ADB’s Private Sector Arm Considering Funding Controversial Coal Project in Northwest Bangladesh
Location: Bangladesh
Total Cost: $100 million Private Sector Loan; $200 million ADB
Project Specifics
Eight million tonnes of coal would be exported by rail and barges through the Sundarbans, one of the three largest mangrove forests in the world which is also an international Biosphere Reserve by UNESCO. Four million tonnes would be transported to India through the rail network and three million would be used for domestic consumption. GCM has proposed a 500 MW powerplant at the mine site. According to the Summary Environmental Impact Assessment (SEIA), the project would relocate 40,000 people (9000 households) and cover an area of 5,192 hectares (ha); the open pit at any given time would cover an area of 2,180 ha.
Phulbari Coal Project
ADB Involvement
Asian Development Bank’s Private Sector Operations Department (PSOD) is promoting this project for an investment loan and a political risk guarantee in spite of major setbacks to the project (see below). PSOD staff believe that the project will economically benefit Bangladesh and provide it much needed energy. ADB has approved the SEIA and is awaiting final resettlement action plans and indigenous people’s plans. Under ADB rules, the private client interested in ADB funds can also conduct the mandatory studies required for high environmental and social impact projects such as Phulbari. ADB “safeguard specialists” on involuntary resettlement, environmental impacts and indigenous people are expected to approve these studies before the project is sent for Board Approval.
PSOD cleared the concept for this project on 14 October 2005. Civil Society Organizations contend that the project violates ADB’s Energy Policy (1995), Indigenous Peoples Policy (1998), Involuntary Resettlement Policy (1995), Environment Policy (2002), and Public Communication Policy (2005).
Shooting on Mass Protest, August 26, 2006
On August 26, 2006, Bangladesh Rifles fired upon a crowd of over 20,000 people as they staged a protest against the proposed open pit mine. Three people from Phulbari were killed in the shootings, one was paralyzed, and several hundreds were injured. Following this incident, GCM was forced to shut down its operations; GCM staff’s property was burned and the Government signed an agreement with the local municipalities to shut down Asia Energy operations. Since then, a state of emergency was declared in Bangladesh and an interim government has been formed. The interim government has set up a Committee to prepare a Coal Policy for Bangladesh. Many expect Phulbari Coal Project’s fate will be determined by the outcome of the Coal Policy negotiations.
Phulbari Coal Project
Displacement and Loss of Livelihoods
As stated in the overview, the project will displace a large number of people (40,000 according to the Company’s own estimates) while absorption of internally displaced people within Bangladesh remains a critical problem given population density and lack of access to land. Some sources from within the multilateral development banks’ suggest that the World Bank Group’s International Finance Corporation (IFC) withdrew from considering this project given the lack of land available for resettlement. Moreover, indirect affects of “de-watering” are likely to be long term (30 plus years of mine life and beyond) and with serious implications for maintaining livelihoods. Moreover, the Bangladesh government does not have a national resettlement policy nor a good track record in handling projects with massive displacement. People displaced from the neighboring coal mine (Barakupuria) are still struggling to receive adequate compensation according to local sources.
Environmental Destruction
Phulbari Ricefields which the proposed project threatens to destroy
The mine life is projected to be more than 30 years; however strategies for mitigation of acid mine drainage–one of the key sources of mine-related land and water pollution have not been adequately addressed in the ADB approved SEIA. Moreover, impacts of de-watering the mine area has not been carefully examined with on the ground tests. Also, eight million tonnes of coal will be transported through the Sundarbans reserve forests and at a distance of “1.5 km from the protected areas.” The Sundarbans, besides being a UNESCO World Heritage Site, remain one of the only natural mechanisms for protection against major storm surges and cyclones that frequent Bangladesh; a massive and long term export of coal through this area will seriously impact the ecosystem.
Human Rights Violations
The project has already been associated with significant human rights violations due to the August 2006 incident. Freedom of Speech and assembly have further been restricted since this event. There are concerns that a central tenet of “free and prior informed consent” will not be met by the ADB if it continues to support the project.
Development Dimensions of ADB’s private sector projects
ADB’s Private Sector Operations Department (PSOD) is a relatively new but growing entity at the ADB, although private sector projects have been funded at the institution since the early 80s. Internal sources at the ADB contend that PSOD has a poor track record of designing projects with sound environmental and social safeguards as per ADB safeguard policies and on ex-ante poverty assessments. PSOD management admits that they have to date not developed “development scorecards” as stipulated in their own strategy document (2001) to assess the poverty dimensions of any given private sector project. They contend that the development dimension is addressed during the evaluation of an approved project. Civil Society remains concerned at these systemic weaknesses in PSOD, particularly where a project will have major social and environmental impacts (like Phulbari).
ADB Policy Violations
Civil Society Organizations believe that the project, if approved, will violate ADB’s Energy Policy (1995), Indigenous Peoples Policy (1998), Involuntary Resettlement Policy (1995), Environment Policy (2002), and Public Communication Policy (2005).
