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Thar Coal      Project            

Chinese company has shown keen interest in the project

Aug  20 - 26 , 2001

The development of Thar coal reserves has been included in the priority list of projects which are likely to be launched during the current financial year. The government has already set up a task force on Thar coal reserves, which is headed by the President Gen. Musharraf himself.

The Pakistani delegation headed by Finance Minister Shaukat Aziz who visited China last week to finalise various business-cum-assistance deals with Chinese authorities also discussed the Thar coal project. The Minister held detailed discussions with Mr. Ye Quing Chairman of a leading Chinese company specialising in coal mining development, who showed keen interest in the project and found it commercially viable. Expressing willingness to invest in the project Quing asked for some specific details about the project. The Finance Minister Shaukat Aziz promised to provide all the required information within one month. A team of Chinese experts may later visit Pakistan to make on the spot studies.

The governor of Sindh province Mohammad Mian Soomro who is the Vice Chairman of the task force told newsmen after the 3rd meeting of the Force in Karachi last week that the government has approached some international investors including Chinese, to form a joint venture for the development of coal reserves in Thar (Sindh) deserts which had largest reserves of coal in the world. Most likely Chinese will be our partner in this venture, observed Mian Soomro.

The high powered task force is headed by President, Gen. Musharraf and its members include Federal Petroleum Minister, Deputy Chairman Planning Commission, Sindh Development, Chairman Board of Investment, Chairman Wapda, Chairman Sindh Privatization Commission, Federal Secretary Petroleum, Provincial Secretary Industries and Mineral Development and DG Sindh Coal Authority. The task force may also associate private sector members as and when considered necessary.

Its terms of reference are to carry out studies including geological exploration, investigation and project specific feasibility studies, to prepare policy and projects on the Coal-fired power generation, to be responsible for distribution and transmission of electric power, infrastructure development to develop skill development in connection with surface coal mining and coal fired power generation related technologies to provide incentives to promote investment in coal mining for various applications including power generation.

It was decided that feasibility of Thar Coal Project by Sindh Coal Authority will be expedited in consultation with the Ministry of Petroleum whereas pace of implementation and infrastructure development will be geared up. The feasibility of rail link to connect Thar coal would be processed in consultation with the Ministry of Railways. The Chinese delegation which visited Pakistan in May last expressed keen interest in the Thar Coal project and held lengthy discussion with Pakistan authorities including Sindh Coal Authority on the subject.

Pakistan is not blessed with large reserves of oil and the opportunity for the hydroelectric potential is confined to the northern region of the country. However, large deposits of coal were discovered at Thar over a decade ago by the Sindh Arid Zone Development Authority. In 1991, enormous coal deposits were conferred by the Geological Survey of Pakistan and the United States Agency for International Development.

Pakistan's Thar Desert contains the largest coal reserves discovered to date, covering an area of 10,000 square kilometers. The Thar Coal Field, should it be developed, will yield over 200 billion ton of coal used to produce electricity, it will yield sufficient power to make Pakistan self-sufficient in Electrical power. Pakistan has reserves of natural gas, but these will start to diminish by 2010.

Since the discovery of Thar coal in 1991 very little development work or study has been initiated. Thar coal has low calorific value but is environmentally friendly with a low Sulfur content. The Thar coal deposits extend across the border and they are currently being mined for power generation in Rajistan in India. India has no reservations about the use of these coal deposits. Coal extraction from Thar will be a development requiring 3-4 years before coal is made available for use. The ideal situation would be that GOP uses the coal to reduce Pakistan's dependence on hydro projects, the only alternative method is to develop the Thar coal via international financing. This is possible only by inviting international power companies to invest in Pakistan and provide the required funding for the development of the Thar coal field.

The Chinese delegation offered to establish a coal-fired power generation plant in Thatta, 125 kilometers from Karachi with an investment of about $ 200 million. Initially the capacity of the proposed plant would be 100 megawatt but it would be extendable to 200 megawatt. The plant's location would be in the vicinity of Jhirk coal mines with have reserves of 1.3 billion tonnes of coal.

The Chinese delegation leader was optimistic about the successful completion of the project within the timeframe of 22 months beginning from the day of start of construction. The leader of the delegation was emphatic in her assessment that Pakistan would be economically benefited to a significant extent if power generation was switched over to coal firing in view of the abundance of coal reserves in the country. In Sindh alone coal reserves are estimated at 200 billion tonnes. The Chinese leader also informed the Sindh officials that electricity generation in China was based to the extent of 80 per cent on coal firing thanks to domestic availability of coal.

The willingness of the Chinese National Mechanical Import and Export Corporation to make investment in coal based power plants in Pakistan is indeed a highly welcome development against the long backdrop of inaction on this front by the previous government despite the presence of high quality coal reserves in Sindh. It may be recalled here that a Hong Kong based firm specializing in power generation projects had, about five years ago, concluded an agreement with the then government for the establishment of three coal- based power generation units of 200 megawatt each at Keti Bunder near Thatta. But the project failed to materialize because the foreign company backed out of its earlier commitment to obtain coal supplies from the reserves in Thar and instead insisted on import of coal from Hong Kong. It may be noted here that the coal reserves in Jirk, which is in the close vicinity of Thatta, were surprisingly not mentioned as a domestic source of supply for the Keti Bunder project which was conceived on the basis of Thar coal reserves.

Besides Power Plant producing cheap electricity Coal can also salvage the cement industry which is in bed shape because of heavy cost of inputs. The use of coal would result in a saving of nearly Rs. 495 million per year for a plant producing 3,000 tons of cement per day. The use of furnace oil for producing one ton of cement is said to cost Rs. 924, as against about Rs. 374 with the use of coal. Among other advantages accruing from the contemplated shift, mention has also been made of the prospect of the national exchequer saving $170 million in the event of the cement sector running to its full capacity, or at least $100 million a year on the utilization of 63 per cent production capacity as now.

A sizeable cut in the cost of production, eventually leading to the much needed reduction in prices, should cause spurt in demand, providing a boost to production of cement in the country. Increase in consumption thus prompted, should help solve the problems. Eventually, reactivation of the national cement industry with an overall reduction in cost of production, coupled with a marked emphasis on the growth of housing sector, which figures prominently in the government's development priorities, can certainly serve as a strong catalyst for the country's economic revival.

However, while recalling the country's huge potential in coal, as lately enlarged by the discovery of the world's largest coal fields in Thar, Sonda and Lakhra in Sindh, BOI has underlined the need for expeditiously developing the hidebound coal industry. With the present state of coal mining, it may not be possible to meet the conversion requirements of the cement industry estimated at around 3-5 million tons of coal. Note has also been taken of the fact that due to convenient access to natural gas liquid fuels, utilization of coal for energy has shrunk from 60 per cent at independence to six per cent at present. An idea of the enormity of this task may also be had from the BOI recommendation that the government earmark Rs. 20 million to conduct a feasibility study of Thar coal field alone. It has also proposed a number of short and long term measures, including facilities for import of machinery, tax incentives, etc., to boost the output of coal and enable conversion of all the cement units within a period of three years.