Written evidence submitted by London Mining Network and International Accountability Project to an inquiry by the Parliamentary International Development Committee (‘Tax in Developing Countries: Increasing Resources for Development’) concerns a proposed mining project in northwest Bangladesh, the Phulbari Coal Project. The project has generated fierce controversy over the past six years. Project opponents cite a 6% royalty rate and a nine-year tax “holiday,” both of which violate national mining rules, as serious concerns. Both would constrain development revenues in one of the world’s most economically poor countries while allowing a UK-based corporation, GCM Resources plc, to extract one of Bangladesh’s most valuable non-renewable resources.
Contract terms also allow the export of 100% of the coal, which means that Bangladesh’s finite coal resources would not be used to meet the country’s own unmet energy needs. In addition to a royalty rate and tax exemption that violate Bangladesh’s mining regulations and would sharply constrain revenues desperately needed for development, the project would inflict severe costs that include adverse impacts on the nation’s food supply, access to water, health and the environment, which would affect as many as 220,000 Bangladeshi citizens. In so doing, the project threatens to reverse Bangladesh’s progress toward meeting Millennium Development Goals (MDGs), and undermine DfiD’s spending and core work in support of the specific goals of reducing hunger and extreme poverty, increasing access to water, improving health, and building livelihoods.
See http://www.publications.parliament.uk/pa/cm201012/cmselect/cmintdev/writev/1821/tax03.htm.