerging requirement of Chittagong. Loop line of BKB-CTG is the only answer.



The advisory council did not approve the coal policy. The draft coal policy in its present shape can not be approved by interim or Care Taker Government. Some of the provisions contradict with existing laws. Only elected parliament can change or formulate new law. The draft policy can not be termed policy .It is as good as new mining law. Moreover some members of the committee considering that whatever they recommended must be approve in original shape.



We must not forget Bangladesh will run out of energy options very soon. If mining is not started for coal immediately the entire nation may soon plunge into devils darkness. We have destroyed gas structure of Bakhrabad and Shangu due to unprofessional production management, Titas gas field is leaking and Bibiyana Gas field is being use as Golden duck.



Fortunately or unfortunately our coal belt is also the major rice growing area. We must sacrifice some of these for the greater long term interest of the nation. In the Coal policy there must be very clear direction about relocation and resettlement and income regeneration of affected people. There must be clear guidelines how the mine area will be reclaimed to its original and better shape.



In every country the Government has sovereign right over subsurface resources. Any citizen or entity can own only surface land and structures or properties there on. Government reserves the right to acquire any property with few exceptions like Graveyards, holy places etc for any national purpose. The original owner is compensated as per existing land acquisition procedure. OK people in the Coal mine area may get additional benefit but there is no way the land can be returned to them after 30 years mining life. The author has talked with Queensland Government Land Officials who deals with mine lease. They told that in Queensland Australia the land for mining is either arranged by Mining Company through direct purchase from the owner or Government acquires it and lease to Mining Company. There are set rules in Environment Management System as to how the land will be reclaimed. The mining is one in such a way that these do not impact on existing Flaura and Fauna, cultural Heritage of the area. In case of strip /Surface/Open Cut mining the mining company rehabilitate the area where mining is complete progressively as per guideline in the mining lease. Only the last pit can not be rehabilitated .It becomes a sweet water lake. Very stringent water management is effected during mining. Australia is a dry continent .Water is very important in Australia. It appears that we need updating of Mining Law as the coal policy is no longer a policy .Update Mining law must give guidelines how to rehabilate the mined area an must very specifically address the water management.EMRD may take reference from Australian Land Ministry regarding land management in mining.



Environment and social management in mining are major issues .These must be properly addressed and given due attention in update mining lawyer must not engaged the same controversial persons having no practical mining experience in reviewing the policy. It can seek support from Bangladeshi Expatriate Community who have exposure to active mining or are engaged in various mining relating rearech in mine countries. Care taker Government may review National Energy policy , Mining laws and Draft coal policy an make a comprehensive policy paper and leave it for incumbent political government to take up for discussion in the first session of the next elected parliament. Any democratic government for its survival will definitely take up coal mining issue with due urgency.



The Advisory committee in this particular meeting could have discussed the engagement of IOCs for deep water exploration for petroleum. Council of advisors could have discussed possibility of expanding capacity of Kaptai Hydro electricity Generation and mini Hydro prospects of the region. It could have thought of Power Generation from Municipal wastes of Chittagong, Wind Power , Solar power and cultivation of special plant in fallow areas of Chittagong and Hill Tracts for bio fuel production could be discussed. Perhaps the Energy Ministry was least prepared. The Coal policy in its present shape should never even been placed to the council meeting.



Month of Ramadan is coming. There is no way the energy situation of Chittagong or rest of the country can be significantly improved. The present situation is already well beyond the capacity of inexperienced Care Taker administration .They should not make it more complex through impractical an unimaginative actions.




http://energybangla.com/index.php?mod=article&cat=SomethingtoSay&article=877

yes smiler but its the same sort on certain threads.......i think hyleo secretly wants uk to collapse and be bankrupt......maybe he wants western world to go that way......maybe hyleo is a russian spy!!! lol

you never Know ; )

Phulbari Coal Project:Ready and revving to go
Posted by phulbarinews on August 18, 2008

The coal at the Phulbari mine remains untapped. And the debate continues as to mine or not to mine; but given the energy crisis already upon us, can
we afford to dawdle?

