Trackback URL
Download PDF While the Barapukuria mine’s coal production cost nearly tripled from the original estimates, the government is preparing to pay $8.4 million to China as the seventh instalment of the supplier’s credit under which this mine was built.
Competent sources said last month the government also drastically reduced the required bank guarantee to $3.5 million from at least $15 million for the Chinese developers to ensure completion of the Barapukuria Coalmine.
This was done under “special consideration”, although the project’s consultant had observed in a list of unfinished tasks of the mine that the CMC-led Chinese consortium was yet to complete various development tasks worth $15 million. The CMC had been trying to have this guarantee reduced from last year.
Sources said while reducing the bank guarantee, the authorities have shown that a set of mining equipment worth $5.5 million that was stuck in mine phase-1110 have been recovered. But in reality, these equipment remain stuck in phase-1110, which was sealed off following emission of poisonous gas.
The consultant’s list of incomplete tasks is also incomplete, sources said. “It did not mention that the working and environmental conditions prevailing in the mine are nowhere near any international standard,” said a competent source.
Sources said even though the government is very much concerned about the bad financial, technical and environmental shape of the mine, it has not even conveyed its dissatisfaction to the Chinese government about the poor performance of the Chinese consortium.
“The CMC-led consortium is now seriously doing its best to improve the condition of the mine. On October 12, the CMC president visited Dhaka and met Petrobangla expressing his all-out support for making this mine fully functional,” noted a high official.
The payment of the seventh instalment of the loan became due in September and the government is now processing all formalities for the payment, although the spiralling coal production cost is imposing huge liabilities on the government.
CMC had suspended coal production for six months from October 2006 due to non-payment of the sixth instalment of the supplier’s credit. Although the mine was supposed to be completed in 1998, the project remains unfinished in parts and the mine is producing less than half of “revised” target production. Originally the mine, being built at a cost of around Tk 800 crore, was supposed to produce 60 million tonnes of coal in 30 years. But following a technical disaster, the mine was redesigned in 1998 putting the production target at just 30 million tonnes. But again, from late 2005, poisonous gas emission forced the mining authorities to seal off phase-1110 along with mining equipment, thus halving the daily production target again.
This has tripled the coal production cost.
Sources said while the original coal production cost was estimated at less than $35 per tonne now it is close to $100 per tonne.
The mine is also set to stop coal production for six weeks from mid-November. The mine authorities would take this time to prepare for coal extraction from a new phase (phase-1103).
The miners have nearly exhausted extracting coal from phase-1109 from which the mine is now producing 2,000 to 2,500 tonnes of coal per day and it serves as the main source for the 250 megawatt coal fired power plant at the mine site.
“The biggest challenge for the loss-incurring coalmine is to keep producing coal at any cost to keep the power plant running. The power plant itself took nearly $300 million to set up and keeping it closed for lack of coal supply is not an option,” said a Petrobangla official.
“But, this will not be a problem for the power plant. Presently we have more than 60,000 tonnes of coal in our inventory. In the next three weeks, we expect the mining authorities to extract and add another 40,000 tonnes. The power plant may consume 30,000 tonnes during this time and that leave us with around 70,000 tonnes of coal in the inventory–this is enough for the power plant’s operation for the next six weeks,” he added.
He pointed out that the mining authority in association with CMC was preparing to unseal phase-1110 again in early 2008. “We have no option but to try to unseal it and recover our mining equipment. Once we do it, we can take our production level to 3,300 tonnes a day and thus halve the production cost,” he pointed out, adding, as part of the preparation, the CMC has expanded its expert team.
He noted that if the incident of poisonous gas emission had not happened, the mine would have produced coal as per target. “In 2005-06, the mine came close to its targeted production of five lakh tonnes. But the mine could not come close to the targeted 7.7 lakh tonne production in 2006-07. The target production for 2007-08 is one million tonnes. But we are left with just one set of mining equipment,” he pointed out.
“We cannot afford to fail with the mine. Because, we spent Tk 1,445 crore for this mine and another Tk 2,000 crore for the power plant. If we fail, both these investments will be doomed,” he added.
Till now the government paid China Tk 770 crore in six instalments.
Earlier this year, the government paid CMC the sixth instalment of the Chinese supplier’s credit worth $15 million, despite opposition from the mining company’s legal adviser.
The legal adviser said CMC repeatedly failed to fulfil contractual obligations.
Because of the severely faulty 1995 deal with China, Bangladesh has to pay China more than another $85 million till 2012 in 10 more instalments.
The contract, which was spearheaded by Dr Khandker Mosharraf Hossain as the energy minister of the previous BNP rule, is full of so many glitches that it did not even say how mining equipment would be supplied. According to Hosaf chief Moazzem Hossain, his company promoted the credit scheme. Hosaf has been representing the builder of the mine, power plant and the consultants of both the projects; making it impossible for the government to ensure their quality implementation.
May 14th, 2008 at 5:56 am
[...] [...]