in Bangladesh, People's Uprising In Phulbari And The Right Signal
By Anu Muhammad
22 September, 2006
to Seventy thousand people, men women Bangali Saontal, were marching
on 26th August 2006 at Phulbari in Bangladesh to say NO to a British
company's big Open Pit Mining (OPM) Project. They wanted to give a strong
message to the company, Asia Energy Corporation (AEC), that they were
totally unwanted in the region and also in the country. People were
angry, nevertheless disciplined. They were gathered under the banner
National Committee for Protecting oil-gas-mineral Resources and Port-Power.
That massive demonstration ended peacefully but on the way to return
home they were hit by bullets, 5 persons were killed and several hundreds
Killing did not stop people
from saying NO, rather protests spread countrywide. After four days,
being unable to stop spreading anger, the government signed an agreement
with the National Committee, where they made commitment for not allowing
open pit mining any time anywhere in the country. The government also
declared to take necessary actions to cancel Phulbari Coal Project and
to say good-bye to AEC.
There are people who became
very annoyed to see victory of the people and cancellation of a big
FDI project. For them, this was a great opportunity for the country.
If that is so, why people turned into irresistible protestors? Why people
became so determined that they gave their blood to cancel the project?
Why they opposed AEC and OPM so strongly? Do they oppose coal mining
per se? Is exploration as well as optimum utilization of natural resources
guaranteed by FDI of present form? What is the Phulbari Coal Project
actually? In this article I would like to bring together theoretical
assumptions of FDI for 'underdeveloped' countries and practical scenario
with respect to natural resources in Bangladesh.
in the late forties and through the fifties, worked extensively on theorizing
development agenda where they focused on the scarcity of capital as
one of the major constraints in the development of post-colonial Third
World countries. WW Rostow, in the early sixties, termed capital the
'missing component' for these countries. Modernization theorists prescribed
capital inflow from capitalist economies as an almost sure remedy. Foreign
Aid (FA) and Foreign Direct Investment (FDI) have always been considered
to be obviously crucial in development discourses of Third World countries
in the modernization paradigm.
It has always been argued
in modernization theories and in the views held by the second-generation
theorists that capital inflow, in either form, would be essential for
Third World countries to boost their economies and break the vicious
circle of poverty and underdevelopment. FDI, according to this dominant
view, would contribute in economic development of the 'underdeveloped'
countries in different ways. It would bring in foreign currency along
with the latest technology, skilled manpower, new ideas and modern management;
it would also create conditions for strengthening and expanding the
productive bases of the host economies. With these assumptions strongly
glued to the FDI discourse, it has been a custom on the part of policy-makers,
and a large segment of the economists and experts, to hail FDI uncritically.
Up to early nineties the
so-called foreign aid, in projects and otherwise, dominated the external
sector of Bangladesh. Since the eighties the remittance of foreign exchange
has been showing significant growth. Gradually it has captured the highest
position in foreign exchange inflow. In fact this source is the only
real one for ensuring foreign exchange inflow into Bangladesh. FDI has
been showing a significant rise since 1993. First it was in the Karnaphuli
Fertilizer Company (KAFCO) and then FDI showed significant rise in the
oil and gas sector followed by power and telecommunications. KAFCO is
still a big liability for the country, as are quite a few other deals.
With practical experience
in Bangladesh at hand, if anybody goes by objective facts and logic,
the established hypothesis will be proved to be a manufactured myth.
We clearly find that the FDI per se cannot ensure or cannot help the
economy to develop and industrialize itself. It is not the quantity
of FDI but the quality — that is the terms and conditions, areas
and objectives — that determines whether it ends with disaster
and high human costs or adds anything productive.
Concept of Common
The concept of common property
is important in discussing the issue of natural resources. Common property
is property that is owned by all in a country; nobody can be excluded
from the ownership and authority over that property. Natural resources
like gas and coal are common property owned by the people of Bangladesh.
The government of Bangladesh, therefore, is supposed to be a protector
of this common property and caretaker of that resource. Any attempt
to transform the common property into private property, that is to privatize
the common property, must fulfill two conditions: firstly, it must be
in the interest of the economy and the people, and secondly, the people,
the real owner, must approve it.
