energy security 2014

8/10/2019 Energy Security 2014

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Energy Security and Natural Resources

Challenging

ResourceCurse' model inBangladesh

Anu Muhammad August 2014

Photo: Shilpi Barua


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What is Energy Security?

Energy Security can be described as the uninterruptedphysical availability at a price which is affordable, whilerespecting environment concerns. (International Energy

Agency)

Energy security is a term for an association betweennational security and the availability of natural resourcesfor energy consumption. Access to cheap energy hasbecome essential to the functioning of moderneconomies.


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What is sustainable development?

meets the needs of the present without compromising the ability offuture generations to meet their own needs. ( Our Common Future , The BrundtlandCommission, formally the World Commission on Environment and Development (WCED) report, United Nations. 1987.)

Sustainable development (SD) is a pattern of resource use, thataims to meet human needs while preserving the environment sothat these needs can be met not only in the present, but also forgenerations to come (sometimes taught as ELF-Environment, Localpeople, Future )

while oil still accounts for the largest share of world commercial fuelproduction, some 2 billion people still rely on the most basic fuel ofall, wood and combustible waste products, for simple cooking andheating.


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Energy and Development:

Diverge Scenariogrowth winners such as US, Canada, Australia, andNorway are rich in resourcesavailability of natural resources should be strongcomponent of growth, but there are oppositeexperiences too Many natural resource abundant economies tend togrow slower than economies without substantialresources.growth losers, such as Nigeria, Zambia, Sierra Leone,

Angola, are all resource-rich, while the Asian tigers:Korea, Taiwan, Hong Kong, and Singapore, are allresource-poor.

(Institutions and the resource curse: Halvor Mehlum, Karl Moene and Ragnar Torvik, 2nd March 2005)


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How Resources turn into Curse?

The surprisingly negative outcomes in oil- and mineral-dependentcountries are referred to as the resource curse. (Covering Oil..)

Natural resource abundance does therefore hinder economic growth

in countries with grabber friendly institutions , but does not incountries with producer friendly institutions . (Institutions and the resourcecurse: Halvor Mehlum, Karl Moene and Ragnar Torvik, 2nd March 2005)

Many countries rich in natural resources exploit and squander thatwealth to enrich a minority while corruption and mismanagementleave the majority impoverished. (COVERING OIL: Edited by Svetlana Tsalik and AnyaSchiffrin, Open Society Institute, 2005

according to the second Arab Human Development Report, releasedby the United Nations in 2003, high dependence on oil in parts ofthe Middle East has led to the over concentration of wealth in afew hands, and faltering economic growth, and weakened thedemand for knowledge.


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Occupation, Colonization, internal

Militarization, war, genocide..Saudi ArabiaSomaliaIraq

AfghanistanLibyaIndiaEcuadorColombiaMyanmarNigeria

AngolaSudanIndonesia

Global Military expendituregoes beyond $1 trillion a year

1 per cent of this could providesafe water for 7 billion people

in the earth (Source: UNDP, 2000)

Oil-gas-coal corporate bodiesare the main patrons ofautocracy and war for

grabbing resources, thereforeprime beneficiaries.


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Examples of InternalMilitarization

India: almost one third of India is now ruled by military, most ofthese areas are resource rich.Nigeria: Shell pays local security forces that commit abuses inNiger Delta; fails to aggressively step in during the trial andexecution of local leaders (1990s)Nigeria: Chevron recruited and transported Nigerian military andpolice who shot at and killed peaceful protesters from Chevronhelicopters (1998 and 1999). Poet activist was hanged for protest.Burma: Unocal contracts with Burmese military to provide securityfor Yadana pipeline; villagers are killed, raped, tortured, andforced to work building infrastructure (1994 present)

Colombia: Colombian riot police brought in to remove members ofUwa indigenous people resisting Occidental Petroleums oilprojects (late 1990s). In an unending war against people in thename of anti-drug operation.Ecuador: the city of shell in Amazon jungle, near Quito, isprotected by military base.


