sharing in governance of extractive industries


As governments regardless of their political outlook have a duty to support and nurture economic development. Wealth and job creation are essential to the stability of any society, especially those that have a limited capacity to provide social welfare for the young, the sick, the elderly and those who have fallen on hard times. One of the greatest challenges in the developing countries is that of unemployment, especially youth unemployment, a factor that can be a root cause of delinquency, criminality and general disaffection. Bangladesh, for all its challenges, has been blessed by an array of natural resources and a population that is willing to work and to work hard. Whilst it is a country of contrasts and huge disparities in wealth it is fortunate to be open to foreign investment. In recent years the sector that has generated particular excitement has been hydrocarbons. In governmental circles there has been considerable anticipation of the benefits that may well accrue from oil and gas exploration and the exploitation of substantial coal deposits. For a country that routinely has to endure regular electricity shortages such potential develop appears doubly attractive. On the surface at least exploration and development seems extraordinarily attractive, especially to governments that haemorrhage funds due to corruption (http://www.transparency.org/cpi2013/results),  mismanagement and poor project execution. Bangladesh certainly falls short in certain respects, and whilst not a poor country, it is invariably seen as poorly managed.

The current political crisis in Bangladesh means that priorities are somewhat skewed and for potential foreign investors there is additional risk. Many potential foreign investors are monitoring things carefully, whilst those that have already committed to the country are keen to protect their interests, especially as there is a real likelihood of a change of government. For locals and those who care about the environment and communal interests there is a real fear that a weak national government, one facing internal difficulties and external scrutiny will buckle to the requests and ‘demands’ of those multinationals who might threaten to up sticks and leave.  An interesting case in point is that of GCM Resources Plc (http://www.gcmplc.com/), an AIM-listed UK-based multinational company.  According to GCM’s company website it “ ...has identified a world class coal resource of 572 million tonnes (JORC compliant) near the town of Phulbari in North West Bangladesh. The resource is made up of 60% high quality thermal coal, with low ash metallurgical coal, also known as semi-soft coking coal, making up 20%.”  No mention of the possible displacement of in excess of 130,000 people or of the loss of over 14,000 acres of fertile agricultural land as claimed by the projects detractors. GCM goes on to extol the virtues of what is seeks to do; “The coal will be used in domestic power generation (mine mouth and elsewhere) and in domestic industries such as clay brick and coal briquette production. Coal for the domestic market will be largely transported from Phulbari by rail. Coal that is surplus to domestic requirements will be transported to international markets by rail, river and sea. The Feasibility Study and Scheme of Development incorporated a full Social and Environmental Impact Assessment for the shipment of coal by rail to Khulna and then by barge/ship to other markets. The Feasibility Study also incorporated plans for rail track upgrades, a loading terminal at Khulna, navigation improvements to the Pussur River, a floating platform at Akram Point and channel dredging to the approach channel at the entrance of the Bay of Bengal.”  Again an upbeat message that makes no mention of the lowering of the water table that will result and the fact that GCM looks set to take 94% of revenue generated, as well as enjoying an initial 9 year tax holiday. Such is the indignation that some Bangladeshis feel about the degree of sophistry and semantics that they believe has been employed by GCM that a group of concerned individuals supported by the World Development Movement (http://www.wdm.org.uk/) decided to voice their concerns outside CGM’s Annual General Meeting in London on 4th December 2013 (http://www.protectbdresources.org.uk/) Whilst it is indeed often easy to demonise multinational companies, there have in the past been incidents where certain local and foreign players have been at best disingenuous about the true impact of intended activity and as a consequence there is a marked lack of trust. Local stakeholders often feel that their opinions and concerns are ignored and that successive governments have been blinded by the sums of money involved.

Those who know anything about what is happening in Bangladesh at this time can appreciate that whatever the potential benefits or pitfalls of CGM’s plans for Phulbari it would be better to wait until things are politically more stable before any final decision is taken.

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