Different studies on common
property at the micro-level found that the common people have little
access to common property. At the micro-level common properties are
being grabbed by local powers while at the macro-level common properties
like mineral resources are being grabbed by global powers. Therefore,
common property like natural resources deserve further attention. Many
instances are available from different parts of the world in this regard.
These global powers are mainly the big corporate bodies supported by
powerful states and global institutions like the World Bank, the IMF
and the ADB.
Foreign 'Aid' as
a tool for problematic FDI
It is not difficult to discover
foreign aid as a tool for shaping 'reform' policies to the advantage
of the so-called 'donors', weakening national institutions in order
to facilitate big corporate bodies and to open up common property to
big business. Evidences clearly show that FDI in the energy sector comes
not through the invisible hand of the market process, but through strategic
intervention by the visible fist of global institutions, the managerial
bodies of global corporate power. Let me explain.
The first elaborate discourse
by the World Bank on the energy sector of Bangladesh was made in 1982.
It was a report of the Joint UNDP/World Bank Energy Sector Assessment
Programme. The report was kept secret, as were most of other reports
of these agencies. It was based on the findings of the Energy Assessment
Mission undertaken in October 1981. It should be noted that similar
reports were also issued at the same time on Indonesia, Mauritius, Kenya,
Sri Lanka, Zimbabwe, Haiti, Papua New Guinea, Burundi, Rwanda and Malawi.
The report seemed certain
about the size of the gas reserves, even though no scientific analysis
was cited. Even 10 trillion cubic feet (TCF) of gas was considered to
be 'substantial, economically recoverable natural gas reserves' and,
according to their estimate, 'at present consumption levels would last
for several decades'. The report then urged the concerned quarters to
make 'rapid and effective use of this major resource' as it could be
a 'crucial element in alleviating the country's current payment's problems
and enhancing its energy outlook'.
The report also suggested
the means by which Bangladesh could take advantage of these resources,
saying that 'given Bangladesh's limited capability in mounting an exploration
programme on its own, it would need to make concerted efforts to secure
the participation of foreign oil companies in this area'. Moreover,
it continued, since 'the supply of gas is likely to remain well in excess
of Bangladesh's expected internal needs for a substantial period of
time', they offered different export options.
A similar pattern existed in the pronouncements of the Asian Development
Bank. It proceeded with a major energy study and an update of the power
sector master plan in the same year as the World Bank. Its report was
even more specific about the 'most effective use of the gas resource'.
In the same report, the Asian Development Bank also informed us that,
'Energy projects have generally been quite popular with a number of
Things followed accordingly. Since 1993 many Production Sharing Contracts
(PSCs) were signed for leasing out different oil and gas blocks to international
oil companies (IOCs). These were kept secret and hailed as a big success
and a big step forward to 'development' of the country. FDI increased
dramatically from the mid-'90s. Presence of multinational corporations
(MNCs) in gas, electricity and telecommunications became visible, and
new contracts were being signed in those sectors. According to the World
Bank's estimates, since 1996 the annual averages of the highest capital
inflows of FDI took place in the gas sector ($134 million) followed
by the power sector ($113 million) in 5 years' time. In the same period
local institutions and specialized agencies were facing fund shortage,
brain drains and government non-cooperation.
What happened actually
in the Gas sector?
If we retrace the steps taken
by the World Bank and the Asian Development Bank in the energy sector
we find the following results:
Step 1: The Study on Energy provided a policy prescription to restructure
public institutions in order to create space for foreign private investment.
Step 2: It argued that foreign private investment would provide an inflow
of foreign currency, would ensure remarkable development of the energy
sector and would contribute to the development of other sectors as well.
Step3: It advocated raising the price of gas and electricity.
Step 4: MNCs started operating here. The national exploration agency
has been kept idle. Budget deficit and pressure on our foreign exchange
reserve has increased. Profitable Petrobangla became a losing concern
since MNCs started operating.
Step 5: Further increase of the price of gas and export of gas is proposed
to avert further crisis!
In the process of this so-called development in the energy sector,
---- The governments chose to bring MNCs to explore gas when BAPEX,
the national exploration agency, had the ability to do the same.
