THAR COAL UTILIZATION TO CHANGE THE FATE OF PAKISTAN

TARIQUE KHAN JAVED,
PRESIDENT, Overseas Pakistani Investors Forum

Jan 05 - 18, 2009

As oil reserves deplete and price shoots up the discovery of 175 billion ton coal reserves in Tharparker is exciting news. Its proper utilization will solve the power shortage problem of Pakistan for the next 300 years. It will also make Pakistan a power exporting country to the tune of 70,000 MW which will become a major foreign exchange earner for Pakistan. The huge economic activity generated by this industry is likely to change the fate of Sindh in general and Tharparker in particular.

The best use of the reserves is to make electricity in large quantity and export it to India after meeting local requirements. It is possible to put up 20, 5,000 MW plants (or total of 100,000 MW) all over the 22,000 Sq. Km of coal field. The discovered reserves are said to be enough for 300 years if 100,000 MW is produced. Our current shortage is only 4,000 MW. Implying that up to 70,000 MW can be exported during the next 100 years. This would become the biggest export of Pakistan.

HUGE INVESTMENT NEEDED; HOW IT CAN BE MET?

Pakistan invites investors from all over the World to help exploit these resources. The amount required for this is huge and can only be provided by foreign investors. Current Government of Pakistan in general and Sindh in particular are assigning top priority to this project. The recent formation of Thar Coal Board headed by Chief Minister of Sindh and representative of all relevant Central Government departments is meant to provide "one window" operation for investors.

With open pit design the coal may be taken out and transported to nearby electricity generating plant. The output may be fed to the National grid and international buyer grid. Each plant will cost nearly USD 2 billion thus the total investment required in stages would be around USD 40 billion. Such large sums can only be provided by international Banks and Operating Cos. Locally we do not have resource for such investment.

The best course to go about is creation of mega Syndication involving Major Banks, Coal exploitation Cos, Power production Cos, Government of Sindh and Pakistan as well as Overseas Pakistan. If Government of Sindh and Pakistan along with Overseas Pakistani can commit 40% of the required funds rest can be easily raised from the Banks, Coal exploration and power generation Cos. Given the size of the fund and strong economic viability this would be possible with the proper structuring of the deal.

BENAZIR'S DREAM AND ROLE OF OVERSEAS PAKISTANIS

In 1994 Benezir Bhutto made first serious attempt to utilize the reserves. By 2007 the necessary infrastructure was built and a 6,000 MW project by a Chinese Co was about to be implemented but was abounded due the management change in the Co. Now efforts are being made to attract new investors in the project and Government of Sindh (GOS) is pinning lot of hope on Overseas Pakistanis.

Overseas Pakistanis are estimated to have between 500 to 1,000 billion USD in assets outside Pakistan. If convinced of the economic viability of the project and made to realize that this project can indeed alleviate poverty in the country in a major proportion they will invest. Most Overseas Pakistanis dream everyday of a day when Pakistan will be a normal liberal prosperous Country free from crime, terrorism and abject poverty so that they could finally return. Most were forced to go and live in very difficult places for the safety of their families. Once the threat is over they will be glad to return home with their billions of dollar.

RESERVE ESTIMATES

Pakistan has huge deposits of low rank, good quality lignite (coal), suitable for power generation, gasification and other purposes. The availability of coal can contribute substantially to the growth of industrial development of the nation. The coal resources of Pakistan are larger than the combine resources of oil and natural gas.

Coal was discovered in Sindh province of Pakistan in 1853 when Baloch nomads reportedly struck a coal seam 2.43 meters thick at a depth of 125 meters while digging a well for water at Lakhra, a village on the western bank of the River Indus in district Dadu.

Burmah Oil Company in 1948, and Pak Hunt International in 1953, recorded the presence of coal at Lakhra in holes drilled in search of oil. Sonda coal was discovered in 1980 and Thar coal in 1992 by GSP.

Total coal resources of Sindh province have been estimated to 185 billion tons whereas the coal deposits of Thar alone are estimated at 175.5 billion tons, which can ideally be utilized for power generation. In addition to Thar, the other coalfields of Sindh are at Lakhra, Sonda, Jherruck and Indus East. The Lakhra coalfield is fully developed, and contains mine-able coal reserves of 146 million tons. Sindh coal is classified as 'Lignite' with calorific value ranging from 5,219 to 13,555 Btu/lb. Thar coal has low sulphur and low ash content but high moisture, whereas Lakhra coal contains high sulfur. The feasibility study conducted by John T. Boyd & Co. of USA has confirmed mine-ability and suitability of Lakhra coal for power generation.

The use of coal does present challenges which the industry freely admits but as an affordable, widely available fuel for electricity, it's also a major driver of energy security, economic development and poverty alleviation across the globe.

The status of present fuel resources of Pakistan is not at all satisfactory and ever increasing demand of a developing country deems it necessary to resort to conventional indigenous source of energy, i.e. Coal. Pakistan is deficient in power generation and intends to generate energy from indigenous resources, especially from coal to meet the energy requirement. Overseas Pakistanis are requested to sort out for development of the technologies. Government of Pakistan encourages establishment of power projects in public-private partnership on joint venture basis.

COAL AS A SOURCE OF ELECTRICITY PRODUCTION

Coal is already a major source of electricity production in the world as the chart below shows (2006):

Poland 93%
Israel 71%*
Czech Rep 59%
S Africa 93%*
Kazakhstan 70%*
Greece 58%
Australia 80%
India 69%*
USA 50%
PR China 78%
Morocco 69%*
Germany 47%