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Four types of countriesUS, Australia, UK, France, Germany .command overown resources, also on resources in many othercountries of the world. Beneficiaries of colonial system,old and new.Norway, China, Malaysia, India, Brazil, Vietnam : growingeconomies, good control over own resources, developednational institutions, now expanding overseas.Sudan, Nigeria, Colombia .. (resource curse group), nocommand over own resources, domination by IOCs orcentre countries.

Venezuela, Bolivia, Ecuador had been in resource cursegroup, trying to build new direction by changing policies,revising international contracts, building new institutions(coming out of resource curse group).

Where does Bangladesh stand?


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What happens in resource curse

countries?Continuity from colonial period......

On average, countries which started the period with a high value ofresource-based exports to GDP tended to experience slower growthduring the following twenty years... Jeffrey D. Sachs and Andrew M.Warner, Harvard University, 1997.

In Saudi Arabia, whose proven crude oil reserves are the greatest inthe world, per capita income has plunged from $28,600 in 1981 to$6,800 in 2001, increased again with high price of oil in 2008.

Autocracy. Highest military contract with the US in 2011.In Nigeria and Venezuela, real per capita income has decreased tothe levels of the 1960s, while many other countries Algeria,

Angola, Congo, Ecuador, Gabon, Iran, Iraq, Kuwait, Libya, Qatar,and Trinidad Tobago are back to the levels of the 1970s and early

1980s.


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Resources and crisis: Nigeria

In 2009, Nigeria exportedclose to 500 Bcf of LNG.Nigeria has vast naturalgas, coal, and renewableenergy resources thatcould be used for powergeneration,industrialization.However, the country issuffering from huge loadshedding, poverty,unemployment and veryweak infrastructure.


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More on Nigeria

Nigeria had an estimated 187trillion cubic feet (tcf) of provennatural gas reserves (2010),makes Nigeria the ninth largestnatural gas reserve holder in theworld and the largest in Africa,also largest oil reserve in theregion.BP Statistical Review of World Energy

All the oil revenues -- $350 billionin total did not seem to add tothe standard of living at all.Between 1970 and 2000, thepoverty rate increased from aboutone-third of the population toalmost 70 per cent of thepopulation. (Covering Oil , Ed. by Svetlana Tsalik and AnyaSchiffrin, Open Society Institute, NY, 2005


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Myanmar, Ecuador and Congo

An energy rich country, Myanmar is now suffering the worst fuel shortagein the region. Its own citizens are starved of electricity, but the regime sellsa steady stream of natural gas to neighbouring Thailand. Yet this exportsuccess has not saved the public finances. Current reserves are estimated

at no more than US$240 million-enough to cover only the next six weeks ofimports. A shortage of foreign exchange has caused the black-market priceof gasoline up by 600% in less than a year. (The Economist, April 4, 2002)Since 1970, in the period of oil boom, the official poverty level grew from50 to 70 percent, under or unemployment increased from 15 to 70 percent,and public debt increased from $240 million to $16 billion. Allocation for the

poorest segments declined from 20 to 6 percent. (John Perkins: Confessions of an economic Hitman)

Seventy five percent of Congolese natural resources are at the presentowned by foreign companies. Congo rates #158 and #142 in terms of percapita GDP and human development index. (http://www.dominionpaper.ca/articles/119).


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UNCTAD on FDI in the LDCs

According to a United Nations report, 66% of foreigninvestment in the 1990s went to the developing nationsof Africa. It has increased to 87% during 2000-2005.

Only Angola, Chad, Equatorial Guinea and Sudan, thefour oil producing countries, are receiving 56% offoreign investment. UNCTAD notes, foreign investmentin these developing countries is generally resourceseeking. The type of this investment is such that it hasneither created jobs nor has it encouraged capacitybuilding or technical development at the local level. Thissector is like an island where the ones who profit at theend of the day are the multinational companies(UNCTAD, The Least Developed Countries Report, 2006 ).


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Joseph Stiglitz on natural resources

in developing economies A country that sells off its natural resources, privatizes its oilcompany, and borrows against future revenues, may experience aconsumption binge that raises GDP, but the accounting frameworkshould show that the country has actually become poorer.