----The governments continued signing contracts even after it was found
that further production of gas would be highly problematic with the
----The successive governments
signed contracts to purchase country's own natural gas at a price from
MNCs that is six times more than the possible price could be obtained
from national companies.
---- The governments signed contracts to purchase country's own gas
by hard earned foreign currency from the MNCs when it was possible to
get it with local currency from the national companies.
----The governments signed contracts to exhaust limited and non-renewable
resources within a few years' time, thus depriving the people of fuel,
electricity and gas-based industrialization.
----The governments turned common properties into private properties
that are virtually owned by the MNCs.
The results of these steps have been disastrous for the economy and
the people. Because, (1) prices of gas and power have been continuously
increasing, and as a result of that (2) cost of production at every
level has increased, which resulted in the fall of the competitiveness
of Bangladeshi goods; (3) hard earned foreign currency is being used
to purchase the gas which could be bought with local currency at a much
cheaper rate, (4) local production establishments are being dismantled
and skills are being lost through disuse; (5) losses of Petrobangla
are going from big to huge; (6) privatization of these institutions
was suggested as a solution; (7) resources have become a huge liability
for the country.
Not surprisingly, these adverse consequences were seen as a 'major step
forward' in the 'reform processes' by creating a congenial atmosphere
for FDI. But after analyzing all the revealed facts, it can be easily
concluded that the FDI scenario in the gas sector does not stand up
to scrutiny. The FDI that took place in the gas sector was not warranted
considering the local capability and demand-supply scenario. Moreover,
this FDI, which became functional through Production Sharing Contracts
(PSC)s, (i) had an adverse impact on our foreign exchange reserve instead
of making foreign exchange more available, (ii) instead of developing
capabilities it negatively affected local expertise and institutional
capability, (iii) adversely affected the resource balance and caused
rise of the gas price which, through the multiplier effect, caused a
rise of production costs in different sectors and an erosion of our
competitiveness, (iv) and finally it obstructed optimum utilization
of gas resources for the Bangladeshi people and the economy.
Coal Project and
The Phulbari coalfield was
the latest discovery among the big four coalfields found in Bangladesh
since independence. Contracts or deals on this field were no exception,
were done secretly, and have still not been made public. In 1994 Government
signed agreement with the BHP of Australia, in 1998 BHP transferred
its right to one year old British company Asia Energy Corporation. The
present energy adviser confessed that the coal exploration deal with
Asia Energy was 'anti-state'. He also said, 'People who were involved
in signing the anti-state agreement should be tried.' But we saw later
how the adviser himself sided with these 'anti-state' people.
Despite the government's
denial of any final contract for production of coal, the Asian Energy
Co (AEC) had been waging a ceaseless propaganda blitz since 2005 to
give an impression that it had been promised the lease of the Phulbari
coalfield. The way AEC had been operating in Phulbari, the way it had
been making statements to the media, the way its local experts and employees
had been engaged in a large-scale publicity campaign may be lead one
to believe it had received the lease for mining. Using multi-coloured
and attractive brochures and leaflets published in both Bangla and English
for projecting the Phulbari Coal Mine Project, big bounties and bright
prospects had been brandished for the consumption of the general masses.
The publications carried a lot of illustrations. The pictures show men,
women and children with smiling faces surrounded by green paddy fields.
These pictures were indeed the opposite of what was going to happen
because of this one-sided deal. The smiles would die along with the
green paddy fields because of the project.
The Project: Open Pit Mining
The AEC was preparing itself
for open-pit mining. It said in its documents, 'Mining by the open cut
method is new to Bangladesh, but it is a proven and highly productive
and safe method in similar geological and hydrological conditions in
other parts of the world such as Australia, India, Indonesia and Germany.'
It goes without saying that projecting such a sweeping comparative statement
as expert opinion is ill motivated. Leaving aside other criteria, the
population aspect in Phulbari is entirely different from the reality
in other countries like Australia or Germany even India or Indonesia.
The AEC further stated in defense of open-pit mining: 'Adoption of this
method will permit the fullest extraction of coal resources, and will
augment duration of the mining period and thus enhance socio-economic
opportunity, income prospects and gains for the Bangladesh economy.'
