18th Apr 2006 07:00
Asia Energy PLC18 April 2006 Asia Energy Plc ("Asia Energy" or the "Company") Phulbari to add one per cent to Bangladesh GDP London, 18 April 2006 - Asia Energy PLC's Phulbari Coal Project ("the Project")will generate more than US$21 billion in economic benefits to Bangladesh overits 30 year life and add one per cent a year to Gross Domestic Product (GDP),according to a new report. "The direct effect on GDP is expected to be US$7.8 billion over the life of theProject," the report by international professional services company GHD said. "The indirect or multiplier effects are expected to be US$13.7 billion. Thisgives a total GDP increase of US$21.4 billion." "In summary, the mine and power station development is expected to contribute upto an additional one per cent to GDP. This represents an average of US$0.7billion addition to GDP per year," the report said. GHD (http://www.ghd.com.au) has extensive experience in working on andevaluating major infrastructure projects and was commissioned to carry out thereport by Asia Energy PLC ("Asia Energy" or "the Company") as part of theBanking Information Memorandum currently being finalised to finance its planned15 million tonnes per annum coal mine in Phulbari, Northwest Bangladesh. Asia Energy has also submitted an unsolicited proposal to build a 500 MW coalfired power plant which could be later increased to 1,000 MW. "This report underlines the exciting potential of the Phulbari Coal Project andits related infrastructure both for Bangladesh and for its people," said CEOSteve Bywater. "The report explains how the Project will have a hugely positiveimpact on the economy." "The Project is expected to contribute significantly to the development of theBangladesh economy by adding up to 10 per cent to the country's energy supply by2015," GHD said. "The productivity and business growth impacts will be verysignificant. The US$13.7 billion indirect impact over the life of the Project islikely to materially underestimate the benefit." GHD used a multiplier of 1.75 for the indirect impacts, which it said wasconservative, given that multipliers in terms of spin-off industries and servicesector growth for similar large scale projects around the world range from 1.5in highly developed countries to 3.5 in poorer, subsistence economies. The multiplier effects included development of industries from the mine'svaluable co-products but did not take into account any contribution from savingson foreign exchange from substituting imported coal with local coal, which wouldamount to a saving of US$3 billion over the life of the Project, GHD said. "The effect of this development is expected to radically improve the social andeconomic well being of the local, regional and national community in Bangladesh," GHD said. "This will be in areas as diverse as job opportunities, healthfacilities and general literacy." GHD estimated there would be 8-10 additional jobs for every person employeddirectly on the project. During construction phase the Project will employ 2,100people. When fully operational the mine will employ 1,200 and another 450 willwork on the barging and shipment operations at Khulna, making a total of up to16,500 new jobs. GHD said US$4.2 billion would be pumped back into the Projectarea in Phulbari. There will also be programmes to increase local agricultural production andre-cultivate the land backfilled after the mining as well as a major operationto inject water drawn down from the mine back into nearby fields which willinvolve laying more than 100 kilometres of pipelines. Asia Energy, which operates in Bangladesh under an existing contract, hasestablished a resource of 572 million tonnes of high quality thermal andsemi-soft coking coal in the Phulbari basin and is waiting Government ofBangladesh ("GoB") approval of its Scheme of Development for the mine in linewith its contract. Plans for the mine were given Environmental Clearance by theGoB in September 2005. Pre-mining activity is scheduled to start later this yearwith first coal expected in late 2008 and production then increasing rapidly to15 million tonnes per annum by 2013. The Executive Summary of the GHD Report on the Economic Benefits of the PhulbariCoal Project is attached. The GHD - Report for Phulbari Coal Project, Economic Benefits (April 2006) 1. Executive Summary Asia Energy Corporation (Bangladesh) Pty Ltd (Asia Energy) commissioned GHD toprepare a Phulbari Coal Project - Economic Benefits study. The Phulbari Coal Project is located in the Dinajpur District in north-westBangladesh. The project will include an open cut mine supplying coal to a powerstation, and to export & domestic customers. The power station will be a purposebuilt 500 MW facility, with a planned later upgrade of a further 500 MW. Thecapital cost estimate over the life of the project is $US3 Billion, made up of$US0.9 Billion spent during the development phase plus $US2.1 Billion spent