Progress Update

Asia Energy PLC
18 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 over
its 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 the
Project,' the report by international professional services company GHD said. '
The indirect or multiplier effects are expected to be US$13.7 billion. This
gives a total GDP increase of US$21.4 billion.'



'In summary, the mine and power station development is expected to contribute up
to an additional one per cent to GDP. This represents an average of US$0.7
billion addition to GDP per year,' the report said.



GHD (http://www.ghd.com.au) has extensive experience in working on and
evaluating major infrastructure projects and was commissioned to carry out the
report by Asia Energy PLC ('Asia Energy' or 'the Company') as part of the
Banking Information Memorandum currently being finalised to finance its planned
15 million tonnes per annum coal mine in Phulbari, Northwest Bangladesh.



Asia Energy has also submitted an unsolicited proposal to build a 500 MW coal
fired power plant which could be later increased to 1,000 MW.



'This report underlines the exciting potential of the Phulbari Coal Project and
its related infrastructure both for Bangladesh and for its people,' said CEO
Steve Bywater. 'The report explains how the Project will have a hugely positive
impact on the economy.'



'The Project is expected to contribute significantly to the development of the
Bangladesh economy by adding up to 10 per cent to the country's energy supply by
2015,' GHD said. 'The productivity and business growth impacts will be very
significant. The US$13.7 billion indirect impact over the life of the Project is
likely to materially underestimate the benefit.'



GHD used a multiplier of 1.75 for the indirect impacts, which it said was
conservative, given that multipliers in terms of spin-off industries and service
sector growth for similar large scale projects around the world range from 1.5
in highly developed countries to 3.5 in poorer, subsistence economies.



The multiplier effects included development of industries from the mine's
valuable co-products but did not take into account any contribution from savings
on foreign exchange from substituting imported coal with local coal, which would
amount 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 and
economic well being of the local, regional and national community in Bangladesh,
' GHD said. 'This will be in areas as diverse as job opportunities, health
facilities and general literacy.'



GHD estimated there would be 8-10 additional jobs for every person employed
directly on the project. During construction phase the Project will employ 2,100
people. When fully operational the mine will employ 1,200 and another 450 will
work on the barging and shipment operations at Khulna, making a total of up to
16,500 new jobs. GHD said US$4.2 billion would be pumped back into the Project
area in Phulbari.



There will also be programmes to increase local agricultural production and
re-cultivate the land backfilled after the mining as well as a major operation
to inject water drawn down from the mine back into nearby fields which will
involve laying more than 100 kilometres of pipelines.



Asia Energy, which operates in Bangladesh under an existing contract, has
established a resource of 572 million tonnes of high quality thermal and
semi-soft coking coal in the Phulbari basin and is waiting Government of
Bangladesh ('GoB') approval of its Scheme of Development for the mine in line
with its contract. Plans for the mine were given Environmental Clearance by the
GoB in September 2005. Pre-mining activity is scheduled to start later this year
with first coal expected in late 2008 and production then increasing rapidly to
15 million tonnes per annum by 2013.



The Executive Summary of the GHD Report on the Economic Benefits of the Phulbari
Coal 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 to
prepare a Phulbari Coal Project - Economic Benefits study.



The Phulbari Coal Project is located in the Dinajpur District in north-west
Bangladesh. The project will include an open cut mine supplying coal to a power
station, and to export & domestic customers. The power station will be a purpose
built 500 MW facility, with a planned later upgrade of a further 500 MW. The
capital 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 over
the life of the mine. While most of the money will be spent on the mine and
power station, significant capital will be spent on the necessary
infrastructure, i.e. improvements to the rail system and on port facilities. In
addition 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 the
project. The indirect or multiplier effects are expected to be $US13.7 Billion
over the life of the project. This gives a total GDP increase of $US21.4
Billion. In summary, the mine/power station development is expected to
contribute up to an additional 1% to GDP. This represents an average of $US0.7
Billion addition to GDP per year.



The Economic Value Added is shown in Table 1 in terms of direct and indirect
multiplier 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 impact
of import substitution. GHD expects these to be significant as the need for
access to foreign exchange is a considerable constraint on growth in most
economies like Bangladesh. For example, the local coal production will be a
direct substitution for imported coal. That is projected to save $US3 Billion in
foreign exchange over the life of the project.



The GHD assessment utilised a multiplier of 1.75 for the indirect impacts, which
is a combination of a multiplier of 2 for half the value added, and 1.5 for half
the value added. The multiplier is applied to the $US7.7 Billion value added for
the project over its life. This is a conservative estimate as multipliers range
from around 1.5 in the highly developed countries to 3.5 for poorer, non cash
rural societies.



Moreover, the project is expected to contribute significantly to the development
of the Bangladesh economy by adding up to 10% of the country's energy supply by
2015. Thus, this project introduces both a cash economy, and a readily usable
source of power. The productivity and business growth impacts will be very
significant. The $US13.7 Billion indirect impact over the life of the project is
likely to materially underestimate the benefit.



The effect of this development is expected to radically improve the social and
economic well being of the local, regional and national community of Bangladesh.
This will be in areas as diverse as job opportunities (both direct and
indirect), health facilities and general literacy.



Summarised in Table 2 are the projected net economic impact values of the more
significant elements of the project as the affect the Phulbari region and the
wider Bangladesh community. The amounts in Table 2 represent the value of direct
and indirect benefits for each element. GHD has assessed that these benefits
will come from a wide variety of factors that will contribute to the increase in
living 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 employed
in the operation and maintenance of the rail system through Bangladesh Rail.
This value of benefit is included in the 'Other elements not yet detailed' item
in Table 2.



It has been assessed that the combined mine and power station will generate 8 to
10 new jobs for every person employed directly at the project. The project is
expected to employ over 2100 people during the construction phase and 1200
during the production phase of the project. Around 450 personnel are expected to
be required for the operation of the Khulna and Sibsa River facilities during
the life of the project.



END - GHD Economics Benefits Report



ABOUT GHD

GHD is an international professional services company. GHD employs over 4,000
people in a network of offices throughout Australia, New Zealand, Asia, the
Middle 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 50
engineering and architecture companies.


For further information:
Steve Bywater, Chief Executive (London)                     Justine Howarth, Cathy Malins
Tel: [phone]                                   Parkgreen Communications
Fax: [phone]                                   Tel: [phone]
                                                            [e-mail]
Gary Lye, Chief Operating Officer:(Bangladesh)              [e-mail]
Tel:[phone]
[e-mail]




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