A PROBE Report

It is not long ago when controversy raged over the Phulbari Coal Mine. While pragmatism held that Bangladesh needed the coal, and needed it fast, there was also the emotional side of the debate which highlighted environmental aspects and other factors. It was a politically volatile time too and decisions in this regard remained safely in limbo. However, time has passed and now it is possible to view the matter with objectivity. With the energy crisis not just looming large, but actually upon us, it is high time that the pros and cons be weighed in realistic terms.

The four-letter word which currently features in every other discussion, dialogue and seminar in the country, is fuel. Fuel is a matter of growing concern, a concern growing out of all proportions. There is, of course, gas. At one time it was said that Bangladesh was virtually floating on gas. But now it is time to take a realistic look at the situation. With an exponential increase in the dependency on gas for industry, motorised vehicles, et al, it is clear that this total dependence cannot continue for long. The upward spiral of international prices of petroleum rules out the continued traditional use of this fuel for vehicles, putting further pressure on gas reserves. CNG has become not the alternative fuel, but the fuel where cars are concerned. In fact, with diminishing gas reserves and general uncertainty about the reserves to be tapped in future, there is need to free up Bangladeshs natural gas to be used for vehicles and such purposes.

Experts in unison will agree that there is no more time to waste in conjecture. And there are certainly not enough funds to waste on an increase in exported fuel. The country must pursue alternative energy sources; there is no two ways about it. Given the existing natural resources of Bangladesh, coal is the obvious solution to the energy crisis. And Bangladesh has coal. It has high quality coal with less than 1% sulphur content, almost on par with coal from Newcastle. Already mining has been undertaken at Barapukuria, though for certain reasons there have been glitches in the system.

It is Asia Energy which now is all set and ready to begin mining at the Phulbari Coal mine which has deposits enough to produce 15 million tonnes of coal annually over the 35-year span of the projects life. In fact, Asia Energy is the only foreign investor that has carried out exhaustive exploration of the mine area along with environment and social impact studies. So if coal is a solution to the energy crisis, it is imperative that the mining begin with immediate effect at Phulbari. Asia Energy is all revved up and ready to go. With the draft coal policy on he brink of being approved, there really now is no need for further delay to give a go-ahead for the mining to begin. Time is of essence. In fact, one official of Asia Energy points out, had the project started up on schedule, then the first power station would be operating on coal by next year.

The delay in the start-up of the project was caused, to the most part, by a section of protesters who demonstrated against the open-pit method of mining. However, taking into consideration all the pros and cons, Asia Energy clearly sees that this is the best way to go about it. Given the geological conditions at Phulbari, the coal seam thickness and depth of coal from the surface, open pit mining is deemed as the safest and most economical way of extracting coal from the mine. As opposed to the open pit method, underground mining has high safety risks which include mine flooding, spontaneous combustion, high humidity, high temperature and extensive ground subsidence with permanent land loss.

On the other hand, open pit mining ensures that 90 per cent or more of the resources can be extracted. Underground mining where the coal seam is thick may allow only 20% of the coal resources to be extracted. Protestors argue that open pit mining will displace a large section of the population, rendering them homeless. It will pose as a threat to the flora and fauna and also cause desertification of the area. Asia Energy experts point out that nowhere in the world where open pit mining has taken place have there been instances of desertification. Additionally, the company has a long-term plan to address all these various impacts of the project, including displacement, ecological imbalance, etc.

In the first place, an official of the company points out, if you look carefully at the map of the Phulbari coal mine project area, you will see that it is certainly not as densely populated as most areas of Bangladesh. Secondly, neither is it a forest area thick in foliage and animal life. However, since there will certainly be displacement of the local populace and felling of forestry, to whatever extent, Asia Energy has plans for sustainable environmental management as well as responsible management for social impacts.