The IMF should not put undue pressure on countries to privatizetheir extractive industries. (In many developing countries,privatization is tantamount to selling the natural resources toforeign firms, since there are no domestic firms with the capital andskills necessary to undertake the task of extraction.)

A country like Bangladesh, with limited reserves of natural gas,might want to exercise caution when selling its gas, given that thereis no other effective way of insuring itself against an increase in theprice of energy over the long run.

(Covering Oil , Ed. by Svetlana Tsalik and Anya Schiffrin, Open Society Institute, NY, 2005


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World Bank: neo-liberal reform a

tool for grabbing natural resources The Banks Oil, Gas, and Mining Policy division -through

an integrated set of services, loans, technical assistance,guarantees and knowledge products- provides advice onlegal, fiscal and contractual issues, regulation, sectorrestructuring, and privatization. These efforts help state-enterprises transition to the private sector reducing thedrain on the public sector, lowering costs of production ,

and providing a level playing field that encouragesentrepreneurs to enter a competitive market. (http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTOGMC/0,,menuPK:463288~contentMDK:20219974~pagePK:148956~piPK:216618~theSitePK:336930,00.html)


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Lessons: Global and localResource abundance does not automatically ensuresustainable development.For many countries resources become curse. Resourcecurse phenomenon is now a real issue. Militarization, war, and conflicts have been closely linkedwith grabbing energy resources.Corruption, poverty, inequality, repression go togetherwith natural resources for many countries.Increasing deregulated investment on speculation of oiland mineral resources create artificial crisis and moredistorted market.Package programmes in the name of development and

economic reform pushed by World Bank, IMF et al isproved to be disastrous for developing economies,created more insecurity and unsustainibility.


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Bangladesh: A country of

Potential and Poverty Area: 144000 sq kmPopulation more than 150 million,density more than 1300 per sqkm.One of the most fertile land,

Agriculture is the main livelihood.Rich water system andbiodiversity: rivers, canals, pondsand wetlandsIndustrious and creative workforceOil gas resources in onshore andoffshore, coal in north of thecountry.But trapped in a cycle of povertyand vulnerability.


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Energy and Power: matter of concern

One of the lowest energy consumption, only higher than Nepal in South Asia. Electricity consumption per capita in world 2875, in Bangladesh: 208kw/h. ( World Bank: World Development Indicators, Internet, accessed 6.9.11)

Only 55 percent of total population have access to electricity.

Regular power failure and shortage create huge problems for HH, industry,agriculture even hospitals.

Demand side unregulated (while industry, hospital, agriculture sufferingfrom load shedding, luxurious consumption including AC use experiencedhighest growth).

Supply side dominated by corporate interest, becoming unstable and costly(increasing IOC and IPP share, rental, quick rental..).

Lack of vision, no comprehensive energy policy. Compartmental initiative.

National capability potential is suffering from hostile policies and


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Power sector: main features

Installed power generationcapacity: more than 10000MW. Real generation: morethan 6000.Government: 60%, Private(including foreign): 40%Primary fuel to generateelectricity (%):Gas: 77.31, Diesel:10.45,

Furnace oil: 5.03, Coal: 3.76,Water: 3.45.(GOB 2011, Bangladesh Arthanoitik Shameekkha)

010203040506070

8090

installedcapacity

net production

gasfurnace oilcoalwater diesel


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Present Reserve and Production Levels ofNatural Gas

The existing natural gas is mainly used in electricity,fertilizer, industry, transport and household activity. Thereserve and production situation of gas up to 2010 are as

follows:Total number of gas fields- 23Number of gas fields which are in production- 17 (number of wells-79)Total reserve of extractable gas (proven and probable)- 20.5 TCF(Trillion Cubic Feet)Total reserve remaining- 12 TCF (may increase to 20 TCF)Daily gas exploration- about 2000 MMCF (Million Cubic Feet)

Production by Petrobangla- 960 MMCFProduction by International Oil Companies- 1004 MMCFDaily demand of gas-2500+ MMCFDaily shortage of gas supply- 500+ MMCF

(http://www.asiatradehub.com/bangladesh/oil2.asp)


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BD entered into resource curse

group?In 1974 Petrobangla was established.In 1975 gas fields were bought from Shell.In 1982- 83 WB came up with development

scheme to bring IOCs in the sector. Energysector reform.Since 1993 signing of PSCs began. In 2004 coalcontract. All secret, not even discussed inparliament or parliamentary committees.Since 1996 private sector power generationpolicy. IFIs stopped funding for state powerplant, put Bangladesh dependent on IPPs.

