Bangladesh News

The government is sitting on a recommendation to increase the Barapukuria coal price to $71 from existing $60 for the Power Development Board (PDB) when price has hit $210 a tonne in the international market.

The PDB consumes 80 percent of Barapukuria’s high-quality coal, the production cost of which is around $90 per tonne.

When the project was conceived, production cost was projected at only $35, but delay in project implementation, faulty mine design and corruption in the project have pushed up the cost.

A committee comprising PDB, Barapukuria Coal Mine Company Ltd (BCMCL), Petrobangla and the energy ministry on revising coal price in November last year recommended increasing the coal tariff to $71.5 per tonne.

“Though the ministry was good enough to take a decision on price increase, it decided to forward the matter to the Economic Committee for National Economic Council [Ecnec],” says a Petrobangla source.

Nine months have passed since then, but the decision never came, the source adds.

Energy ministry sources say the ministry sought Ecnec’s decision because in the past, the Council had resolved an anomaly of coal price for both BCMCL and PDB.

The anomaly was however a creation of Ecnec itself in two different times.

In the early 90s, Ecnec okayed the coalmine project with a coal price for PDB set at $80 per tonne. The Ecnec in late 90s approved the coal-fired 250-megawatt power project showing the coal purchase rate at $50.

This anomaly came to the notice when the power project was being implemented earlier this decade. To resolve this problem, the energy ministry turned to Ecnec, which fixed the price at $60.

“But someone should now address the coal price issue. In the international market, the price of certain types of high quality coal has gone up to $210 per tonne. Even when BCMCL floated a tender to sell some coal to third parties, bidders offered a price of up to $105 a tonne,” says a BCMCL source.

In June, BCMCL sold 17,000 tonnes of coal to private consumers, mostly brick kiln owners.

The mine was incurring heavy loss due to various problems, especially due to poor production. But in the last one year its production has increased and the mining company now has a record inventory of 1.5 lakh tonnes of coal.

Mining sources say as its production level has increased, it is expected to achieve the target of producing 8.5 lakh tonnes of coal this year. If production level continues to rise, the coal production cost will gradually decline.

“But we also need some price adjustment so that the mine reaches break even within a few years and even gets to see some profit,” the BCMCL source adds.