Closure of coal mines due to levy of GST

Workers fearing joblessness if nothing between coal miners and government worked out

July 05 - 11,1999

Over four lakh families, earning their bread and butter from coal mining sector, are fearing joblessness at their place of work, as the coal mine owners have decided to close down their business to protest against the levy of 18 per cent General Sales Tax (GST).

The coal mine owners, in the province of Punjab and Balochistan, have gone on a strike to lodge their protest against what they called the exorbitant imposition of GST.

Both Punjab and Balochistan Mine Owners Associations have unanimity in their opinion to close down their business.

The decision of levying GST has affected around 250 coal producing mines in Balochistan who closed their business from June 25 while mines in Punjab followed in their footsteps from July 1.

The decision to close down all coal mines in Balochistan was announced by Sardar Ali Ahmd Jogezai, the chief of Balochistan Mines Owners Association.

The coal mine owners have taken a plea that since they are unable to pay what they called unaffordable tax hence they are forced to decide to pull down the shutters of their business. Sardar Jogezai regretted that earlier the government had imposed a tax at the rate of Rs 98 per tonne on coal and again it has levied the GST which was beyond their capacity to afford.

The government has asked the coal mine owners to pay Rs 720 million as outstanding dues on account of tax. He said that mine owners cannot pay such a huge amount.

The Balochistan Mine Labour Federation, has, however, called upon the owners' association to reconsider their decision as over 60,000 families sandwiched between the government policy of imposition of the GST on coal mines and the decision of the owners to go on strike.

The labour federation has sought 30 days period from the mine owners for conducting negotiations with the government to resolve this issue amicably. The jobless miners also staged a protest rally in Quetta last week.


Pakistan's great potential of mineral exploration has not yet been exploited to its full capacity for the growth and development of the country. Notwithstanding, concerted efforts by successive governments, its share in the GDP has not grown beyond 0.5 per cent. The present government has also shown determination through major policy initiative in order to expand mining sector activities mainly through foreign and local private investment. Both public and private sectors are actively participating in the development of this sector by indulging in mineral exploration and extraction. The public sector investor in mining has restricted to the development of an institutional base or for too large or too risky investment. The private sector investment is confined to minerals. Over the years a considerable number of occurrences and prospects have been identified and reported by a number of agencies. However, very few have been evaluated and developed for want of high risk capital investment.

Pakistan has economically exploitable reserves of coal, rock salt, lime stone and onyx marble, China clay, dolomite, fire clay, gypsum, silica sand, granite and precious, semi-precious stones. However, very few have been evaluated or developed for want of high risk investment and according to quantum index of mineral exploration is concentrated in three important minerals namely coal, natural gas and crude oil.

The Mineral Policy has provided incentives like rationalization of duties and taxes on imported machinery, equipment of precious and base minerals in Pakistan.

Pakistan Mineral Development Corporation (PMDC) has produced 260,679 tonnes of coal from its four operating coal mines, three in Balochistan and one in Sindh, Pakistan has estimated deposits of 250 billion tonnes of coal. It produced 3,496,000 tonnes of coal in 1996-97, 3,145,000 tonnes in 1997-98, 2,276,000 in 1997-98 and 2,314,000 tonnes in 1998-99.

Lakhra Coal Development Company (LCDC) was set up to develop large scale mechanized coal mining operation at Lakhra. LCDC has produced 232,000 tonnes of coal for WAPDA's coal-based power plant at Khanote near Hyderabad.

The availability of 250 billion tonnes of coal with the country offers a cheaper substitute of costly oil and of course deserves protection to get it fully utilized to save much needed foreign exchange.

The import of petroleum products is projected to increase by $422million to $1.8 billion during current fiscal year while $1.4 billion were spent on its import during previous fiscal.

The import of crude oil and POL products during 1998-99 registered a decline of 24.4 per cent when compared with its import of $1.75 billion in the preceding year. In the presence of indigenous resources i.e. natural gas and coal, the economy can given a better shape by minimizing dependence on imported oil.