For details see: Anu Muhammad (2008): Kothai Jachche Bangladesh, Sanghati and Development or Destruction,Essays on Global Hegemony, Corporate Grabbing and Bangladesh, Sraban


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Bangladesh divided into blocks for

PSCs with IOCs


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Main features of FDI in Energy

SectorPSCs were signed with IOCs to purchase gas at average250 taka when it could be possible to get it at around 25taka from national companies.PSCs were signed to purchase its own gas by costlyforeign currency from the IOCs when it was possible toget it by local currency from its own company.

Policy was taken to bring IOCs or Foreign nationalcompany to explore gas when BAPEX, the nationalexploration agency, had the ability to do the same.Rich blocks in eastern side were awarded for IOCs.Common property has been turned into private property.


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PSCs during 1990sIn 1993-94, Six PSCs were awarded in the first round

Cairn Energy-Holland Sea Search (Block 15, Block 16),later Halliburton/Santos Block 16, Shell/Cairn -Block 15

Occidental (Block 12, Block 13 & 14), later UNOCAlto

Chevron Okland-Rexwood (Block 17 & 18), later Oakland/Tullow United Meridian Corporation (Block 22)

In 1997, four PSCs were awarded in second licensingroundShell-Cairn Energy-Bapex (Block 5, Block 10),Tullow-Chevron-Texaco-Bapex (Block 9)Unocal-Bapex (Block 7), later Chevron -BAPEX


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Result: Development or Burden?By leasing out most resource- rich gas blocks to IOCs,Bangladesh becomes hostage.Cost of production of gas and electricity increased by 10to 30 times. Fiscal deficit increases every year.Instead of saving public money, drainage and corruptionincreased manifold.In the last 10 years IOCs received 160 billion taka byselling gas to GOB, which could be purchased by 20billion taka from national agency in local currency.Drainage of foreign currency equivalent to 140 billiontaka is a direct result of FDI in energy sector only.National agencies were made marginalised to give spaceto MNCs or foreign state agency. Erosion of nationalcapability.


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Number speaks: construction of

myth to rationalize grabbingTwo arguments behind bringing MNCs in Energy sector:

1. capital scarcity and 2. lack of technical ability. But,

Every year one at least 500 MW power plant could be built by themoney spent as subsidy for buying gas from MNCs, about 2.5 billiontaka. It is increasing as their share is growing. BD spends moremoney with MNCs, not less.When Bapex-Petrobangla spends Tk. 1 billion to drill a well, MNCsusually do it by costing 6 to 15 times. UNOCAL spent Tk. 15.31billion to drill a well. What is wasteful?MNCs made big blow out, not national agency. Who is moreefficient?When MNCs selling gas at $3-$4 per thousand CFT, Bapex couldgive it at 10% price. Who is more capable?


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Confession from WB and ADB

Although the individual companies responsible for ADB -financed gas sector projects are profitable, Petrobanglais incurring losses due to the increasing share of moreexpensive gas from IOCs .(http://www.adb.org/Documents/Reports/SAPE/BAN/SAP-BAN-2009-36/SAP-BAN-2009-36.pdf )