Environmental management

Asia Energy has extensive plans in place to manage environmental impacts such as water, soil, air, noise, waste and biodiversity. By extracting underground water, Asia Energy will ensure the supply of water for domestic, agricultural and industrial use and meet the demand of drinking water in and around the project area, including the Phulbari township. Allaying any fears of desertification, some of the extracted water will be injected back to maintain ground water levels. Extracted and treated water will also be pumped back into rivers and other water bodies of the area, further removing the threat of aridity. The company also is committed to rehabilitate the land used in the project to its proper state for agriculture and other uses.

Social management

Displacement of local populace was a matter of great concern to the local people where the project was concerned, but Asia Energy is committed to resettle around 40,000 people, including 2300 indigenous people. They will be provided with ample rehabilitation support. The people will be relocated only after the rehabilitation arrangements are complete. Fair and full market price compensation will be provided for land, trees, crops, houses and other assets. Financial assistance will also be given for a period of time to support affected people while they attain their previous income levels. All this will be done in a very participatory manner, in consultation with the local communities, public representatives and other stakeholders. This engagement will continue throughout the project.

Benefits

The benefits of the Phulbari coal mining project are multifarious and long-term. They far outweigh any other concerns which may have risen regarding the project. As Asia Energy is committed to addressing these concerns in tangible terms, it is time to concentrate of the benefits of the project, on exploiting the opportunity to use the coal for the development the nation so sorely needs. Bluntly speaking, it is time for the tree-huggers to take a reality check.

The project will generate sizeable revenue for the government, both directly and indirectly. Over the life of the mine and based on an average coal price of US$50 per tonne, the government will earn an estimated US$ 4.43 billion in corporate taxes, royalty payments, custom duties and income tax on employees wages. Bangladesh Railway and the Mongla Port Authority will earn about US$ 2.64 billion. Unlike gas, coal mining in Bangladesh is not covered by any Production Sharing Contract (PSC). The companies are expected to pay corporate tax, income tax for its personnel, VAT, duties, royalties and other government service charges. Asia Energys contract has no provision for full cost recovery. The full financial risk is taken by the investor.

The Phulbari Coal Project has a planned life of 35 years. This may be extended. Studies determine that 15 million tonnes of coal per year must be mined and sold to ensure the project remains economically viable and is able to meet the huge production costs as well as meet its environmental and social commitments. In addition to providing a new source of energy for the countrys domestic demands for several decades, Phulbari will also generate foreign exchange earnings and drastically cut down on coal import. It will also spawn the growth of support industries. As a benchmark coal mining project, Phulbari will also activate the acceleration of the overall coal mining industry of the country. With the desired upgrading to the railway and deep-water port facilities, further economic benefits are inevitable.

Importantly, about 50 % of the projects net earnings will go to the governments coffers. And as the coal policy is on the brink of approval, the government can be secure in ensuring optimum benefit for the project.

The Bangladesh Vision

The Phulbari Coal Project, in fact, has such potential that it can make significant contribution to Bangladeshs efforts in achieving the Millennium Development Goals. Poverty alleviation is one of the most significant features of MDG and this project is a milestone in economic development. And with a coal-fired power station in place, electrical power for all by 2020 will not seem so unrealistic as it does now, with only 38% of the population currently coming under the power supply net.

Coal, now

The bottom line is we need coal and we need it now. It is a new and reliable source of energy which will provide Bangladesh with energy security, new power stations, reliable power supply and economic development. Phulbari mine will lead to regional infrastructure development. It will save on natural gas, increase revenue and generate employment. In a nutshell, this pioneering project will pave the way for the next generation. It will be a landmark in encouraging foreign investors to look at Bangladesh.

Vigilance

While Asia Energys Phulbari Project is certainly promising, it is up to Bangladesh to ensure that the nation can reap the most from the project. It is up to Bangladesh to remain vigilant that commitments are kept and targets are met. Vigilance is also needed against vested quarters out to resist the project. It is the people who matter and their interests must be safeguarded. Any misgivings in the mind of the people will soon diminish as benefits of the project accrue.

