NationalVOLUME 17 ISSUE # 22

The Thar coal exigency

Coal reserves in Tharparkar district of Sindh are estimated at nearly 175 billion tons, which are comparable to 50 billion tons of oil equivalent, more than the Saudi Arabian and Iranian oil reserves. But it is, definitely, regrettable that the project to bring these deposits had been delayed for over 20 years to be brought into use.

The use of Thar coal has the potential to reduce the country’s reliance on expensive imported energy and raw material for fertiliser manufacturing. It could cut the lofty import bill, help narrow down the current account deficit and accelerate economic growth of the country, once the project is launched practically to produce energy.

Ahmed Muneeb, general manager administration and external affairs at the Sindh Engro Coal Mining Company, told a group of journalists in the last week of February 2022 that the reserves in the Sindh province are equal to 2,000 trillion cubic feet (TCF) of gas, which is 68 times higher than Pakistan’s total gas reserves. The reserves could meet the electricity demand of Pakistan for several centuries; however, the entire deposits would not be utilised for power production. There could be many other uses of coal, apart from power production. This coal can perform liquefaction and make syngas (synthesis gas), which can be utilised as a raw material for fertiliser production.

The official says the coal could be supplied to power plants of the country that are utilising imported coal currently. The government is working on a project to connect Thar with different parts of the country through a railway network to ensure the transportation of coal. The supply of coal from Thar to the Lucky power project located in Karachi has already started. Currently, Pakistan is producing around 660 megawatts of power from Thar coal. The power production from Thar coal would increase to 1,800-2,000 megawatts over the next one year, till February 2023, the Sindh Engro official says.

The total area of the project has been divided into 13 blocks of coal, and each block is of a different size. Initially, coal production would start at block-I and II. Once work on more blocks is initiated, Pakistan might also consider the option of exporting the commodity to India after fulfilling the local demand. India had already shown willingness to import coal from Pakistan, as it operates power plants having an installed capacity of around 8,000 megawatts. A portion of Thar coal is located in the Rajasthan region of India, which was equivalent to 8 per cent of Pakistan’s Thar coal. However, the neighbouring country had already utilised all the reserves for power production since 1950 till the recent past.

The first-ever power project on Thar coal was launched in July 2019, which has so far saved foreign exchange worth over $200 million, according to energy experts. However, the losses caused to the national exchequer due to the politicisation of the project and delay in its launch was enormous. A strong lobby in the country created hurdles to setting up plants to generate electricity from Thar coal reserves for a long time in the past.

Initially, the federal as well as provincial governments had planned a Rs. 5512 million project in 2000-2001 in collaboration with China, to install a 500-kV power transmission line from Thar. Besides, in April 2002, a state-run Chinese company, Shenhua Group Corporation, was assigned to develop block-two of the Thar coalfields, accepting its proposal to establish a 600-MW power plant at the mine-mouth with associated captive coalmines. The Shenhua Group carried out studies related to coal-geological and hydro-geological possibilities in the area, and a project feasibility report was finalised.

However, regrettably, the project ran into various snags. Later, a number of foreign investors showed interest in developing the resources, but no breakthrough could be achieved for years. In April 2005, AES-Oasis Ltd. of the USA showed interest in developing an integrated mining-cum-power project of 1,000-MW capacity, utilising block-one Thar resources. The sponsor, after a year, finally backed out.

The federal government did not include the Thar coal power project in the priority list of the Planning Commission of Pakistan for years. As mentioned on its official website in 2011, commission authorities put emphasis on generating electricity through hydel and thermal power projects only. However, a Planning Commission document mentioned in its feasibility study that the use of Thar coal for the cement manufacturing industry could be very beneficial. The document said 90 per cent of the cement manufacturing plants had abandoned furnace oil and opted for coal energy during the past decade. It helped save a huge amount of precious foreign exchange which was earlier spent on the import of furnace oil. With this major change in the cement industry’s energy needs, coal consumption had gone up to five million tonnes per annum.

The Sindh Thar Coal and Energy Board was established to lure investors into investing in Thar coal fields and projects. However, a lobby comprising oil importers, rental power brokers and other vested interests created hurdles to the coal project for years. International energy politics might also have a hand in the delay of the project. The World Bank had organised an energy conference in Washington in 2009, to convince the world financing groups to invest in Thar coal in Sindh. However, the same year, an environment conference was held in Copenhagen, which strongly stressed the need for minimising the use of coal for generating energy, to save the environment from hazardous effects of coal burning.

At the Copenhagen summit, the US advocated development of no, or low, carbon energy sources in the developing countries. Then the WB wrote a letter to the government of Pakistan, seeking assurance that the Thar coal power generation projects would not affect the environment adversely. However, no reply was sent to the Bank for long. Later, the then federal finance minister Dr. Abdul Hafeez Sheikh, who hailed from Sindh, talked to the WB authorities and tried to convince them that the use of new technology would help minimise the hazardous effects of coal use for power generation.

The WB, according to sources, had become cautious after facing worldwide condemnation for extending a $3.75 billion loan to South Africa in April 2009, to build one of the world’s largest coal plants. The decision drew sharp criticism from all Western countries. In Pakistan, the World Bank’s decision not to finance the Thar coal project apparently for environmental reasons was not convincing enough, because the country’s industry did not contribute much to carbon emissions and its carbon footprint was one of the lowest. So, not much harm to the ecology could be expected from the Thar coal project on completion. However, as the project is under way currently, though at very slow pace, it is a need of the hour to expedite exploration work on more blocks to produce energy not only for domestic use but also for various industries.