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Govt doubles coal mining royalties

| Updated: March 14, 2020 14:29:00


File photo (Collected) File photo (Collected)

The government has doubled the rate of its royalties from coal mining after eight years in a bid to increase revenue.

From now on, underground coal extraction companies will have to pay 10-per cent royalties to the government.

The rate of royalties was fixed at 5.0 per cent in 2012.

Power, energy and mineral resources ministry has recently issued a gazette by revising the rate upwards.

With this rise in royalties, the government would receive higher revenue from coal-mine extraction.

Currently, Barapukuria is the only mine supplying coal to the Bangladesh Power Development Board (BPDB).

However, Barapukuria Coal Mining Company Limited (BCMCL) managing director Md Kamruzzaman Khan said their earnings would reduce due to a rise in royalties.

The BCMCL, a subsidiary of Petrobangla, sells coal at $130 per tonne to the BPDB.

The company's expenditure, including VAT, tax and payment to contractors, stands at $123 per tonne, Mr Khan observed.

The margin of earnings is currently $7 and it would reduce further from now on, he added.

"We propose that the government increase the rate of coal that it sells to the BPDB," the BCMCL chief said.

Annually, the government receives an estimated Tk 1.10 billion in royalties from coal mining, he added.

Joint secretary (operations) to energy ministry Dr Md Sher Ali said the government would take only 10 per cent from coal extraction.

The remaining 90 per cent would be enjoyed by the foreign companies and others, he added.

"We've increased the rate for raising revenue from the coal mining sector," Mr Ali mentioned.

According to energy officials, the rate of royalties has been increased following a recommendation from the Bureau of Mineral Development.

Md Zafar Ullah, director general of the bureau, said the royalties was 20 per cent in 1989 that was reduced to 5.0 per cent in 2012 through framing an act.

"We've seen the drastic reduction and felt the need to increase the rate in the current context," he added.

Officials said the bureau has also proposed that royalties from the extraction of stone or boulder and sand be raised.

In the gazette, the ministry has amended the rates of royalties under 11th schedule of Mine and Mineral Resources Law (regulation and development)-1992 (39 in the law of 1992), and Mine and Mineral Resources Rules 2012, sections 2 (26), 66 (4), 81 (5).

Bangladesh has coal reserves around 7962 million tonnes in seven locations of the country, including Barapukuria, Phulbari and Digipara of Dinajpur, Khalaspir of Rangpur and Jamalganj of Joypurhat.

The rate of coal was $61.50 per tonnes on May 29, 2001.

It was raised by phases to $71.50 in July 2008, $85.50 in July 2010, $106.50 in February 01, 2012, $131.50 in May 01, 2015.

On July 01, 2017, the rate was reduced slightly to $130, according to the data of the BCMCL.

However, state royalties remained 5.0 per cent since 2012 despite an increase in the selling cost of coal.

The BCMCL has signed a contract with Chinese coal miner XMC/CMC (China National Import and Export Corporation) consortium and the extraction began in 2005.

A Consumers Association of Bangladesh report shows as many as 5,48,000 tonnes of coal were misappropriated since extraction at Barapukuria with the aid of officials of the department concerned.

The production of power supplied to the northern region was largely dependent on the availability of coal from the coal mining company.

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