Correspondence
Joint NGO letter to Asian Development Bank Board of Directors calling for ADB to pull out of Phulbari Coal Project January 11, 2008 (Acrobat pdf, 87 KB)Community Letter to ADB December 15, 2007 (Acrobat pdf, 29 KB)
Civil Society Reports/Analysis
Phulbari: A Parlous Project, prepared by Nostromo Research, November 12, 2008 (Acrobat pdf, 368 KB)Phulbari Coal Project: An Assessment of the Draft Resettlement Plan Prepared by Global Coal Management/Asia Energy Corporation November 3, 2008 (Acrobat pdf, 375 KB)
The Blood Soaked Banner of Phulari: A Coal Mine Against the People, Global Coal Management plc (GCM), (Google video)
Monitoring the Phulbari Coal Project Japan Center for a Sustainable Environment and Society (JACSES website)
Society for Environment and Human Development Articles
Phulbari, Asia Energy and Grassroots Revolt by Philip Gain, Society for Environment and Human Development (Acrobat pdf, 568 KB)Killings in Phulbari Ignite Unstoppable Protest: Local Communities Stand Strong against Open Cut Mining by Philip Gain, Society for Environment and Human Development (SEHD website)
Open Pit Mining for Coal: Horror Feeling Shrouds Northern Bangladesh by Philip Gain, Society for Environment and Human Development (SEHD website)
ADB Documents
ADB Response to Civil Society Petition (featuring Phulbari) Presented at 2007 Kyoto AGM (Acrobat pdf, 590 KB)Summary Environmental Impact Assessment August 2006 (Acrobat pdf, 8683 KB)
GCM/Asia Energy Documents
Phulbari Coal Project Resettlement Plan (Asia Energy), December 2006 (Acrobat pdf, 4050 KB)Phulbari Public Communication and Disclosure Plan (Asia Energy), April 2006 (Acrobat pdf, 6650 KB)
Indigenous Peoples Development Plan (Asia Energy), February 2006 (Acrobat pdf, 25944 KB)
Government of Bangladesh Documents
Summary of Expert Committee Report (Acrobat pdf, 42 KB)Press
Global civil society calls for private banks to withdraw support from Bangladesh Coal Mine November 3, 2008 (Acrobat pdf, 143 KB)Protracted struggle forces ADB to pull out of Phulbari, One World South Asia, April 8, 2008 (One World South Asia website)
ADB postpones funding The Daily Star, April 7, 2008 (The Daily Star website)
Phulbari Coalmine Project: Deal with Asian Energy against interest of country: Mir Nasir, by Pulack Ghatack, January 31, 2008 (The New Nation website)
Energy division likely to review draft coal policy, The New Age, January 24, 2008 (Banglapraxis blog)
Residents of Phulbari apprehensive of coal policy, The New Age, January 9, 2008 (Banglapraxis blog)
Megh Barta blog on Phulbary Coal Project (Megh Barta website)
Useful Websites
BankTrack (BankTrack website)Berne Declaration (Berne Declaration website)
Phulbari Coal Project (Asian Development Bank website)
Phulbari Resistance Blog (Blogspot website)
BanglaPraxis (WordPress website)
Bank Information Center (BIC website)
Phulbari Coal Project (NGO Forum on the ADB Website)
Society for Environment and Human Development (SEHD) (SEHD website)
Japan Center for a Sustainable Environment and Society (JACSES) (JACSES website)
Mines and Communites (Mines and Communites website)
Phulbari (Asia Energy’s Bangla website)
Global Coal Management (Global Coal Management Website)
Civil Society Contacts
Banktrack
David Barnden, Human Rights and NGO Contact
Boothstraat 1c
3512 BT Utrecht
The Netherlands
Telephone: 31-30-2334343
Website: www.banktrack.org
BanglaPraxis
Zakir Kibria, Executive Director
Email: zakir.kibria@gmail.com
Website: http://banglapraxis.wordpress.com
NGO Forum on the ADB
Hemantha Withanage, Executive Director
Email: Hemantha@forum-adb.org
Website; http://www.forum-adb.org/Phulbari.htm
Society for Environment and Human Development
Philip Gain, Executive Director
Email: sehd@citechco.net
Website: www.sehd.org
Japan Center for a Sustainable Environment and Society (JACSES)
Yuki Tanabe
Email: tanabe@jacses.org
Website: www.jacses.org
Partizans
Roger Moody
Email: partisans@gn.apc.org
Website: http://www.minesandcommunities.org/
ADB Contacts
Mats Elerud, (Project Team Leader for Phulbari), Senior Investment Specialist, PSOD
Email: melerud@adb.org
Robert Bestani, Director General, PSOD, ADB
Email: rbestani@adb.org
Hua Du, Country Director, Bangladesh Resident Mission
Email: huadu@adb.org
Kunio Senga, Director General, South Asia Regional Department, ADB
Email: ksenga@adb.org
Liqun Jin, Vice President (Operations 1), ADB
Email: ljin@adb.org
Bart Edes, Head, NGO Center, ADB
Email: bedes@adb.org
Global Coal Management/Asia Energy Contacts
Gary Lye, Chief Executive Officer of Asia Energy Bangladesh
Global Coal Management PLC
2nd Floor, Foxglove House
166 – 168 Piccadilly
London, W1J 9EF
United Kingdom
Email: info@gcmplc.com
Telephone: + 44 (0)20 7290 1630
Fax: + 44 (0)20 7290 1631