Phulbari coal mining: An anti-state project?

Now, with such an evaluation of the AEC proposal by a person no less than the Energy Advisor to the government, who would dare to be associated with any "anti-state" activities that may expose him, who knows, even to a charge of treason!

The question that may arise as to how such an agreement could get concurrence? The GOB has not yet published any white paper on the AEC deal for Phulbari, nor has the ministry made the so-called agreements public. From the available information, it appears that BHP was awarded a mineral exploration licence in August 1994 (as per statement of a former Director of BMD, Mr. M Mominullah, published in the DS on March 20) for the north-western part of Bangladesh.

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This exploration license was later (in 1998) assigned by BHP to AEC, who conducted seismic and drilling operations in Phulbari and discovered 572 million tons of bituminous coal at a depth ranging from 400-800 feet. On the basis of the field exploration and then client-financed evaluation by a different group of consultants, AEC has reportedly submitted a plan for open pit mining of Phulbari coal.

AEC is now contemplating to start open pit mining in the Phulbari area on the basis of 6 per cent royalty only by the year 2007. It is claimed that environmental clearance for the said project has already been obtained. Foreign finance has been mobilized. In addition, they are going to collect money through IPO in the local stock exchange market. All set to go for an "anti-state" project!

The Energy Advisor has admitted that BHP signed the agreement in 1995 while AEC took over the project in 1998. The gray area in his statement is whether any new agreement was signed with AEC in 1998 or they (AEC) were just the assignee of the agreement signed between the Bureau of Mineral Development (BMD) and BHP in 1995.

If these were two separate agreements and if export provision was not in the agreement signed in 1995, but incorporated in 1998, then of course the later officials must explain their conduct. The Hon'ble Adviser perhaps has mixed up the issue or may be trying to shield some officials by saying that the people of both the regimes responsible for the two agreements should be tried for striking deal against national interest. It is not clear how two agreements could be signed for a single project with two different companies at the same time. In any case, the issue needs to be dealt with properly.

It may sound ludicrous to suggest that the Hon'ble Advisor should dissociate himself from such a deal any more. This is more so when he has given a press statement to the effect that the deal was anti-state, then as a conscientious citizen of the country, he must rise against the deal and make sure that those who were responsible for such a deal either justify their stand or face charges as could be brought against them by the judicial process of the country.

Unless he scraps the said deal, and seriously reviews the proposed open pit mining and export of coal, he will be accused of double standards and considered instrumental in approving of an illegal project, thereby abetting in the unlawful act committed by a section of officials.

The Hon'ble Advisor has mentioned in the press that the deal should not be scrapped as it is an international agreement. May we suggest that the deal cannot and should not be termed as an international contract, because the contract does not involve any international forum, institution, or even an international company. It is an agreement between two local institutions, namely between AEC and the BMD.

Is it not a fact that AEC has been formed in Bangladesh under the Companies Law as Asia Energy Corporation (Bangladesh) Pty Ltd? So, legally, it is a Bangladeshi company. As such, no international convention will be at stake to deal with such a case. Further the deal was not made outside Bangladesh and no multinational or international agency was involved in the contract.

For the irregularities of not abiding by terms and conditions of the contract, non-submission of the documents and returns in accordance with the Mines and Minerals Rules, 1968, to the BMD, the agreement signed earlier by BHP or AEC should stand automatically cancelled. The contract itself as mentioned by the Hon'ble Advisor is asymmetrical. AEC through BHP has taken advantage of the simplicity or stupidity of the other party, i.e. BMD, and incorporated conditions which will be detrimental to the interest of the nation. These, if analyzed in the light of natural justice, shall go in favour of Bangladesh to revisit the terms and conditions of the contract.

It will not be out of context to refer the case of Dhabol Power Plant Project in Maharashtra in India; when Maharashtra signed an agreement with Enron for installing power plants under IPP. After the election in India, the new government re-examined the terms and conditions of the Dhabol project and found that the contract was against Indian interest. The contract was scrapped with no consequences whatsoever for the government of India.

It will add to our shame if, after such forceful declaration by the energetic Energy Advisor, the Phulbari coal mining project, already considered against the interest of the state, is allowed to proceed without a scratch. Incidentally, the Coal Policy itself now smells suspicious due to the inclusion of provisions which appear to justify the wrong deeds done earlier in the Phulbari coal mining project -- an anti-state project. It is necessary to revise the "proposed" coal policy as well.

The author is a geologist, former chairman of Power Development Board, and retired Additional Secretary of the Government of Bangladesh.