June 09 - 15, 2008

Government of Sindh has invited request for proposals from investors for coal mining project at Block II of Thar coalfield latest by 15th June, 2008. This will be a joint venture project of 50% equity participation by the government and wherein preference will be given to that proposal which proposes to make mined coals available as fuel for power plants of 1000 MW capacity.

According to one of the prominent conditions laid down by the Sindh government for the qualification of proposal, no score to the proposal would be assigned if investor would not assent to an integrated mining-power project; which means investor undertakes coal mining activity and concurrently sponsors coal fired power plant so that excavated coals are to be exploited for electricity generation. Government will score the eligibility of investor in accordance with his/her meeting the criteria.

Seeking technical and financial soundness, investor's previous experience in power projects, and timely completion of coal excavation government has set strict criteria to maximise success rate of coal mining project on bid at Block II of Thar coalfield, said Mohammad Younus Dagha, Secretary Mines & Mineral Development Department, Government of Sindh.

Geological Survey of Pakistan has selected four blocks near Islamkot for coal exploration and assessment. Block II situated at Singharo Bhitro has a total covered area of 55 square kilometres with 1.5 million tons of potential reserves. It has a mining capacity of six million tons per annum.

Talking to PAGE in an interview, Sindh Secretary said stringent preconditions were scribed to filter out fragile bidders at the very beginning, assuring "assessment of bids would yet be absolutely transparent". 'It is a first instance that government through public advertisement attracts investment in the Thar coalfield. So far the feedback is satisfactory and the probability of project success is relatively high this time.'

He says $200 million paid-up capital requirement is stipulated for an interested investor, adding verifiable technical partnership with foreign mining company is also very important to qualify acid test for a candidate. Proposals offering completion of the project within or below deadline are preferably sought. According to the request, tentative deadline for completion of the mining project is 36 months starting from the issuance of notice to proceed.

Sindh Secretary says since this will be a joint venture project government will finance 50% of the equity. The project will cost around $600 to $700 million. At least 25% of the total cost of the project will be covered through equity and the balance 75% through debt. Detailing about the coal reserves of the country, he says there are potential reserves of 185 billion tons out of that estimated 175 is embedded in Thar. The exploration activity jointly carried out by United States Geological Survey and Geological Survey of Pakistan has already approved more than 15 billion tons of coal reserves.

Thar coal reserves comprise of basic form of coal, which is known as lignite. One ton of such coal has a capacity to produce 2 barrel crude oil, he said, saying in terms of oil value local coals are far greater than crude of Saudi Arabia and Kuwait. These countries have crude oil reserves of around 235 billion and 105 billion barrels respectively.

About ecological impact of coal combustion, he said, proper environment assessment technology will be bolstered to mitigate carbon emissions effectuated due to coal processing. In a course to transforming coal into fuel for power plant, modern desulphurization techniques would be incumbent. But, fortunately Thar lignite reserves are naturally found with low sulphur content and ashes that both cause greenhouse gaseous emissions, said he, adding Coal mining is not as much expensive as power generation. Only 25% expenditure may be incurred as cost of excavation, however, conversion to fuel for power generation may lift up 75% of the cost.

Roughly, it will take three to five years to accomplish coal mining project. The ongoing coal mining and coal power generation projects have not left a landmark impression about the capability of coal fired power plants. The supply of electricity from these plants is not widespread and forms a scant percentage of total national production. Located at Lakhra in the Sindh province, coalfield site has produced 5 to 7 million tons of coal, generating 50 to 100 MW electricity intermittently, Younus Dagha said.

Coal fired power plants require abundance of water that can be available only after construction of faultless irrigation system. According to Sindh Secretary, sub-soil water of proposed site is sufficient enough to cool off 2,000 MW of electricity plant(s). Besides, a canal namely Nara Canal will also be built to fulfil the water requirement in Thar coalfield.

At present, China has emerged one of the largest consumers of coal in the world. It uses coal to ignite power plants to satisfy gigantic electricity demand of its national grids. Since its local coal production is not up to fuelling coal fired power plants China's coal import from around the world is on rise. Pakistan, having potential coal reserves, may also become an exporting country.

Along with, China is also taking keen interest in coal power generation for Pakistan. Sheenhua Group Corporation of China has consented to invest in coal fuelled power plants in the country. The construction of company's 2 x 300 MW coal fired power plant at Thar coalfield is underway according to mines and mineral department. Secretary Sindh says local and foreign investors seriously aspire to collaborate with the government to explore coal bonanza of Thar Desert. He expressed his utter hope that positive outcomes after proposals submission deadline would appear.

Coal, one of the alternative fuels for generating electricity, is a source of future power for Pakistan. In the wake of power crisis and prospective worsening energy situation, coal reserves must be exploited without delay to suppress at least the impending sobriety of the crisis. Therefore, strategic planning should be on board.