Source: http://www.probenewsmagazine.com/index.php?index=2&contentId=4198

SYED ZAHIRUL ABEDIN

20/08/2008

The much-talked-about 8th draft coal policy was not approved at the Advisory Council meeting due to strong differences over the issues of payment of royalty, acquisition of land, and quite a large number of ambiguities in it.

Sources at the Ministry of Energy and Mineral Resources told The New Nation yesterday that the draft coal policy was sent back to the ministry concerned for further scrutiny.

Besides, the meeting of the Council of Advisers held on Wednesday in Chittagong suggested to make the draft coal policy smaller in size removing all the ambiguities.

The sources said the draft coal policy would again be placed before the Advisory Council before December this year for approval.

Earlier, the Energy Division of the Ministry of Energy and Mineral Resources sent the draft coal policy to the Cabinet Division to place it before the Council of Advisers for approval.

The meeting sources said there were strong differences among the Advisory Council members regarding the recommendations of coal extraction under open-pit system, environmental effects, payment of royalty, and rehabilitation of the affected people. The royalty issue, in particular, came under extensive discussion at the meeting.

Though 13 percent royalty has been recommended in the 8th draft coal policy, the Advisory Council noted that no local or foreign companies would come to invest in the country's coal sector if such a 'big amount' of royalty would have to pay the government.

"The amount of royalty proposed in the draft coal policy is not investment-friendly," a source said quoting the meeting.

During the meeting the amount of royalty that exists in Indonesia's coal sector was pointed out.

Special Assistant to Chief Adviser for Energy and Mineral Resources Dr M Tamim told the meeting that though the amount of royalty was only 6 percent in Indonesia, other taxes were higher in that country compared to Bangladesh.

Dr Tamim mentioned that except royalty, other taxes were quite lower in Bangladesh. "That is why 13 percent royalty has been proposed," he said.

It may be recalled that Asia Energy submitted a feasibility study report along with a development plan for Phulbari Coalmine Project during the reign of BNP-Jamaat led alliance government back in 2005. In its development plan, Asia Energy proposed 6 per cent royalty, i.e. Bangladesh would get only 6 percent of the coal after extraction from the Phulbari Coalmine Project.

However, at the same time the country's left-leaning political parties and different social organizations, including the National Committee for Protection of Oil-Gas-Mineral Resources and Ports and Power demanded of the government to raise the amount of royalty for extraction of coal. In the wake of that demand the present caretaker government formed an advisory committee with former vice-chancellor of BUET Dr Abdul Momin Patwari as convener to finalise the draft coal policy.

Other members of the committee were University Grants Commission chairman Nazrul Islam, BUET's Professor Nurul Islam, senior journalist Ataus Samad, Dhaka University Professors Badrul Imam and Mustafizur Rahman, chief engineer of the Bangladesh Army Major General Ismail Faruque Chowdhury, Petrobangla Director Maqbul-e-Elahi and chief executive officer of IIFC Nazrul Islam.

Subsequently the committee proposed that any company which will be awarded the contract for extraction of coal will have to pay 13 percent royalty to the government.

The sources said the amount of royalty proposed in the coal policy in 1968 was 10 percent. Later, it was raised to 20 percent in 1987. In 1995 the royalty was re-fixed at 6 percent for open-pit mining and 5 percent for underground mining.

At the meeting, some members of the Council of Advisers raised questions regarding the issue of acquisition of land incorporated in the draft coal policy.

They opined that any law ought not to be brought under the purview of any policy, rather laws should be kept out of the purview of a policy.

The members of the Council of Advisers said that the issue of land acquisition fell under the purview of land acquisition policy of the government, not under the purview of coal policy.

Some of the advisers also suggested making the coal policy smaller in size removing all the ambiguities.

The sources at the Ministry of Energy and Mineral Resources said that coal extraction under the open-pit method in at least one coal mine has been proposed in the draft coal policy as a test case since 'no one in the country has any real experience in open-pit mining.'