Petrobangla buys gas from IOCs at a price linked to the

international price of fuel oil. Petrobangla will incurincreasing deficits, leading to a negative cash flow.(World Bank: Foreign Direct Investment in Bangladesh: Issues of long run Sustainability , October 1999.)
http://www.adb.org/Documents/Reports/SAPE/BAN/SAP-BAN-2009-36/SAP-BAN-2009-36.pdfhttp://www.adb.org/Documents/Reports/SAPE/BAN/SAP-BAN-2009-36/SAP-BAN-2009-36.pdfhttp://www.adb.org/Documents/Reports/SAPE/BAN/SAP-BAN-2009-36/SAP-BAN-2009-36.pdfhttp://www.adb.org/Documents/Reports/SAPE/BAN/SAP-BAN-2009-36/SAP-BAN-2009-36.pdfhttp://www.adb.org/Documents/Reports/SAPE/BAN/SAP-BAN-2009-36/SAP-BAN-2009-36.pdfhttp://www.adb.org/Documents/Reports/SAPE/BAN/SAP-BAN-2009-36/SAP-BAN-2009-36.pdfhttp://www.adb.org/Documents/Reports/SAPE/BAN/SAP-BAN-2009-36/SAP-BAN-2009-36.pdfhttp://www.adb.org/Documents/Reports/SAPE/BAN/SAP-BAN-2009-36/SAP-BAN-2009-36.pdfhttp://www.adb.org/Documents/Reports/SAPE/BAN/SAP-BAN-2009-36/SAP-BAN-2009-36.pdfhttp://www.adb.org/Documents/Reports/SAPE/BAN/SAP-BAN-2009-36/SAP-BAN-2009-36.pdfhttp://www.adb.org/Documents/Reports/SAPE/BAN/SAP-BAN-2009-36/SAP-BAN-2009-36.pdfhttp://www.adb.org/Documents/Reports/SAPE/BAN/SAP-BAN-2009-36/SAP-BAN-2009-36.pdfhttp://www.adb.org/Documents/Reports/SAPE/BAN/SAP-BAN-2009-36/SAP-BAN-2009-36.pdfhttp://www.adb.org/Documents/Reports/SAPE/BAN/SAP-BAN-2009-36/SAP-BAN-2009-36.pdf


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and Solutions from WB and ADB

Their solutions:To solve the fiscaldeficit, raise gasprice.

To solve the pressureon foreign currency,

export gas.

Peoples suffering and rejection:GOB has been periodicallyincreasing gas price and priceof electricity. Rising cost of

production and cost of livingan obvious outcome.

Independent experts andpeople in general opposedexport move taken jointly by

GOB, MNCs, IFIs, embassies.Otherwise present gas andpower crisis could have beendoubly worse.

For detail analysis, Anu Muhammad: Development orDestruction...., 2007


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5 billion US$ due from US

and Canadian company Bangladesh lost 500 bcf gas forblowout in Magurchhara (1997)and Tengratila (2005). Thisamount of gas equals to gas usedfor power generation in 20months for whole Bangladesh.

Compensation due from UScompany Chevron and Canadiancompany NIKO. The price of gaslost only is more than 5 billion USdollar, which is 7 times of yearlybudget allocation for energysector. Still today compensationis unpaid.

WB, ADB or other IFIs used to bevery vocal about everything butcollectively remain silent aboutthis compensation issue.


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South Asia is emerging as an important region both economically andpolitically. President Obama shifted focus from Iraq to South Asia as soonas he took office in 2008. The strategic alliances in South Asia withIndia, China, Pakistan and the US being the key players are largely tosecure control of fossil fuels, minerals, and other natural resources, andthe infrastructure such as oil and gas pipelines and ports to import andexport them.The Militarization of India, http://www.counterpunch.org/2011/05/27/the-militarization-of-india/)

Is Bangladesh becoming a victimof new global strategy?


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Wikileaks: Who decides on peoples

lives and resources? US diplomats privately pressurised the Bangladeshi government intoreinstating a controversial coal mine which had been closedfollowing violent protests.

Later on in the cable, Moriarty privately noted: "Asia Energy, the

company behind the Phulbari project, has sixty percent USinvestment. Asia Energy officials told the Ambassador they werecautiously optimistic that the project would win governmentapproval in the coming months.