It was not made clear who would bear the cost and who would be the beneficiaries
of this 'fullest extraction'!
It was conceded in the AEC's
own publication that the 'initial open cut will cover an area of about
2,000 hectares. Over the life of the project, a total of some 10,000
hectares will be required for the mine and associated infrastructure.
This means that there will be loss of agricultural land and that people
living in the eastern part of Phulbari and in a number of outlying villages
and homesteads will have to be relocated…As the mine advances
during the first 5 to 10 years, between 15,000 and 20,000 people will
have to be resettled, and over the 30-year life of the mine the total
number of people resettled could be in the region of 50,000. Population
displacement is likely to occur mainly in Phulbari Township and also
in some of the villages of the upazilas of Phulbari, Birampur, Nawabganj,
and Parbatipur.' From the local government offices' data we find that
the number of people who could be evicted goes beyond 1,50,000!
Not vitally needed agricultural
land alone will be lost. 'A number of local roads, the regional Bogra-Phulbari-Dinajpur
road and the north-south railway may need to be relocated.' Besides,
'The groundwater level will require lowering in the vicinity of the
mine in order to maintain dry and safe working conditions.' The issue
had not been further elaborated on for fear of exposure of the danger
and disaster this de-watering will cause.
In another publication of
AEC, we find some more partial facts and statements of possible social
distortion and economic losses and damages:
'It is eventually estimated that an area of 10,000 hectares of land
may be needed, a part of which will be engulfed by the mine pit. Other
areas would be consumed for making roads inside the mine area, offices,
workshops, stack yards for excavated soil and rocks, and some areas
would go under the re-located railroad and national highway, and yet
some more areas would be used for resettlement of the uprooted people.
The areas to be appropriated for the purpose will spread over the upazilas
of Phulbari, Birampur, Nawabganj and Parbatipur.
'It is estimated that a part
of Phulbari town, some wards and villages belonging to Phulbari Municipality,
and the unions of Hamidpur, Joypur, Khanpur, Khairbari and Shibnagar
would come under the mine's area. A little part of the unions of Golapganj,
Aladipur and Daulatpur would also be used. Nearly 10,000 homesteads
and business establishments, along with trees, would become victims
and would require relocation and settlement.
'Some community buildings
like schools, colleges, hospitals, mosques, temples, churches and community
property like bazaars and graveyards would be affected, requiring relocation
Even these effects appear
as catastrophic but those cover only a part of the story. The damage
to earth formation and losses to human beings, current and long-term,
have not been taken into account.
Financial Loss and
Let us now look at the quantum
of gain and quantum of loss of the economy of Bangladesh that will be
caused by the deal with the AEC. The latest figure for the extractable
quantity of coal in Phulbari is 572 million tonnes. Besides coal, the
mine contains high-grade silica (sand), ceramic clay, Madhupur clay
and gravels and rocks of high quality. The AEC claims that only 10 to
20 per cent of the coal can be mined if the tunnel system of extraction
is used. The percentage of recovery rises to 70-80 per cent if the open-pit
mining method is adopted. In the initial stage of the project, annual
coal production will be nearly 1.5 million tonnes and by 2011 the figure
will rise to 15 million tonnes. The plan was that 12 million tonnes
would be exported per annum, of which 4 million tonnes would go to India.
Only 3 million tonnes would be available for consumption in Bangladesh.
If we consider only coal
in the mine, at the rate of Tk 50 billion per year, AEC could make an
income of Tk 1,500 billion or 1,50,000 crore takas in thirty years.
Investment figure was shown to be increased by Tk 70,000 crore or 856
per cent within a few months. In the latter account the cost of machinery
and equipment was shown at Tk 13,000 crore, and the balance was operating
costs, which include salaries, travel expenses, refreshment, etc. Siphoning
of money outside the country of investment after artificially inflating
the figure is an oft-practiced ploy. Even if this discrepancy is ignored
and the latter higher figure is assumed, the profit comes to nearly
100 per cent. If the previous figure, which is possibly nearer the truth,
is taken into account the profit goes up to 1,621 per cent!