The advisory committee proposed that at least one mine should be developed following the open-pit method to gather hands-on experience, and to assess the effect on the environment.

The draft says that the first open-pit mining project will be experimental, and Bangladesh will gather data on the impact of water extraction on the environment, the impact on the underground through simulation, protection of the environment, resettlement of the evicted people and the socio-economic impact, and assess the success of re-injection of water into the underground and land reclamation and fertility.

'If the result of the open-pit mining method is satisfactory, the method can be used in other coal-fields for commercial extraction of the coal,' said the provision.

The draft coal policy says that either the proposed state-owned 'Khani Bangla' or a public-private joint venture under the management of the government would develop the coal-field using the open-pit method. The partner of the joint venture will be selected through competitive bidding.

However, the National Committee to Protect Oil, Gas, Mineral Resources, Port and Power demanded that the coal policy should not include any provision for open-pit mining, not even an experimental one.

Regarding underground mining, the policy said that necessary measures would have to be based on the experience of underground mining (in Barapukuria).

If any company wants to develop a coal-field, it has to carry out socio-economic and technical feasibility studies and submit reports on both open-pit and underground mining, and a government committee will choose the mining method, said the policy.

The committee also decided to fix a security deposit for environmental damages, which will be 2 per cent of the estimated project cost. The deposit will be in addition to the existing deposit of 3 per cent of the project's cost as stated in the mining rules.

The draft policy said that a representative group, comprising elected local representatives and local civil society members, would be formed, which would be involved with a coal project for observing environmental and social impacts and hear the complaints of local people.

The draft policy also restricts coal export and proposes to set up a large power station near every coalmine project. The coal which will be extracted will be used for generating electricity at these power stations.

It says that coal will have to be extracted according to the requirements. Coal will be extracted maintaining a balance between the extraction and utilization. In spite of it, if any company wants to extract additional quantity of coal it will not be allowed to do so.

However, the Council of Advisers suggested incorporating an explanation in detail regarding the sort of penalty if any company is found guilty for extracting additional quantity of coal.

Meanwhile, the sources at the Ministry of Energy and Mineral Resources also told The New Nation that the 8th draft coal policy would again be placed before the Council of Advisers by December next so that it could be approved within this year.


http://nation.ittefaq.com/issues/2008/08/20/news0242.htm

Energy supply stalls
August 20, 2008
FORREST COOKSON

The energy crisis in Bangladesh continues to worsen. As he has learned more and more of the real situation the Special Adviser, a courageous man of ability and integrity, is bringing order to a confused and difficult situation. But time is short and we must pray for his success in the face of long odds. But for most the full depth of the crisis is not being faced. Policy actions have been much better in past few months. After floundering for a year there began to emerge a coherent approach to energy.

For too long those concerned with the energy sector have lived in a fools paradise, unwilling to face up to the technical and economic issues that the nation faces and believing in dreams rather than in a reality dictated not by ideology or nationalism, but by science and economics. Donors have focused on the wrong issues and have maximised the returns to their employees careers rather than Bangladeshs real problems. Two gaps have emerged: One scientific and real, the other one managerial.

Gap 1: Technology, economics and energy
There is an unwillingness in the public sector to master the science and management skills needed to operate a modern energy economy. There is a commitment to ideological or opportunistic approaches, ignoring pragmatic issues of what works. It is not a lack of skilled personnel; there are plenty of highly competent Bangladeshi engineers. Talk to them you find that they are disgusted with the lack of scientific integrity that characterises the governments policies. The authorities have a history of wanting to hear only good news; they do not want to face difficult facts. Everyone loves to proclaim the merits of BAPEX as an organisation that is able to handle the exploration and development of gas without outside help. But ask a Bangladeshi engineer about this and one is greeted with laughter. The organisation and financing needed for recovery of the energy sector cannot be achieved within a government organisation.

