Bangladesh in coal dilemma

Bangladesh rushes head-long into coal, protests grow as vital wetlands threatened

Published Date: 20-02-2012
Source: New Age Xtra
Source Date: 14-02-2012

Parlous prospects face many thousands of Bangladeshi citizens – and the country’s fragile environment – as the government seems to be rushing headlong into dependency on coal-fired power.

Plans to mine the Phulbari deposit continue being stalled, due to intense domestic political wrangling prompted by continuing resistance. See: Bangladeshi activists demonstrate in London against GCM Resources

So now, the government envisages importing coal from overseas.  Although no contracts have yet been signed, Indonesia, Australia and South Africa are cited as possible sources of supply.

Late last month, Bangladesh signed a deal with India to construct the first joint-venture coal-fired power plant, just 10 km north of the world’s largest protected wetlands.

The proposal created a wave of protest from within the country.

Twelve prominent Bangladeshi citizens have called for the plant to be cancelled immediately, at least in its currently-proposed location.

Beginning of an end?

Mahfuzul Haque explores the possible hazards of the Indo-Bangla agreement on the $ 1.5 billion Rampal power plant

New Age Xtra (India) 14 February 2012

To enhance the electricity generation situation of the country, Bangladesh government signed an agreement with India on January 29, 2012 to produce coal-fired electricity as the Power Development Board (PDB) of Bangladesh and the National Thermal Power Corporation (NTPC) of India partnered to build a 1,320 megawatt coal-fired power plant at Rampal in Bagerhat. The first ever joint venture between the two country’s governments in electricity production will cost around $1.5 billion, according to PDB, and it will start supplying electricity to the national grid by 2016.

Two units of the plant, with 660 MW generation capacity each, will be built over 1,834 acres of land which will be located about 10 kilometres north of the Sundarbans, the world’s largest mangrove forest. The plant will be the largest power plant in the country based on imported coal.

According to the agreement, PDB and NTPC will contribute equally 30 per cent of the total cost while the rest 70 per cent will come from bank borrowing. ASM Alamgir Kabir, chairman of PDB, informs the media that the price of power from the joint venture would range between Tk 5 and Tk 7 per unit.

Prior to that on December 20, 2011, PDB inked deals to build three coal-fired power plants to generate about 1,087 MW electricity based on imported coal with a consortium of local Orion Group and Chinese Long King to initiate electricity generation by 2014 with a price of Tk 4 per unit.

BPDB has also floated international tenders to build six more coal-fired power plants to generate up to 2,775 MW of electricity based on imported coal in different areas across the country, especially in Chittagong, Dhaka and Barisal areas.

According to PDB website, two power plants will be built in Dhaka area having a capacity of 600 MW to 800 MW, another two having the same capacity will be in Chittagong and another plant will be set up in Barisal having capacity of 100 MW to 300 MW.

Before ascending to power, the incumbent Awami League-led government pledged in its manifesto to enhance the capability of the country in electricity generation as it is one of the burning demands of the entire nation. During three years of its tenure, the government took some initiatives to improve the electricity generation by adopting mainly quick rental power plants, which consume huge amount of fossil-fuel. The move has already affected the indicators of the country’s economy as the government has to provide a large amount of subsidy for importing fuel and it has also to buy the produced electricity costing at a high rate. The government has been facing criticisms from different quarters for not adopting proper policy for electricity generation.

Now, after almost three years, the government is taking another path to increase electricity generation depending on the coal-fired power plants. Finance Minister AMA Muhith also echoed the government’s move toward coal-based power plants as he said in the agreement ceremony on January 29 that electricity from coal-fired power plant will be cheaper than that of the oil-fired plants.

The Indo-Bangla agreement is the implementation of a MoU (Memorandum of Understanding) signed between the two governments during the visit of the prime minister of Bangladesh to India in January 2010. Later, BPDB and NTPC inked a MoU in August 2010 in Delhi for setting up coal-fired power plant. It was initially considered that the coal to run the power plant will be imported from India. Later, PDB found the coal of India not having proper quality and thus changed its decision. Now PDB is considering Indonesia, Australia and South Africa as the tentative sources for coal import.

The project falls under the red category of industrial classification made under the Environment Conservation Rules of 1997 that requires Location Clearance Certificate and Environment Clearance Certificate from the Department of Environment (DoE). In 2010, BPDB entrusted Centre for Environmental and Geographical Services (CEGIS), a public trust under the Ministry of Water Resources, with the responsibility of conducting Initial Environmental Examination (IEE) and Environmental Impact Assessment (EIA) with purpose of obtaining clearance certificates from DoE.

