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Policy bankruptcy and wavering leadership: The case of proposed coal policy
Dr. Mustafizur Rahman
3/20/2006
THE countries that are developed today did not achieve their development just by chance. They were blessed with a visionary leadership at some point of their history, which enabled them to overcome miseries, beggaries of nature and external adversaries.
Development as we understand today is the result of inter-play of a number of relevant policy instruments, which may include, among others, education, high standard of morality, innovative and functional institutions, monetary and fiscal measures, fair legal framework, justice delivery system, effective law enforcement, health service delivery system, absorption, development and application of technology; cultural harmony, maintenance of social peace and strengthening of capacity to follow the principle of honourable self-reliance vis-à-vis shameful begging, however alluring may it be.
The development should always mean cultural, social, technological, industrial, educational and moral development with the highest and uncompromising priority to human life, human welfare and national interest.
We have a history of colonial sufferings over hundreds of years. Policy making was not with our people. Now that we have the right of making our policies for our own well-being, should we not play wise to make policies to safeguard our own interest and to elevate our standard of living?
Betrayal has been a part of our history. We cannot discount the chance of betrayal by someone or other in power or for grabbing power to take the national interest hostage for personal gains. So we must revamp our systems and constitution to protect our interest against easy adverse manoeuvre.
Unlike in the 1600s - to 1800s militarily powerful nations try to avoid, though with some exception, physical occupation of other nations to secure resources.
Now the weapons are aid, World Bank, IMF, WTO, WPO and other innocent-looking institutions, and allurement of market access to influence the very policies of the less powerful countries. Bangladesh is naturally one of those poor countries. Our policy of deindustrialisation instead of revitalisation, closing down of a number of industrial enterprises under some pretexts or other is attributed to external pressure or conditionalities for loan. This cannot be a development policy by any definition.
A foreign accounting firm PWC well-known for corruption in famous Enron scandal, and four of whose auditors were arrested in Japan for its wrong doing in Kanebo case is engaged as consultant for about one hundred crore Taka to prepare our nationalised banks for privatisation, or may be directly or indirectly 'Foreignisation' rather than for restructuring and bringing them to profitability.
During development stage, it is the nationalised banks that can provide necessary financial leeway for essential development initiatives, contrary to laissez-faire economic activities. If you try to open a few bank branches in any developed countries, you will realise how their policies safeguard their service sector, particularly, banking and financial sector. Banking is one of the areas of service sector which we can, and should venture into in developed countries.
We indulged in mobile phone service prematurely and are losing about US$2.5 to 3.5 billion officially and unofficially in foreign exchange per year. We produce neither cell phone sets nor the involved communication equipment. Our Bangladesh T&T is not provided sufficient fund to expand its capacity to some million lines, the market for which was very much their. Anybody could wonder how our penny-pinching, anti-developmental financial management could handle the economy even at this miserable condition had there not been available expatriate and UN peace keeping forces remittance to the tune of US$3 to 4.0 billion per year. Instead of utilising this for capacity building and industrialisation, should we lavish this money away for non-foreign exchange earning service sector at this stage of economy? Will international financial institutions give us soft loan for industrialisation in our own way? It is not the obligation of the international institutions or their staff to build our or for that matter, other country. We must make our own informed and far-sighted policy; otherwise our fate will be as it has been over last 35 years or so.
For launching any tangible development, energy supply is absolutely essential. There may not be found any country with sizeable population that does not have a power generation capacity of more than 7,000 MW. If we want to launch real development, we must prepare ourselves with a power generation capacity of up to at about 10,000 MW in coming 4 to five years, and up to at least 20,000 to 25,000 MW in coming 15 years. This will at the best bring us just at the threshold level of economic take-off. We must do more.
Ours has so far been a mono-energy country, depending solely on natural gas. Though our natural gas was discovered and produced by BAPEX, we mysteriously bypassed it to lease out our right under losing production sharing contract to virtually buy our own gas in foreign exchange. The payment liability is going to be a great retarding pressure on our economy. Gas reserve is estimated at about 10.6 trillion cubic feet (tcf) which may not last long enough to meet our energy need. We should now look for supply source of LNG and think of building gas terminals before it is too late.
The big economies of the world are in frenzied competition for securing energy sources. We had been its target, first with pressure for gas export, and now with diplomatic and commercial persuasion tactics for leasing out Phulbari coal field to Asian Energy Company for open-pit mining at 6.0 per cent nominal royalty, but at a national loss of about US19, 250 million.
Baraphkuria coal field is being developed by a Chinese company on our behalf by underground method, costing about US$18 per ton for operation and management. Though extractable at 20 per cent, this may earn us about US$2,146 million (Table 1). An Indian company TATA is manoeuvring by pressure, allurement, influence buying and hoodwinking to discontinue our contract with the Chinese company, and lease the field to it for open-pit mining at 6.0 per cent nominal royalty, virtually at our national loss of US$12,347.5 million plus. If we adopt underground extraction method in Phulbari, we may earn about at least US$ 3,148 million plus, while ownership shall remain with us. We shall not be under pressure for export of coal and shall not have to build railway or port facilities for coal export only. We shall have to face no major relocation of dislodged persons, no huge refilling problem, and no irreversible immediate ecological or environment damage.
It appears that a coal policy is being drafted to provide for and justify leasing out the fields to AEC and TATA at a national loss of US$31,597.5 while we can earn at least US$5,294 million plus if we keep the operation under our control or even if we engage contractors for operation and management at our cost, without ecological, environmental, physical and political disaster, and foreseeable human casualties. Incidentally neither AEC nor TATA has any experience of open-pit mining at this great depth and in alluvial soil and monsoon climate. It is also mysterious how names of particular companies can be there in a national policy.
As we have to fuel our power plants with available coal, there is no scope of export unless some large good quality coal fields are discovered at very shallow depth. At this point we must follow the policy of India and a number of other countries to prohibit foreign direct investment in mining, railway and road, and road transport. We must not sell land to any foreign interest under any condition because of our intrinsic land scarcity and highest population density in the world.
We are already draining out our foreign exchange for mobile phones, and it is anybody's guess how and how much we shall have to pay in foreign exchange if FDI is allowed in Chittagong-Dhaka elevated expressway, Jathrabari-Gulistan-Mohakhali elevated road. and subway system in Dhaka on Build-Operate-and-Transfer (BOT) term. No such venture should be jumped into without finalising comprehensive Dhaka town planning, Strategic Transport Planning (STP) and MRT planning so that we can avoid creating road block to future development as Mohakhali flyover design has ignored provision for possible passage of elevated train below the flyover, etc.
Our policy must be development-oriented and must not be loan- or aid-driven. The administration, and for that matter the head of the government, cannot afford to waver in educated and informed policy decision with full trust in our own people.
It is highly expected that our leadership and political people irrespective of party affiliation will realise the great responsibility of national policy. Let us hope, good sense will prevail.
Mustafizur Rahman, PhD, is Chairman, The Institute of Development Strategy, Dhaka. The views expressed are of the author's own and not necessarily of the organisation he represents. E-mail: idsrahman@msn.com
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