Energy Adviser agreed to build support for the project through theparliamentary process.

http://www.guardian.co.uk/world/2010/dec/21/wikileaks-cables-us-bangladesh-coal-mine

The US ambassador to Bangladesh persuaded the government inJuly last year to award two blocks in the Bay of Bengal to ConocoPhillips and to permit Chevron to set up a compressor in Muchai, aCNN-IBN report said on Friday quoting US diplomatic cables leakedby Wikileaks.

http://www.bdinn.com/news/conoco-phillips-chevron-contracts-pm%E2%80%99s-adviser-us-envoy-agreed-deals- wikileaks /
http://www.guardian.co.uk/world/2010/dec/21/wikileaks-cables-us-bangladesh-coal-minehttp://www.bdinn.com/news/conoco-phillips-chevron-contracts-pm%E2%80%99s-adviser-us-envoy-agreed-deals-http://www.bdinn.com/news/conoco-phillips-chevron-contracts-pm%E2%80%99s-adviser-us-envoy-agreed-deals-http://www.bdinn.com/news/conoco-phillips-chevron-contracts-pm%E2%80%99s-adviser-us-envoy-agreed-deals-http://www.bdinn.com/news/conoco-phillips-chevron-contracts-pm%E2%80%99s-adviser-us-envoy-agreed-deals-http://www.bdinn.com/news/conoco-phillips-chevron-contracts-pm%E2%80%99s-adviser-us-envoy-agreed-deals-http://www.bdinn.com/news/conoco-phillips-chevron-contracts-pm%E2%80%99s-adviser-us-envoy-agreed-deals-http://www.bdinn.com/news/conoco-phillips-chevron-contracts-pm%E2%80%99s-adviser-us-envoy-agreed-deals-http://www.bdinn.com/news/conoco-phillips-chevron-contracts-pm%E2%80%99s-adviser-us-envoy-agreed-deals-http://www.bdinn.com/news/conoco-phillips-chevron-contracts-pm%E2%80%99s-adviser-us-envoy-agreed-deals-http://www.bdinn.com/news/conoco-phillips-chevron-contracts-pm%E2%80%99s-adviser-us-envoy-agreed-deals-http://www.bdinn.com/news/conoco-phillips-chevron-contracts-pm%E2%80%99s-adviser-us-envoy-agreed-deals-http://www.bdinn.com/news/conoco-phillips-chevron-contracts-pm%E2%80%99s-adviser-us-envoy-agreed-deals-http://www.bdinn.com/news/conoco-phillips-chevron-contracts-pm%E2%80%99s-adviser-us-envoy-agreed-deals-http://www.bdinn.com/news/conoco-phillips-chevron-contracts-pm%E2%80%99s-adviser-us-envoy-agreed-deals-http://www.bdinn.com/news/conoco-phillips-chevron-contracts-pm%E2%80%99s-adviser-us-envoy-agreed-deals-http://www.bdinn.com/news/conoco-phillips-chevron-contracts-pm%E2%80%99s-adviser-us-envoy-agreed-deals-http://www.bdinn.com/news/conoco-phillips-chevron-contracts-pm%E2%80%99s-adviser-us-envoy-agreed-deals-http://www.bdinn.com/news/conoco-phillips-chevron-contracts-pm%E2%80%99s-adviser-us-envoy-agreed-deals-http://www.bdinn.com/news/conoco-phillips-chevron-contracts-pm%E2%80%99s-adviser-us-envoy-agreed-deals-http://www.bdinn.com/news/conoco-phillips-chevron-contracts-pm%E2%80%99s-adviser-us-envoy-agreed-deals-http://www.bdinn.com/news/conoco-phillips-chevron-contracts-pm%E2%80%99s-adviser-us-envoy-agreed-deals-http://www.bdinn.com/news/conoco-phillips-chevron-contracts-pm%E2%80%99s-adviser-us-envoy-agreed-deals-http://www.guardian.co.uk/world/2010/dec/21/wikileaks-cables-us-bangladesh-coal-minehttp://www.guardian.co.uk/world/2010/dec/21/wikileaks-cables-us-bangladesh-coal-minehttp://www.guardian.co.uk/world/2010/dec/21/wikileaks-cables-us-bangladesh-coal-minehttp://www.guardian.co.uk/world/2010/dec/21/wikileaks-cables-us-bangladesh-coal-minehttp://www.guardian.co.uk/world/2010/dec/21/wikileaks-cables-us-bangladesh-coal-minehttp://www.guardian.co.uk/world/2010/dec/21/wikileaks-cables-us-bangladesh-coal-minehttp://www.guardian.co.uk/world/2010/dec/21/wikileaks-cables-us-bangladesh-coal-minehttp://www.guardian.co.uk/world/2010/dec/21/wikileaks-cables-us-bangladesh-coal-minehttp://www.guardian.co.uk/world/2010/dec/21/wikileaks-cables-us-bangladesh-coal-minehttp://www.guardian.co.uk/world/2010/dec/21/wikileaks-cables-us-bangladesh-coal-minehttp://www.guardian.co.uk/world/2010/dec/21/wikileaks-cables-us-bangladesh-coal-mine


