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Irshad Ali Khokhar, Director General (Minerals) at Pakistan Ministry of Petroleum and Natural Resources, had recently been in Dhaka to attend a seminar on development of standard of coal organized by Bangladesh Atomic Energy Commission in cooperation with the International Atomic Energy Authority. During a break, he talked to the Energy & Power on various aspects of energy, particularly concerning the region.
“The energy demand both in India and China is increasing following their growing economy. On the other hand, the entire SAARC region is short of required energy,” he said adding “in this situation countries like Bangladesh and Pakistan are less privilege to meet their energy demands through imports.”
That is why, he said, “we have to start work right now for optimum utilization of own resources. With this perspective, the senior Pakistan official informed that his country has started work to formulate a national coal policy to attract foreign investors in the coal sector. “At present, 85 percent coal is being extracted in private sector,” Khokhar said adding that “the royalty for coal extraction is two percent.” He informed that the new policy would not increase the royalty as royalty is not the only thing in the coal sector. “The main benefit the country gets from the investors is tax and duty.”
The EP Editor Mollah Amzad Hossain interviewed the DG (Minerals) of Pakistan Ministry of Petroleum and Natural Resources. Following are the excerpts:
EP: First of all, we would like to know about the state of coal sector in Pakistan.
Irshad: The coal industry in Pakistan is not very large. There are coals spread over different parts of the country, but the coal seam is only two meters thick. That’s why we’d to go for underground mining. However, recently we discovered a new coal reserve at Thar desert in Beluchistan. There reserve over there is 185 billion metric tons, but it’s lignite. We carried out a feasibility study by RWE of Germany for its development. The coal seam here is 22 meters thick. We’re trying to attract foreign investors for open cut mining in the reserve because the government is not able to make the huge investment. We also invited Asia Energy, working in Bangladesh, for investing in the project.
EP: You visited Barapukuria coal mine. Do you have any observation?
Irshad: Bangladesh is fortunate to have world-class premier coal reserve. But the challenge is extracting the coal with minimum investment but with safest mode. To my understanding, the emergency requirement is analyzing the geological structure and determining the mining method. My understanding is that the Barapuluria coal is 40 meters thick. So, underground mining was not the better option. The overburden was also not in favor of underground mining. That’s why the Barapukuria underground mine is risky from the safety aspects. Also, the underground mining made the production cost higher. Had it been an open cut mine, it would have been safer although the primary investment is high.
EP: So, do you’ve any suggestion?
Irshad: I don’t think there is any scope to shift from the present mine after making so much of investment. Now the option for Bangladesh is reducing the risk factors through skilled manpower and sophisticated technology. Still, it’ll remain as a risky project. Again, I don’t think it’ll be wise to turn Barapukuria into an open cut mine. The government should work to obtain maximum benefit keeping it in present form of mining.
EP: We know that Pakistan has a national minerals policy. Then what’s the necessity of formulating a coal policy?
Irshad: Pakistan wants to develop it as a competitive country in international arena of energy. The main objective is attracting the foreign investors. That’s why the coal policy is keeping all kinds of fiscal and regulatory incentives for the foreign investors. The royalty will remain at two percent for coal extraction as well as other taxes and duties. I firmly believe that the new coal policy will attract foreign investors in coal sector of Pakistan.
EP: But, the royalty is other countries like Indonesia is higher. In Bangladesh it’s five to six percent. Why you are not raising the royalty in the new policy?
Irshad: Look, investment in the mining sector put positive impacts on overall economy of the country. We don’t think benefits come only from royalty. A company investing in the coal sector has to give royalty no matter whether it earns profit or not. But, if it earns profit, it has to pay different kinds of taxes including corporate tax and sales tax. At the same time, the investment in the coal sector brings positive impacts on economy, including the local community. On the other hand, royalty depends on availability of coal. In Indonesia, you’ll get coal whether you go for drilling. That’s the reason, the investors are coming despite high royalty. But, will you get any investment if 100-200 meters overburden is to be removed for extracting coal and the royalty is like Indonesia? We believe that the royalty should be imposed considering all aspects. That’s why Pakistan has no plan to increase the royalty in the new coal policy.
EP: Bangladesh lacks in skilled manpower in the coal sector. How can Pakistan help us?
Irshad: Our coal sector is also not very developed, but we’re in a better position in terms of manpower. If any request comes up from the government level, we’ll be glad to extend our cooperation.
EP: You might be aware that Bangladesh is also formulating a coal policy. Already, the decision is not export coal. How do you consider it?
Irshad: Look, I don’t know what kind of policy Bangladesh is going to have and on what context. But, if a country has market of its coal, should it export? The question is how much coal has to be extracted to make a mine profitable and there must be a proper study whether the coal to be extracted has enough market in the country. Before any such study, a total ban on coal export will not be logical. And what’s the necessity? If there is a market in the country, the investors have not to think about export.
On policy, my opinion is that before adopting a policy the main emphasis should be whether proper implementation of the policy will be possible. And this consideration can ensure benefit and welfare of a country and its people.
EP: What are the factors to determine the method of coal extraction?
Irshad: If the seam is thick enough open cut is the better option. Bangladesh has that thick coal. You’ve to remember that you should go for open cut mining if the reserve permits it geologically, economically and technically. But, rehabilitation and protection of environment are big challenges. But, environment’s protection is possible through technological advancement in the present age of sophisticated method. And in regards to rehabilitation, I must say people who have to be migrated should feel that they are in better position than the living standard they have previously. Again, the environmental matters have to be ensured through proper monitoring. Bangladesh can exploit the experience of Australia and Germany in this regard. And it’s the right time for coal extraction.
EP: Why are you saying it’s the right time for coal extraction?
Irshad: All the SAARC countries are experiencing energy shortage. The energy demand both in India and China is increasing following their growing economy. So, countries like Bangladesh and Pakistan are less privilege to meet their energy demands through imports. Again, if we can arrange the imports, the money will come where from. It’s also a big question. So, we don’t have any alternative but to start work right now for optimum utilization of own resources. That’s the reason, I think it’s the high time for Bangladesh to develop coal resources.
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