Energy & Power

Column
Reverse Swing

Don’t Send Wrong Signal to Foreign Investor
Farid Hossain

On August 26, 2006 Phulbari, a farming area in northern Dinajpur district, captured news headlines. On that day security forces fired on thousands of villagers who attacked the office of Asia Energy Corporation (AEC) protesting the company's open-pit coalmine project there. The violence left at least three protesters killed. AEC itself became a casualty. The then-government of was forced to cancel the controversial agreement that allowed AEC to go for open-pit coalmine in the area. AEC was also forced to temporarily pull out from Phulbari.

Since then the company has waited patiently for an opportunity to return to the area and restart its work. It has been quietly lobbying with the caretaker government, hoping that the new administration will appreciate the importance of the project in boosting Bangladesh's investment credibility.

The bad news for AEC is that the opponents of AEC and its project are once again back to their business. National Committee to Protect Oil, Gas, Mineral Resources, Electricity and Port has once again demanded that the caretaker government formally scraps the deal with the AEC. The committee also wants to see AEC thrown out of the country.

“AEC is now hatching a conspiracy to extract coal at Phulbari coalmine through open-pit method,” said Prof. Anu Mohammad, member secretary of the committee that has spearheaded the protest against AEC and its US$1.4 billion project. “We will go for legal action if the caretaker government does not cancel the Phulbari open-pit coalmine project," Mohammad told a news conference in Dhaka ahead of the first anniversary of Phulbari riots. He did not stop here. He said the committee wants the government to punish the officials (both in AEC and government) responsible for signing the agreement should be punished. The Phulbari project will displace at least 50,000 villagers and damage hundreds of acres of cropland and the environment, the committee has argued.

But AEC does not see it that way. It argues that the project has the prospect of turning the area into the country's coal capital and attracting more foreign investment. It also is likely to benefit the Mongla port, which currently sits almost idle for lack of shipments. Asia Energy has planned to mine 572 million tones of high-quality thermal and semi-soft coking coal over a 30-year period, at the rate of
15 million tones per year. The company has acknowledged that the project would displace 40,000 people over 30 years, but it has promised to fully compensate those who lost property and their livelihoods. The project would have also produced a domestic coal supply for Bangladesh and contribute 1% to the GDP of a country, where nearly half the 145 million population earns less than a dollar a day.

AEC also has promised to provide an average 1,100 jobs during mine life that it said would precipitate thousands of more jobs in support industries. The project also offered to improve community services in the area. Villagers could get better schools, hospitals as AEC offered to improve the community facilities. Improved education and sanitation along with tap water in model housing projects have also been offered by AEC.

AEC officials have recently said they want to return to the area as the locals have no dispute with the company. The villagers would have loved to welcome them because of the adequate compensation the company has offered for those who would have been displaced.

The anti-AEC activists would not be pacified. Instead they are planning to rekindle the agitation after they have a got wind of renewed AEC lobbying. Whether open-pit coalmine is good or bad for the country is a matter of debate. What is, however, clear is that the activists are a wrong signal: Bangladesh is not friendly to foreign investors.