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Oil gas blocks in Bay of Bengalleased out on 16.6.11

Main concern:100 per cent export opportunityfor Conoco-Phillips (15.5.1 Subjectto Articles 15.5.4, 15.5.5 and 15.6Bangladesh share not more than20% (15.5.4), but needs to buildits own pipeline to bring itonshore.Production limit is relaxed (tomore than 7.5%)Joint Review committee andmanagement committee aredominated by IOC.

Conoco phillips has bad recordsfor blowout, compensationconditions are not concrete.

Authority over Bay of Bengal iscrucial for bangladesh. That isbeing threatened.


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PSC 2012

Amendments to meet MNCs demand (dealwith ONGC)

Almost import price Cost recovery share increased Third party sales right No corporate tax


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Coal: location, depth and reserve Year of Discovery Location Depth (meter) Reserve (million

ton)

comment

1962 Jamalganj,Joypurhat

640-1158 1050 Too deep to betechnicallyfeasible in theforeseeablefuture.

1985 Barapukuria,Dinajpur

130-506 390 Production since2005, ownershipwith Petrobangla,Land slide andwater logging.

1989 Khalashpir 257-482 685 Project is ready tobe implemented

1989 Dighipara,Dinajpur 328-407 500 (yet to beconfirmed) Petrobangla, notyet began anywork

1997 Phulbari, Dinajpur 150-240 572 Export and openpit mine basedproject wasrejected by the

people


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Phulbari coal project

The Bangladesh Government originally awarded an explorationlicense to the Australian company BHP Minerals in 1994, whichhowever, decided against developing a coal mining operation in thearea.

In 1997 Asia Energy was formed and in 1998 BHP transferred itslicence to this newly formed company, incorporated in London StockExchange Alternative Investment Market, changed its name toGlobal Coal Management after August 2006 killings in Phulbari.Its major shareholders have been Polo Resources USA, RAB Capital,UBS, Fidelity Group, Barclays, Credit Suisse, LR Global, OspraieManagement, Capital Group and Argos Greater Europe Fund.Project of 30-35 years, for Bangladesh only 6 per cent royalty.75-80 per cent of the coal was planned for export throughSundarban mangrove forest.


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Cost for Bangladesh3 crop, highly fertile

area, free from floodand natural disaster

P h o t o : P h i l l i p G a i n

656 sq km area of this region would beaffected by open pit mining Destruction of rivers, canals, water

bodies, fish farms, ducks, hens and cattle,thousands of shops, and business andcommercial houses.


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Why to oppose open pit? About 200,000 people from 150villages will have to be evacuated fromonly one mine area.Dewatering in the mining area will notonly disturb the major aquifer, it willalso damage the most potential andmassive aquifer of north-westernBangladesh, making the area a desert-like place.Huge area outside the mining area willbe affected through groundwaterdepletion, that currently provides asignificant portion of the countrysfood supply. Open pit mine Projectwould therefore have serious impactsfor the food security of the entirecountry.

After destroying food security andhuman security, by exporting coal itwas planning to destroy energysecurity too.


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Peoples Mobilization against

Resource Curse


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Peoples collective efforts

Resistance against gas export by depriving people and the economy(2002-2004).Phulbari uprising and national resistance in 2006 regarding phulbaricoal project. 3 young men gave their lives to save the country from

unprecedented disasterResisted open pit mining and export of coal in Phulbari. Resistanceis on (latest long march 24-30 Oct, 2010).Peoples tribunal against World Bank, IMF and ADB has identifiedproblems of these friend philosopher guide (2007). Protest continuing against gas deal with conoco phillips with export

provision since 2008, (including two general strikes in 2009 and2011).Brought energy and sustainable development in peoples thinkingand actions, as well as in political agenda.