But experts say, before initiating such type of projects there should be some studies which will find out whether the proposed project is economically viable, technically possible, socially acceptable and environmentally tolerable. If these steps are followed properly and findings are adequate, then the project becomes feasible.

Engineer M Inamul Haque, chairman of Institute of Water and Environment alleges, ‘The required steps had not been taken properly, rather the government is in a rush to implement the project.’ According to Article 7 (4) of Environment Conservation Rules 1997, location clearance certificate and thereafter environmental certificate shall be obtained from DoE for industrial unit falling under red category.

After examining both Lobanchara of Khulna and Shapmari area of Bagerhat district, the CEGIS submitted the IEE report in September 2010 recommending Shapmari for the project. The report states that the potential impacts during the pre-construction phase will be the loss of agricultural land (shrimp farming ponds, crop lands) and homestead land due to land requisition. At the construction phase, it will affect through visual intrusion, local air pollution due to generation of dust particles and emissions from engine vehicles, noise from machinery and engine vehicles, solid waste from construction site and labour colony.

During post-construction or operation period, air pollution might occur due to emission of sulphur dioxide, nitrogen dioxide and SPM (suspended particular matter). The report also warns about the accidental release of fly ash which will have an impact on ecosystem.

The report also reveals that the most likely impacts from the thermal power plants are deterioration of surface water quality due to sediment runoff, runoff from coal yard, and discharge thermal plume. It presumes that the water quality will reduce due to leakage and spillage of oil and chemical. It continues, ‘Excess mining of ground water intake for cooling purpose may reduce the ground water level, subsequently killing juvenile fish and other micro lives in water resources.’

Environmentalists tell Xtra that coal is one of the large toxic emitters. It emits carbon mono-oxide, carbon dioxide, sulphuric acid, which are risky to bio-diversity. Even when coal is kept on soil, it emits hydro-carbonates that usually mix up with the soil. Due to this, plants do not grow in these areas later on.

Moreover, a large amount of sweet water, mainly from surface and deep underground sources, will be needed in cooling the machines and in the recycling process of the steam. The discharged and waste water will affect the flora and fauna. Coal burning emissions and greenhouse gas will pass over the Sundarbans in dry seasons when wind blows from north to south, affecting the trees heavily. ‘In monsoon there will be acid rain that will severely affect the green land, vegetation and habitat,’ says Engineer Inamul Haque.

The CEGIS report recommends that good housekeeping of the stockpiles, fencing around the boundary, vehicle management, use of high potential and advanced machinery with noise control devices, and waste management might mitigate the pre-construction impacts. Maintaining the DoE standard of emission by using advanced technologies of pollution control might reduce the air pollution.

Proper maintenance of the storage system, provision of rain water harvesting and retention ponds may mitigate the declination of ground water. The fisheries and wildlife habitat might be protected by creating minimum disturbance during the construction phase. Disturbance to the dolphin habitat might be reduced by limiting the construction activities within day time period and avoidance of their surfacing time and dolphin conservation programme might be initiated to mitigate the potential impacts on their mitigation. Regular inspection and maintenance, continuous monitoring from the control room and adopting safety plans would be necessary for the security of the environment.

Engineer Inamul Haque criticises the recommendations in the report for leaving an uncertainty on the impacts with words such as ‘might’, ‘may’, ‘might be’ etc. He says to Xtra, ‘through the “eye wash” study of CEGIS, the government claims that the project is feasible.’

In the report, CEGIS states that most of the people are supportive towards the project, except the landowners, whose lands will be acquired. Further, it recommends that proper resettlement and compensation as per government’s regulation, and employment opportunity for the local people might resolve the public concerns and would make them cooperative towards the projects.

Public concerns lie in the affects of the project that will be responsible for threatening the bio-diversity of the Sundarbans, a critical zone declared by DoE. Dr Abdus Sattar, chairman of environmental science department of Bangladesh Agriculture University of Mymensingh, found in his study that the project will threaten the livelihoods of 50,000 people while it will also exacerbate deforestation.

The Bangladesh Poribesh Andolon (BAPA) is also worried about the project and said in a statement that the power plant units would release toxic chemicals that will harm the neighbourhood and the Sundarbans. BAPA said the project is contradictory to the environmental laws in force as it has not obtained environmental clearance yet.

In this regard, an official of DoE informs Xtra, seeking anonymity, that the project only obtained location clearance certificate and after completing EIA, the project will get the environmental clearance certificate.