On the other hand, Bangladesh
could receive, by way of 6 per cent royalty and taxes, $7 billion or
Tk 48,000 crore in thirty years, little over Tk 1,500 crore per year.
In this context it should be noted that currently the export earning
of Bangladesh has exceeded Tk 60,000 crore per year. Bangladeshis working
abroad send foreign exchange remittances worth around Tk 30,000 crore
per year. The AEC claimed that its project would give a fillip to the
Bangladesh economy, but the income that Bangladesh would get from AEC
over 30 years is less than one year's export earning or 2 years' worth
of foreign remittances by Bangladeshi expatriates. What can be the economical
and social cost to Bangladesh in making the above income? AEC gave a
partial projection but it refrained from drawing the full picture or
telling the whole truth.
According to AEC's own estimate,
the coalfield will extend over 135 square kilometers. Again, the area,
which can be affected directly or indirectly during the mining operation
including de-watering, will be nearly 656 sq km. This area is very fertile,
paddy output is extremely high, and nearly all the land yields three
crops per year! The people inhabiting the area are very active economically.
The business activities in the non-agricultural sector are also expanding
fast, and the density of population is very high. Because of the coal-mining
operations, the production activities of the entire area in agriculture,
livestock, fisheries and forestry will be totally destroyed and will
remain unproductive for an indefinite period! The products here include
Aman, Aus, IRRI and Boro varieties of rice, wheat, mustard, potato,
corn, banana, sugarcane, jute, chilli, garlic, onion, vegetables of
all varieties, and numerous fruit-bearing and timber trees.
There are also rivers and
canals, beels, and fish farms numbering over a thousand, and farms that
rear ducks, hens and cattle, etc. Besides the above, there are many
shops, and business and commercial houses. Economic activities in the
entire area will come to an end. This is 'small loss' in AEC's eyes.
The quantum of loss has not been figured out by AEC but the people of
the area have done it. According to their account, considering the adverse
effect on production and economic activities, the total loss will be
Tk 1,800 crore per annum!
Even according to the above
conservative estimate, our coal resource would be used to build a mountain
of profit for AEC, an MNC, at the expense of an ocean of loss to Bangladesh,
to the tune of at least Tk 90 billion in addition to the loss of the
coal. This predicament was shown by AEC as a blessing for the Bangladesh
economy! The figure of loss will swell manifold if the destruction of
a large variety of flora and fauna, environmental imbalance and economic
uncertainty, along with physical debility of the population now and
in the future, is taken into account.
AEC stated that 'during the
operation of the mine, 2,100 short-term and 1,100 long-term positions
would be available for employment'. AEC has been deafeningly silent
about the fact that livelihood of over 2,00,000 people will be destroyed
by its operation. Furthermore, the few hundred or thousand jobs to be
created by them will not be routine or familiar jobs but dangerous ones
indeed. Profiteers exclude these costs while figuring out profit or
If AEC and its local commission
agents and collaborators could succeed in implementing their sinister
plan, the foreign company would leave Bangladesh after grabbing an astronomical
sum as profit, and the sycophantic agents and devious politicians would
be bloated by commission money gorged by them, and today's green, living
and thriving Phulbari would be permanently consigned to the status of
a disfigured wasteland. No one can predict what would be the condition
of the people remaining in the region.
The right signal
It should not be unclear
anymore that natural resources have turned into a liability and a source
of danger for the people of Bangladesh not due to lack of FDI but because
of it. A local-global vicious alliance has been working on plundering
in the name of FDI. The Phulbari inhabitant's uprising and their victory
in resisting the AEC's machinations by sacrificing lives have not only
halted the implementation of this disastrous project but also have brought
other corrupt secret FDI projects under critical observation.
The Phulbari project is a
project of mass destruction and genocide. The Phulbari people's verdict
has sent the right signal to the government and global corporate entities,
and made it clear that the people of Bangladesh will no longer tolerate
plundering and impoverishment in the name of FDI and the contracts signed
without their knowledge will not be accepted anymore.
The AEC has caused bloodshed in Phulbari. This blood of innocent young
people should haunt the company for ever and everywhere.