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Phulbari Agreement

Phulbari Agreement wassigned between GOB and theagitating people (August 30

2006). The main points were:1. Phulbari coal project will be

scrapped and Asia energy willbe ousted from the country.

2. No open pit mining will beallowed anywhere in thecountry .

3. Mining method and othersteps for coal developmentand utilization will be takenafter proper consultation withthe people keeping national

interest in tact .


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Verdicts from Peoples Movements:Challenges against Resource Curse

People of Bangladesh should have 100 per cent owner of its own resourcesNeo liberal development paradigm should be replaced by people centreddevelopment policyIFIs disastrous policies should be rejected, to made them accoutable, andtheir immunity should be scrappedFood and Energy should be the priority. No destruction of agri land and noexport of energy.No development project that destroys peoples lives, livelihoods andenvironment.

Peoples consent and long term sustainability must be part of developmentprocess.People will not accept projects of mass destruction in the name ofdevelopment or FDI.More efforts should be given to explore huge potential of renewable

energy.


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Renewable energy: future ofhuman civilization

Main features:Supply of solar power and wind for power generation is infinite;available all over the year in Bangladesh.Cost is still comparatively high, research and innovation will soonmake it cheaper.Possible to produce in different scales.Possible to reach remote places.Speculation and plunder, war and conflict, crisis and scarcity notlikely from within.Part of nature, part of Environment.Nothing to worry about future energy security.

Yet to be done:Comprehensive plan to build up own capability to escape unnecessary

trap by big business and global power.


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RecommendationsProprietorship and authority of the people over natural resources should be strictlyensured.Since it is limited and non-renewable; export of gas, coal and any product there fromshall be prohibited by law.Phulbari agreement (prohibit open pit mining and expulsion of Asia Energy or GCMfor its crime and fraudulent activities) should be implemented to earn confidence of

the people.National coal agency should be established to utilize resources in environmentfriendly way.Maritime boundary and maritime resources should be protected to ensure energy andnational security.Realization of compensation for losses in Magurchara and Tengratila and penalty forcrimes and irregularities. And to use this money to build energy infrastructure.National energy policy with a clear vision to ensure energy security with sustainabledevelopment.National capacity building, BAPEX, Petrobangla, Geological Survey of Bangladesh(GSB) and Bureau of mineral development (BND) shall be adequately developed.More departments at university level and also research institutes shall be establishedat national level to develop skilled manpower for mineral resources development andtheir best utilization. For this purpose, the services of expatriate Bangladeshi expertsand foreign experts, if needed, shall be utilized.Huge potential of renewable energy should be explored, national capability to bedeveloped. Production of solar panel, wind mill, tools for biogas plant should beencouraged through different incentives.


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Immediate steps necessary to ease gas andpower crisis.

Increase production of gas from rich gas fields like Titas and Hobiganj under national agencies.To make 12 gas points, closed for technical reasons, operational.To ask IOCs to explore all blocks under their domain, takeover blocks which they unable to doand the expired ones.Renovate and repair power plants including Barapukuria power plant, transmission line and gaspipe line.

All these steps should cost only 9.5 billion taka but will be able to add about 1400 MW in the nationalgrid.Development of Sunetra gas field with probability of 4.5 TCF should be done by BAPEX, cost:2.79 billion taka. PSC 2011 process should be stopped.

Moreover,Installing small power plants by local entrepreneur should be encouraged.Local entrepreneur also should be encouraged to produce solar panel and more battery.Shopping malls and high rise apartment and office buildings should be discouraged.Hospitals, industry, agriculture should get priority to get electricity over shopping malls and VIPresidence, ad bill boards.Use of AC should be discouraged. (one small AC consume power by which 50 HH can get one faneach).


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Countries like Bangladesh need to change the approaches ofDevelopment to challenge Resource curse model to ensure

energy security and sustainable development.

Energysovereignty isthe key toenergysecurity anddevelopment.

Photo: Taslima Akhtar