Finance Minister AMA Muhith said at the signing ceremony that new technology would be introduced at the plant, so that it becomes more environmentally sustainable.

Twelve noted citizens of Bangladesh have also demanded immediate cancellation of the proposed project through a statement while urging the government to select another location for the plant after assessing environmental impacts and public opinion. The statement said ‘Although we welcome the government initiative to generate more electricity but we are seriously concerned over selection of Rampal as the project site.’

The statement also said the primary environmental report, based on which the government gave location clearance for the project, did not discuss the impacts of the power plant on the Sundarbans although the site is very near to environmentally vulnerable area of the forests. Even the Department of Environment granted a certificate without paying hardly any attention to the issue. The law does not allow such a project outside an industrial area.

The eminent personalities who made the appeal are: Sultana Kamal, executive director of Ain o Salish Kendra; Professor Abdullah Abu Sayeed, president of Bishwa Sahitya Kendra; Muhammad Zafar Iqbal, professor of Shahjalal University of Science and Technology; Rasheda K Chowdhury, executive director of Ganosakkharata Ovijan; Syeda Rizwana Hasan, chief executive of Bangladesh Environmental Lawyers Association; MA Matin, secretary general of BAPA; Abu Naser, chairman of PABA; Sara Hossain, honorary director of Blast; Khushi Kabir, coordinator of Nijera Kori; Badiul Alam Majumder, founder secretary of Sujan; Farah Kabir, executive director of ActionAid Bangladesh and Iftekharuzzaman, executive director of Transparency International Bangladesh.

***

In their 2008-election manifesto, the incumbent government mentioned about formulation of coal policy after ascending to power but the government could not adopt any decision so far after three years of assuming power. Since 2005, ten editions of the proposed coal policy have been made but none did get the final whistle.

Prime Minister Sheikh Hasina recently said that local coal will be kept reserved for utilisation by the future generation adding that after adoption of policy the coal will be extracted. Experts see the decision merely as a ‘political one’. Dr AB Mirza Azizul Islam, economic advisor to former interim government, says, ‘The present government has every opportunity to go for a policy to extract indigenous coal as it has the greater majority in the parliament.’

The government is now planning to build more coal-fired power plants as it has a target to generate 7,000 MW from the coal-fired power plants by 2016 and a total of 15,000 MW by 2030. The country has around three billion tonnes of high quality bituminous coal reserves in five discovered coalmines. The country’s only coal-based 250MW-power-plant is located in Barapukuria, which consumes around 2,500 tonnes of coal every day.

Thus the proposed Rampal power project will need around 13,000 tonnes a day,’ observes MM Akash, professor of economics department at University of Dhaka. ‘This will need huge amount of money that will add more problems in the country’s balance of payment and foreign exchange reserve,’ he adds.

This will create an extra havoc in the country’s economy, thinks Mirza Azizul Islam. He says, ‘There should be cost-benefit assessment before initiating such steps.’

He also doubts whether the government’s analysis has been done properly or not. Dependency on imported coal would initiate uncertainty in behaviour of price and the transport cost would be higher as it will come from large distance.

The government has allowed nearly two dozen small liquid fuel-based power plants which forced the nation to import more fuels. A statistics shows that the demand for fuel has increased almost two folds over the fiscal year.

Bangladesh Petroleum Corporation imported fuel worth Tk 165.66 billion in 2009-2010 fiscal while the import cost increased to Tk 285 billion in the next fiscal. As the government has to provide large amount of subsidy to import fuel, the retail prices of diesel, kerosene, petrol and octane have been increased by Tk 15 per litre and furnace oil by Tk 18 per litre since May 2011. The import of a large volume of diesel and furnace oil for these plants has put additional pressure on the government resources and external reserve, which has led to high government borrowing.

***

BD Rahmatullah, former director general of Power Cell, thinks that the method the government is adopting to enhance electricity generation is not sustainable.

He criticises the government for not adopting environment friendly and cost-cutting methods in electricity generation. Production of gas, the key source for power generation, has already started declining.

Rahmatullah criticises the government for not concentrating enough on the reserve of gas. He suggests that the government should increase the efficiency of BAPEX to find gas. He also thinks that there is a vast opportunity to mitigate energy demand from renewable sources.

Engineer Inamul Haque, however, alleges that the government has opened the domestic market for India in the name of ‘partnership’.

He says, ‘NTPC could not initiate coal-fired power plants in some provinces of India because of the environmental risks and local people’s protest. But why then are both the governments in a rush to implement the project without examining the imminent impacts?’

