The government stance was conveyed to the international coal mining company when Chief Executive Officer (CEO) of Asia Energy Corporation (Bangladesh) Gary Lye met the adviser of the energy ministry at his Secretariat office yesterday.

Steve Bywater, CEO of London-based parent Asia Energy PLC, was present during the meeting.

"Our stand is very clear: whatever the agreement the government will sign, it will be on the basis of the new coal policy," Mahmudur Rahman told reporters after the meeting.

"We had a positive meeting with the energy advisor," Gary Lye said. "We told him that we want to work with the government to make the coal policy and the coal sector a success for Bangladesh… we look forward to implement our Phulbari Coal Project in an economically and environmentally sustainable manner."

The government already prepared a draft coal policy, which is now being discussed at various levels to accommodate suggestions from different circles.

After finalising the policy, it is likely to be placed in the cabinet for approval sometime next month.

In the new policy, the government has planned to increase the royalty rate from existing five percent to about 16 percent and add some new conditions making it mandatory for the coal mine developer to set up a 500 MW power plant simultaneously with its mining project.

In addition, the use of coal for domestic purpose will be given priority and export to be discouraged.

But the UK company prefer to sign a mining agreement with the government to implement its plan on the basis of the old coal policy where the project developer is allowed to make unlimited export of coal.

Earlier, the Asia Energy conducted a feasibility study for Phulbari coal mine project and submitted its development plan to the government under an agreement signed in 1998 on the basis of old policy.