The Asian Development Bank (ADB) has said the Phulbari Coal Project would boost the country's gross domestic product (GDP) by 0.7-1.0 per cent a year, while also generating substantial employment opportunities.
However, the Manila-based development lender has classified the proposed multi-billion-dollar project as "category A", with having "significant potential environmental impacts" unless appropriate mitigation measures are taken.
" … The project will add between 0.7 per cent and 1.0 per cent to Bangladesh's annual GDP and provide more than 20,000 new direct and indirect jobs," the ADB says in one of its latest study reports.
The study report maintained that the proposed Phulbari Coal Project, although still caught in a bureaucratic tangle, would "do more than just develop a coal mine", serving as a catalyst for major economic development.
The project will help the country alleviate poverty and achieve sustainable growth, it added.
"It will also accelerate the pace of Bangladesh's industrial growth, convert the country into an energy exporter, and bring much-needed industry and jobs to the predominantly subsistence farming economy of the northwest region."
The Phulbari coal mine project includes three main components -- mining, railway and a coal terminal in Khulna. The terminal will offer barging facility and an offshore reloading facility for transfer of coal to sea-going ships.
The UK-based Asia Energy Corporation (AEC), which plans to pour US$ 2.0 billion into the project, is currently awaiting the government's approval for extraction of coal, for which it has a license.
According to rough estimates, the country's northwest region has two billion tonnes of coal equivalent to 53 trillion cubic feet (TCF) of natural gas, which is more than three times the known gas reserves.
Of them, the Phulbari coal basin has a reserve of 572 million tonnes of high quality bituminous thermal and semi-soft cooking coal, alone.
The Project will have significant positive implications for the economy of Bangladesh, not only by providing an alternative source of energy, but also in terms of other beneficial impacts at the local, regional, and national level.
"… Project will provide the country with a vital new source of sustainable energy, transform the northwest region's economy from predominantly agricultural to significantly industrial, increase government earnings and revenues, increase exports, and accelerate the pace of industrial development throughout the country," the report quipped
But, the ADB warned that progressive use of agricultural land and other land for mine development would temporarily affect the settlements and livelihood of people located within the project area.
At the national level, according to the study report, the benefits of the project include direct earnings for the government in the form of royalties and taxes.
On the other hand, indirect earnings include, among other things, increased revenue for Bangladesh Railway and Mongla Port Authority (MPA); earnings and savings of foreign currency; a new commodity for export; provision of an alternative source of energy; substantial increase of GDP and gross national income (GNI); and attraction of foreign direct investment (FDI).
The project also involves costs, including temporary loss of agricultural land for the mining operation; loss of other assets in the project area; partial loss of or disturbance to existing means of livelihood; disturbance to local cereal production; increased vulnerability of poor people in the project area; disruption to social bondage; and general impacts on the environment.
As far as environment is concerned, the ADB study report identified ambient air pollution, noise, groundwater changes, surface water pollution, spills, dredging, and ship collision as the principal potential negative impacts on the environment.
The project is expected to offer several direct and indirect environmental benefits.
"The exchange to low-sulfur coal is a direct benefit; improved traffic management and risk management related to shipping in one of the largest rivers in Bangladesh is an indirect benefit."
As the Phulbari mine's coal is of much better quality than the high-sulfur, high-ash, and generally low quality fuel used today in Bangladesh, the use of the mine's coal will thus reduce overall air pollution, the report pointed out.
Various mitigation procedures, including injection of water back into the aquifer and a reticulated water supply for irrigation and for affected townships and villages, will ensure that the project in reality will have a positive effect on the surrounding area, insists the report.
The coal mine will be developed as an open-cast mine and at one stage the open pit will cover an area of about 2,180 hectares.
At full production, about 8.0 million tonnes will be exported by rail and barges to an offshore reloading facility at Akram Point for export to international markets, some 4.0 million tonnes will be exported to India via railway, and the remaining 3.0 million tonnes will be used for a proposed mine-site 500 MW power plant and sold for domestic use.
Key economic highlights based on most conservative estimates
(i) contribution to GDP over project operational lifetime USD 15.5 billion;
(ii) equivalent to USD 442 million per annum, or 0.7% of current GDP;
(iii) average annual contribution to GNI USD 233 million;
(iv) direct earnings of the government USD 3.4 billion-USD 5.3 billion;
(v) Bangladesh Railway additional net earnings USD 1.4 billion;
(vi) cumulative net foreign exchange earnings USD 8 billion;
(vii) annual impact on balance of payments USD 250 million;
(viii) equivalent to 7% of annual remittances from abroad;
(ix) net loss in value of land USD 57 million; and
(x) maximum net loss in agricultural production 17% over project lifetime.