Experts urge the government to step forward at adopting wise decisions through consultation with the concerned quarters. Otherwise, the overall economy will be under pressure, biodiversity will face major threats and the entire nation will be the ultimate sufferers.

Anu Muhammad, professor of the department of economics at Jahangirnagar University, explains to Mahfuzul Haque how the wrong policy of the government for power generation is putting the country’s economy and environment at stake

… ‘It will be difficult to get rid of the danger we have already fallen into’

MH: The government has claimed that they have drastically changed the whole power situation through rental power plants. But we have already seen its effects on the economy for importing huge amount of fuel. What do you think is the actual scenario?

AM: We observe lacks in the steps government has been adopting to bring solution in electricity generation. The government has no comprehensive approach and is also influenced by some vested interested groups. As a result, the output we got so far became the cause of creating more problems.

The government so far added electricity supply of about 3,000 MW in the national grid but at the same time the supply of 1,700 MW of electricity from public sector power plants are no longer part of the national grid as most of these plants are inactive due to lack of maintenance and also scarcity of gas supply. Thus, the government has added net 1,300 MW of electricity to the national grid.

If the government repairs the existing power plants and increases gas supply, it will cost not more than 1,000 crore takas. Per unit cost of electricity from the public sectors power plants is less than two takas. Spending about 1,000 crore takas, we can get 1,700 MW of electricity costing two taka per unit. But the electricity supplied from quick rental power plants cost 12 to 16 taka per units.

The government also has to supply huge amount of fuel for the plants and as a result the government spends more 20,000 crore takas just for importing fuels. Thus, the price of electricity is increasing and the government has to increase subsidy in electricity and again more subsidy is going toward importing added fuel.

For importing fuel, the government is taking more loans from the banks and pressure is increasing on the price of dollar. The burdens of government’s bank loans are going on the people. Moreover, investors are getting less money from the banks because of government’s heavy borrowing. Import cost is also increasing because of depreciation of taka and inflation rate is continuously increasing.

MH: Do you see any respite from rental and quick rental power plants in the near future?

AM: It will be difficult to get rid of the danger we have already fallen into. Because the rental power plant contracts have already been signed and that will run at least two to three years more. As short term solutions, if the government renovates and repair existing power plants instead of rental plants, there will be respite. But the government does not pay any heed to these solutions.

MH: Recently we are seeing an inclination toward coal-based power plants. Without the national coal policy, we would have to import coal. Would that not affect us, economically?

AM: We see two types of agreements; one is with domestic company and another with foreign company. We do not know the details from where coal will be imported.

The per unit cost of electricity with domestic company in agreement will be four takas and we do not know the exact price of electricity in the agreement with India. Unofficially it might be Tk 8 per unit.

Moreover, the government has no ground-work on the places of the plants and its impacts as it is yet to finalise the source of coal and how it will be imported. Moreover, 70 per cent of the total investment of the agreement with India for Rampal power plant will come from bank borrowing. It will bring more financial, social and environmental loads.

MH: How do you perceive the recently signed agreement of coal-based Rampal power plant between Bangladesh and India?

AM: The agreement is very risky and dangerous as the location is near the Sundarbans. The government has no environmental impact assessment. The mangrove forest is not only important for Bangladesh but also for the whole world and its contributions are beyond monetary evaluation. Again, the adjacent Mongla port will be affected.

In this agreement Bangladesh and India will invest 30 per cent equally and the rest will come from bank loans. But India will hold 50 per cent of total ownership investing only 15 per cent. It is not a rational agreement as Bangladesh is giving a large part of green lands, taking environmental risks and evicting a large number of people from that area.

Moreover, Bangladesh has expertise to do such project from its own as it has about 10 years of experience in handling such plants. If required, Bangladesh can also hire foreign experts. There is no base in involving India in the agreement for just 15 per cent investment. I also doubt that India will claim 50 per cent of total produced electricity.

MH: What can be the ideal solution at the moment?

AM: We are very lucky that we have reserve of primary fuels for power. We have gas reserves and there is vast possibility to get more significant reserves.

If we ban export of gas and utilise properly then it is possible to solve power crisis for the next several decades.

Moreover, we have coal resources. If we can utilise the resource with safer technology then it will be a safe energy resource. We also have potential renewable energy resources.

If we can enhance our national capability for utilisation of the three resources then we will get sustainable energy security. What is needed in this regard is a comprehensive plan from the government.