Bangladesh coal projects may go ahead after national policy adopted

M Azizur Rahman, Bangladesh

A number of international companies eyeing investment into Bangladesh’s coal sector with foreign direct investment proposals worth around $5 billion may shortly get the go ahead after the government adopts the nation’s first national coal policy. At least four foreign companies are awaiting government approval for their respective coal-mine development proposals for several years after applying to the state-run Board of Investment.

The companies include UK-based GCM Resources (formerly known as Asia Energy), Indian business conglomerate Tata group, South Korea’s Luxon Global and US-based Global Vulcan Energy, said a senior BoI official. He said the foreign investment proposals pending with the BoI include a $2.5 billion project from GCM Resources, a $1.6 billion venture from Global Vulcan Energy, a $1.5 billion investment from Luxon Global and a portion of the $3 billion earmarked from Tata.

GCM Resources proposed in October 2005 the development of an open-pit coalmine at Phulbari with a 1,000-MW mine-mouth power plant. Before submission of the investment proposal, GCM Resources conducted a feasibility study on the Phulbari project at the cost of $18 million, company sources said. Tata plans to spend a portion of its $3 billion investment proposal placed in April 2006 developing the open-pit Barapukuria coalmine with a 300-MW mine-mouth power plant. Tata’s proposal also includes investment in steel and fertilizer plants.

Global Vulcan Energy signed a memorandum of understanding with the BoI in 2005 to invest $1.6 billion to develop a coalmine at Jamalganj and set up a mine-mouth power plant. The US company also proposed to set up two organic fertilizer plants in Bangladesh. Luxon Global placed its investment proposal and signed a MoU with the BoI in July 2005 intending to develop a coalmine, a mine-mouth power plant, a fertilizer factory and a liquefied natural gas plant.

Since the first such proposal was placed to the BoI in May 2005, the successive governments are holding up these proposals on the pretext of adopting a relevant policy first. Dr M Tamim, Special Assistant to the Chief Adviser on energy issues, said the companies will have to wait until the adoption of the country’s first-ever national coal policy before receiving a government decision.

“We are working on adoption of the coal policy. I am hopeful that it might be done in the next two months,” Dr Tamim said. The country’s future coal-sector developments would be based on the coal policy, he added.

Source: World wide english magazine “Platts” (www.platts.com)
Date: Issue 874/June 23, 2008