UNDUE DELAYS IN THAR COAL EXPLORATION

TARIQ AHMED SAEEDI
(feedback@pgeconomist.com)
Nov 29 - Dec 5, 20
10

While start of Thar coal project was good news for the people worried over the energy crisis in the country, controversial reports about the project are now dampening the hopes attached with the reliefs exploitation of one of the world's largest coal reserves can provide to energy crisis-hit economy. First, there was a report on reluctance of international financier to fund the project, then came the political wrangling over the resources between federal and provincial government.

Recently, an opposition leader in the provincial assembly fired broadside at the politicians playing power game on the Thar coalfield. Who owns what has already prolonged the gestation period of resource exploitation, and is inhibiting benefits to be passed on to masses. Basic infrastructure has not been completed, making the likelihood of successful execution of works on Block-II, which is the first field to bear digging, on time quite murky.

Sindh has an estimated coal reserve of 175 billion tonnes in its arid zone of Thar. Geological survey of Pakistan selected four blocks near Islamkot for exploration of coal resources. The Islamkot is located 410 kilometres away from port city of Karachi. Thar terrain is the world's 9th largest desert with almost one lakh population. So far, total 175 billion tonnes of coal resources have been assessed because of the widespread drilling over an area of 9000 square kilometres. The four blocks spread over an aggregate area of 358 sq. km include Sinhar Vikian Varvai, Block-I (122 sq. km), Singharo Bhitro, Block-II (55 sq. km), Saleh Jo Tar, Block-III (99.5 sq. km), and Sonalba, Block-IV (82.5 sq.km).

Sindh government went into a first public-private joint venture with Engro PowerGen to exploit coals laid under Block-II of the Thar and generate electricity from it. Total coal reserves at Block-II are estimated to be around 1.6 billion tonnes that can generate 5,000 megawatt for the next 50 years. According to the company's accounts, the works on Block-II will be executed in 2012 and electricity from coal resources will be generated by not before 2016. It is said that Block-II is attractive for investors and can attract billions of dollars investments.

Government has also provided attractive incentives to investors such as 20 percent IRR for attaining financial close by 2015, duties exemption on import of coal mining and construction machinery, and exemption from other levies. It is also assured to the investors that incentives will continue to enforce and not be altered to their disadvantage. These incentives in fact are illustrative of provincial government's seriousness to explore and make use of Thar coal resources.

When the World Bank refused to extend financial assistances for the project, the argument was environment-unfriendly implication that power generation through coal may have caused. Interestingly, the bank had funded over three billion dollar coal-fired power plants in South Africa. Analysts said Pakistan needed to revisit its application for loan to convince the bank. It is notable that coal resources in Thar have minimum pollutants and above all various technologies have emerged in the globe to lessen ecological hazardous elements during coal-combusted power generation. A study has found that the coal quality of all four blocks in terms of moisture, ash, volatile matter, carbon, and sulphur is far better than the coal used for power generation in many countries. Coal gasification can also offset the GHG (greenhouse gas) impact of coal burning on environment. Many countries have entered in to the group of using gasification as clean coal technology. United States has pioneered coal gasification electric power plant in the world. Nuclear scientist Dr. Samar Mubarakmand told APP coal gasification would produce electricity by next year. Through this technology, he said, the plant would be fixed on coal layer to produce gas instead of mining coal.

At present, access to Islamkot is via road while airport in the area has not been constructed. The government launched scheme of construction of airstrip at Islamkot with a cost of 120 million rupees, however, it is yet to be materialised. Similarly, railway line despite preparation of feasibility study has not been laid. Railway links are important to facilitate transportation of coal and other necessary machineries to and from coalfields. It is understandable that a coordinated plan will be needed to manage such a gigantic project from exploration up to power generation. It will cause displacement of large number of population living near coalfield. Government official said town planning to rehabilitate and resettle displaced population has been sponsored.

Recently, Sindh chief minister Syed Qaim Ali Shah announced the government would allocate Rs10 billion per annum for the Thar coal project for 10 years. For infrastructure developments, the provincial government has also allocated Rs8 billion in the current financial year's budget. The provincial head also asked the federal government to extend financial support to expedite progress of developments to explore Thar coal resources.

Marble export fetched $9.5 million during the first quarter of this financial year starting from July 2010, depicting 85 percent growth over the same period a year ago.

Unfortunately, due to energy crisis, precarious law and order situation, and other obstacles exporters are unable to meet export orders.

Marble export is estimated to increase $500 million per annum up to 2015. At present, marble exporters can avail the opportunity of earning million of dollars from exporting marbles to Saudi Arabia. During a recent visit to Riyadh exporters were offered big orders, but they couldn't grab them since they knew they couldn't meet the deadlines because of electricity load shedding. Karachi accounts for 90 percent of total marble exports from Pakistan.

Marble processing units in the city are facing worst kind of electricity load shedding. India that consumes one million dollar marble per month is also a potential market for Pakistani marble.

There is an urgent need to exploit Thar coal resources and expedite the process of power generation through clean coal technology in order to save the economy.