Bangladesh: Bangladesh Coal Profile

Coal

Bangladesh has small coal reserves, and has consumed little coal in the past. Bangladesh began commercial coal production in April 2003 with the opening of the Barapukuria Coal Mine, which is expected to produce one million short tons of coal per year (Mmst/y), principally for electricity generation. This mine is being used to fuel the 250-MW Barapukuria Coal-Fired Power Plant in Parbotipur, which began commercial operation in January 2006. Another possible coal mining project at Khalashpir is under consideration as well.

Despite Bangladesh’s small reserves, the government has recently promoted the development of coal to ease its reliance on natural gas for power generation. Bangladesh’s coal reserves have so far not been developed, mainly owing to a lack of domestic financing. To attract investment, the government has opened the coal sector to foreign bidding. Although estimates vary, Bangladesh’s Energy Ministry judges that the country has up to 2.7 billion short tons of high-quality coal reserves. According to the latest Energy Information Administration (EIA) figures, in 2004 Bangladesh has no domestic coal reserves or production. The government is currently crafting a new national coal policy that will govern foreign involvement in Bangladesh’s coal sector. Some analysts anticipate the new coal policy will hike the royalty rate on coal projects from 6 percent to 16 percent and place limits on coal exports from the country, among other guidelines.

In July 2005, UK-based Asia Energy Corp. (AEC) submitted a proposal to develop a coal mine in Bangladesh’s Phulbari region. According to a Scheme of Development and Feasibility Study submitted to the government, AEC declares that the Phulbari site contains an estimated 572 million short tons of recoverable coal reserves. The initial investment in the project would be $1.4 billion, and the open-pit mine is expected to produce 15 Mmst/y of coal to fuel a planned 500-megawatt power station. AEC is awaiting formal approval from the government, which has declared that it will not approve any new coal development projects until its new coal policy is enacted. AEC also faces a number of other obstacles in gaining approval for the project. According to the Feasibility Study submitted by Asia Energy, up to 40,000 people would gradually be relocated away from the Phulbari area that currently live on or near the planned mining locations.