EVALUATION OF PHULBARI DEAL: SEARCH FOR POLICY OPTIONS

Abstract

An Australian company, Broken Hill Proprietary Minerals International
Exploration Inc (BHP), started coal exploration in Phulbari area. Bangladesh
government signed a contract with BHP through an open tender. In 1998, the contract was assigned to Asia Energy (AEC), a British company, after estimating
the coal reserve. A AEC report claims that Bangladesh will receive benefits worth
US$13.7 billion as indirect or multiplier benefits. The mine itself and the coal fired
plant for the production of electricity will contribute 1% percent per annum to the
Gross Domestic Product (GDP) of the country. 26 August 2006, the local people
assembled in Phulbari town to tell the foreign company that it must vacate their
ancestral land. They would rather die than allow the company to mine their land
for coal since that would displace a huge population. It seems that the full
implementation of the agreement between the National Committee to Protect Oil,
Gas, Mineral Resources, Power and Port and the government seems to be the
hardest part of the episode. However, all concerned should look into the factors
that have led to this catastrophic situation. It seems that is a clear mismatch
between the deal signed and the coal policy. Many believe that the Phulbari Coal
project will be a burden for the country. So the issue needs urgent attention. The
lessons learnt must be drawn in the upcoming coal policy which is still in draft
form. Keeping all the realities in mind, it is necessary to examine the deal minutely
and establish the facts and expose the deviations in the deal which have lead to
such national crisis. This paper makes an humble effort at evaluating the deal and
suggest a few viable options. The aim of the paper is to suggest stopping further
recurrence of such misunderstanding, finding out the mismatch between the deal
and its implementation and recommend a suitable extraction method based on
keeping the national interest at the centre.