There are three points:
What are the gas reserves? This first point is an engineering question.
The estimated reserves claimed for the gas fields need regular revision and testing, analysis of data from the wells. etcetera. Reserve levels are not constants of nature but dynamic, determined by technology, increased knowledge and prices. Improved technology may increase reserves; higher prices increase reserves; knowledge of the gas field gained by experience allows adjustment in reserve levels. This type of review is not being done on a regular basis so that the actual reserve position in the gas fields is, at best, vague. Now as the need for more gas is so urgent truth is emerging. We do not really know the condition of the gas fields owned by the government. The Ministry has not been willing to do the work, recruit the staff, and fund their activities that would provide the needed information. At a technical level this has long been understood, but no one was willing to let this secret out of the bag. Ultimately when the gas field will not produce the reserves that are alleged to be there, reality bursts out. Objectively there are two points: (1) the reserves are more likely to be larger than claimed but the work to establish this is yet to be done. US experience is a gas field provides six times the original estimate of the reserves! (2) The field can be exploited to maximise the total gas from the field or to maximise the current flow. Too often the second is followed resulting in loss of gas.

Swallowing the optimistic claims of the gas reserves, the left wing elements that try to dominate government policy were able to argue against the need to develop the gas fields using private foreign knowledge and capital. Repeating the fairy tale of the gas situation and continuing to project a nationalistic fervour in the place of scientific assessment, the nation was led step by step into the present quagmire. Never without arguments the leftists now claim that the present problems with the gas supply are a conspiracy to move towards private and foreign participation in the energy sector! Wow! What illustrated better their capacity to spin fairy tales? All the myths and misrepresentations do not actually produce the volume of natural gas the nation desperately needs. All the hot air does not generate electricity. Bangladeshs energy sector is not being properly developed.

Preference for public ownership
The second factor is the commitment of the bureaucracy to government ownership and rejection of involvement of the private sector. The commitment to government ownership despite thirty years of proof that it does not work exposes the deep cancer inside the energy sector. The increase in gas availability in the past decade has come almost entirely from the private production sharing contracts (PSCs); the increase in electrical energy has come almost completely from the private independent power projects (IPPs). The obvious conclusion that the government must stop trying to construct and operate gas fields and power stations has been rejected over and over. Now the nation is paying the consequences.

To my amazement, in the face of this history of what works and what does not work, the left intellectuals and the bureaucrats continue to argue for government ownership and operations and against the private sector. The bureaucracy and the politicians have favoured government ownership and operational role as this opens the opportunities for rewarding friends and obtaining illegal pay offs. But the intellectuals, as all over the world, cannot bring themselves to face reality their belief that government resource allocation can improve over that based on the greed of capitalism is wrong, it does not work. The Caretaker government understands the folly of public sector domination of energy production. Their efforts to shift to private participation should win the day.

Achieving Realistic Pricing: Pricing of energy has been unrealistic and results in poor resource allocation and waste. The government feels that prices should be kept low to help the common man. This results in waste; often does not provide the alleged support to the farmers and the poor which are instead captured by influence and monopoly; and causes widespread misallocation of resources. The taxes levied on energy are very high but rarely reviewed for appropriate economic consequence. Low prices for electricity benefit largely middle and upper class households; low prices raises demand allowing households to live beyond their means. Gas prices are also low. The government is considering needed increases in gas; the Petrobangla proposed increases will bring revenue much closer to costs. The decisions on price levels to be made by BERC in September are critical to moving towards realistic gas prices.

The first gap comprises the failure to develop and support proper technical management of the gas fields; the second is failure to shift the ownership, investment and operation of the energy sector to the private sector; and third to establish realistic prices. These are not points of ideology but points of science and logic. The consequences of this gap are now clear: No one knows how much gas the nation has in existing fields and the reserve figures are uncertain. Until the Caretaker government, the energy ministers proved over and over that these are not able to plan, finance, build power stations or operate gas facilities at a reasonable cost with an acceptable quality. Finally energy prices remain below cost. The Caretaker government has made great progress in all three areas but there is a long way to go.

