Bangladesh News

Authorities have shelved a proposal to export 200,000 tonnes of high quality and expensive coal by the Barapukuria Coal Mine Company Ltd (BCMCL) and asked it to go for local market sale first.

Sources say frustrated by a lack of interest in local buyers, who prefer cheaper but environmentally hazardous coal from India, BCMCL sought permission from its board to export the coal.

Given the international coal market scenario where price of Barapukuria standard coal exceeded $200 a tonne, BCMCL thought it could secure up to $170 a tonne at the mine site from international buyers.

This expected price is a sharp contrast to BCMCL’s coal’s sale price of $70 a tonne to the Power Development Board.

The company secured a price of $105 a tonne from private buyers in July, but at that time, it could not sell more than 17,000 tonnes coal against a target of 50,000 tonnes.

“This would have helped the company earn more than $30 million and eventually resolve a part of its financial problems,” says an official, adding this was the first time the financially battered coal company dared consider coal export.

Yet for six months between 2007 and 2008, the mine’s operation was suspended and the 250 megawatt coal-fired power plant at the mine site had to be shut down due to lack of coal supply.

The power plant consumes 80 percent of the coal production.

The mine’s coal production shot up early this year due to improved management and favourable mining condition.

Now the company believes by the end of October, the two coal-yards of the mine having 2.30 lakh tonnes storage capacity will be filled up completely. This coal is good enough to run the 250-mw power plant till December.

But between November and December, the mine will continue to produce another 2 lakh tonnes of coal that must be sold to other customers as these cannot be stored or left outside the storage system for safety or environmental reasons.

“Back in July, we were enthusiastic about the local coal market. But the market was actually not so enthusiastic. May be it was not the season for brick kiln owners then. So last month we floated a tender again with the hop that it would at least be $115 per tonne. But the response was so thin that we sought the board’s permission to export coal,” notes an official.

The authorities have not given the permission stating that the company should at first conclude the local tender and see if it has really failed to secure enough buyers.

The BCMCL incurred a loss of Tk 128 crore since it started production two years ago due to massive project cost escalation and low coal production.

When the mine project was approved in the early 90’s, production cost was estimated at $35 per tonne and the annual production target was set at two million tonnes of coal for 30 years.

The original project cost was less than Tk 800 crore and it was supposed to launch operation from 2000.

However, the Chinese Supplier’s Credit financial package coupled with poor project implementation doubled the project cost to Tk 1,600 crore, while the annual production target nose-dived to 800,000 tonnes a year.

As a result, the coal production cost almost tripled.

While the project drained out huge money from the nation, it immensely profited Hosaf group chief Moazzem Hossain, who had been the local representative of all the Chinese companies concerned.

Brother of an ex-BNP parliamentarian from Feni, Moazzem is an accused in the Barapukuria case file by the Anti-Corruption Commission.

Sources say prior to submission of the charge-sheet in the case, Moazzem was tipped off to leave the country.