overthe life of the mine. While most of the money will be spent on the mine andpower station, significant capital will be spent on the necessaryinfrastructure, i.e. improvements to the rail system and on port facilities. Inaddition the operating costs have been estimated at £US10.4 Billion. The direct effect on GDP is expected to be $US7.8 Billion over the life of theproject. The indirect or multiplier effects are expected to be $US13.7 Billionover the life of the project. This gives a total GDP increase of $US21.4Billion. In summary, the mine/power station development is expected tocontribute up to an additional 1% to GDP. This represents an average of $US0.7Billion addition to GDP per year. The Economic Value Added is shown in Table 1 in terms of direct and indirectmultiplier contributions. Table 1 - Economic Value Added Economic Value Added $US Billion • Direct impact of coal mine and power station $7.8 • Indirect multiplier impacts $13.7 Total Economic Value Added $21.4 These amounts do not include any contribution from the foreign exchange impactof import substitution. GHD expects these to be significant as the need foraccess to foreign exchange is a considerable constraint on growth in mosteconomies like Bangladesh. For example, the local coal production will be adirect substitution for imported coal. That is projected to save $US3 Billion inforeign exchange over the life of the project. The GHD assessment utilised a multiplier of 1.75 for the indirect impacts, whichis a combination of a multiplier of 2 for half the value added, and 1.5 for halfthe value added. The multiplier is applied to the $US7.7 Billion value added forthe project over its life. This is a conservative estimate as multipliers rangefrom around 1.5 in the highly developed countries to 3.5 for poorer, non cashrural societies. Moreover, the project is expected to contribute significantly to the developmentof the Bangladesh economy by adding up to 10% of the country's energy supply by2015. Thus, this project introduces both a cash economy, and a readily usablesource of power. The productivity and business growth impacts will be verysignificant. The $US13.7 Billion indirect impact over the life of the project islikely to materially underestimate the benefit. The effect of this development is expected to radically improve the social andeconomic well being of the local, regional and national community of Bangladesh.This will be in areas as diverse as job opportunities (both direct andindirect), health facilities and general literacy. Summarised in Table 2 are the projected net economic impact values of the moresignificant elements of the project as the affect the Phulbari region and thewider Bangladesh community. The amounts in Table 2 represent the value of directand indirect benefits for each element. GHD has assessed that these benefitswill come from a wide variety of factors that will contribute to the increase inliving standards. Table 2 - Elements of Economic Impact Elements of Economic Impact $US Million • Local community $4,192 • Communities outside the local area $4,830 • Rail and ports development $314 • Payments to Bangladesh Government $7,070 • Other elements not yet detailed $5,010 Total Economic Impact $21,416 In addition to the direct costs attributable to the "Rail and ports development"item in Table 2, a large but not yet defined number of people will be employedin the operation and maintenance of the rail system through Bangladesh Rail.This value of benefit is included in the "Other elements not yet detailed" itemin Table 2. It has been assessed that the combined mine and power station will generate 8 to10 new jobs for every person employed directly at the project. The project isexpected to employ over 2100 people during the construction phase and 1200during the production phase of the project. Around 450 personnel are expected tobe required for the operation of the Khulna and Sibsa River facilities duringthe life of the project. END - GHD Economics Benefits Report ABOUT GHD GHD is an international professional services company. GHD employs over 4,000people in a network of offices throughout Australia, New Zealand, Asia, theMiddle East and the Americas. GHD incorporates architects, engineers, drafters,planners, scientists, management consultants and economists. GHD serves the global market sectors of Infrastructure, Mining & Industry,Defence, Property & Buildings and the Environment. GHD was established in 1928 and today, is ranked in the world's top 50engineering and architecture companies. For further information:Steve Bywater, Chief Executive (London) Justine Howarth, Cathy MalinsTel: +44 (0) 20 7079 1798 Parkgreen CommunicationsFax: +44 (0) 20 7491 2758 Tel: +44 (0) 207 493 3713 [email protected] Lye, Chief Operating Officer:(Bangladesh) [email protected]:+88 [email protected] This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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