Tata wants to go for open pit mining at Barapukuria while China has developed the mine using shaft method. Open mining is up to 20 percent cheaper than shaft mining but it causes high degree of air and environmental pollution, and destroys arable land.

The mine, developed at a cost of $ 192 million by Chinese company CMEC, will be handed over to Petrobangla's Barapukuria Coal Mine Company this month. The government already signed a development, production and maintenance contract with another Chinese company CMC. Upon taking over the mine from CMEC, the government will deploy CMC on a 72-month contract for operation till 2011.

But as Tata is interested to utilise the high quality Barapukuria coal resources, the government is considering creating scopes for Tata, the sources said.

Tata seeks exploration rights over a prospective coal deposit area north of Barapukuria and another point in between Barapukuria and Phulbari mines. Besides, it wants exploration rights at the existing Barapukuria mine, applying open mining.

Tata prefers open pt mining than shaft mining since it allows extraction of more coal in one go. Up to 90 percent of a deposit can be extracted this way.

The government several months ago formed a committee comprising Petrobangla experts. The committee in its report said the government may award Tata exploration rights in the two unexplored zones but Barapukuria mine is already under a contract.

The report further said that before awarding the exploration rights, the government must first see Tata's detailed plans on mining to understand if they will affect the existing Barapukuria mine and have negative environmental impact.

Sources pointed out that since CMC will be operating in the coal mine, the PMO is considering awarding one area of Barapukuria coal reserve away from the present mining site. It is estimated that the mine has two billion tonnes of coal, which in terms of its thermal value is equivalent to 6 trillion cubic feet of gas.

Under the Coal Development Policy, 1993, the government would get only 6 percent royalty from Tata for operating the mine. The policy was framed when petroleum price was between $ 12 and $25 per barrel. Now the price has gone up to $50 to 60. Six percent royalty is now too less, the sources pointed out.

Since Tata is interested in open mining only, energy ministry adviser Mahmudur Rahman twice instructed Petrobangla to appoint a consultant to see if open mining is more profitable than shaft mining.

At a meeting with officials of the ministry and Petrobangla, the adviser said if open mining is more profitable, the mine will be awarded to Tata for production. One source however pointed out, "A decision has already been taken on awarding the coal mine to Tata."

Tata plans to utilise this coal for its proposed steel mill and power plant, and also export it to India.

"Barapukuria mine will help lower Tata's operational cost and act as a long term energy source. To operate its steel mill, Tata will import iron ore from India. The 100 tonne-capacity wagons that will carry iron ore from India will not return empty if Tata can export coal. That way the carrying cost of coal and iron ore will reduce significantly. This is why Tata is so much interested in the coal mine," the source said.

While Tata's plan has its merits, energy experts vehemently oppose open mining.

One expert said if Tata is so much interested, it can be awarded Khalashpir coal deposit at Pirganj, not very far from Barapukuria. " Khalashpir deposit is located at a higher point and its reserve is bigger than Barapukuria's. But the government should first revise its coal development policy and increase the percentage of royalty."

Khalashpir deposit is actually in the same belt of coal reserve as Barapukuria.

Barapukuria mine was discovered in the late eighties by the Geological Survey of Britain (GSB) that later deployed British consultant IMCL to suggest the best way to produce coal from the reserve, mainly located at a depth of nearly 150 to 250 metres.

The IMCL through a study ruled out open mining because of the depth of the coal reservoir and serious environmental damage it causes. Open mining will lead to widespread destruction of paddy fields in the area, and since land is scarce in Bangladesh, such mining will cause additional miseries to local people.

"Open mining is an option when it is not located in a populated area, or when the deposit is near the surface. This was debated in the early nineties and we had a consensus that the geological condition in that region poses great risk for open mining," noted one expert.

Accordingly, the then BNP government struck a Suppliers' Credit agreement with China in 1994 to develop this mine using shaft method.

While developing the mine, CMEC under-estimated the complex geological nature of that area, especially presence of a large number of sub-soil water reservoirs. As a result, the mine was completely flooded in 1998. Mining remained nearly stalled till 2002.

The Chinese company then installed a new shaft half a kilometre to the south of the original shaft that remains flooded till date. The new shaft does not give access to as much coal as the original one gave, sources said.

From mid-2002, the mine started pilot production of coal. It now has a production capacity of seven lakh tonnes a year, which will gradually go up to one million tonnes. Nearly 75 percent of this coal will be consumed by the 250 megawatt Barapukuria power project now being developed by another Chinese company.