Gap 2: Implementation failures
The second gap is slow implementation of three actions that would accelerate the long term development of the energy sector: The development of manpower for the energy sector, building a strong regulatory organisation, and expanding foreign investment in the energy sector. Manpower Development: One essential action in improving the energy sector is to increase the trained manpower. Some one should ask the government what has been done with all of the money that the IOCs, operating under Production Sharing Contracts, have given the Ministry for manpower development. It would very interesting to see how much money has been given and how this has been used. Who has been trained? Where are these persons now? What benefits has the nation gained from the expenditure of these funds? How much has been spent on officials taking trips around the world? What other sources of training funds have been used to improve the skills of persons in the energy sector? Who has been trained and where are they now? How much money has been spent on shopping expeditions in the guise of attending training seminars? Everyone knows this is going on but nothing is done to stop it. There is continuous discussion of the need for training manpower in the energy sector. The government has not told its citizens what they have done in the past with their own funds or with donor funds. The use of training funds by government organisations is one of those scandals that everyone knows about but no ones wants to face. Bangladeshi citizens should be angry at the wastage of funds available for training that are not used to benefit the nation. The performance of the energy sector will be based on the quality of the technical staff available.

Building the Regulatory Commission: The build up of the energy regulatory commission (BERC) has been very slow. It is obvious that the government had opposed the establishment of this commission and stalled in the face of the donors insistence. It is ridiculous that the donors are involved in this; surely it is obvious that the government needs to have a strong regulatory organisation that will objectively guide and regulate the activities of the players in the gas, coal, and power sectors. Of course as a regulatory commission develops, the role of government owned energy facilities would decline. The Ministries and the Corporations do not want their power diminished by a strong regulatory commission! That is the point; the private sector brings its superior management skills, its greater technical knowledge, and its ability to mobilise finance. The regulatory commission insures that the publics interests are protected in pricing, safety, and environment. BERC should regulate the PSCs and IPPs and establish prices for energy products.

Foreign Investment in the Energy Sector: Bangladesh is very unfriendly to foreign investment in the energy sector. The press reports continually a flood of negative seminars, groups, etcetera denouncing foreign investment. There is almost no one explaining the necessity and benefits. It is no surprise that interest in the energy sector in Bangladesh by foreign investors has shrink to almost nothing. There are various aspects of this. The failure to develop the coal resources in a timely fashion is now seen as a disaster. Not starting large scale coal mining along with gas shortage means that there will be little increase in the availability of electricity over the next few years and it may go on as long as a decade if the present dithering and indecisiveness continues. The delay is largely the consequence of group preaching anti foreign investment propaganda.

The poor response to the third bid round in the gas sector signalled the difficulties in attracting IOCs for gas development. The ban on exports of gas reinforces the lack of interest. Petrobangla made no serious effort to examine the factors related to investor attitude. The lack of bids for the Bibiyana power project reflects the scepticism of foreign investors in participating. Once again the Power Cell was not willing to listen, believing terms can be dictated. Finally, foreign investors in gas fields claim price adjustments are needed to meet changing costs. No one listens; foreign investors go away. The nation is caught up in a deep, devastating energy crisis. Unfortunately this crisis will get worse and worse. The availability of electricity will at best increase slowly and may well decline as old plants fall apart and function with less and less reliability. Projects will bog down in court cases that may take as long as a decade to resolve. The legal system was used to block further development of the gas sector, and to prevent private sector projects from going ahead by frivolous challenges to decision after decision. Frankly I do not see any way out. It is like a national suicide. Training resources have been wasted on shopping expeditions; those who have received real training are often no long employed in the sector. The political system is unable to act to develop either the gas or the coal resources. The bureaucracy continues to believe the nostrum that public ownership is the right path. If business as usual continues in the energy sector then the Bangladesh economy will find its growth rate declining and there is only poverty and darkness for the ordinary men and women of this nation.

The CG has made considerable progress. But based on history an elected government is unlikely to continue these effective actions. Democracy will bring a black out, not electricity.


http://truebdnews.wordpress.com/