INTERVIEW: ABDUL MAJEED PATHAN, DIRECTOR GENERAL SINDH COAL AUTHORITY

THREE YEARS ON COMMERCIAL OPERATION WILL BE AT FULL THROTTLE.

TARIQ AHMED SAEEDI
(feedback@pgeconomist.com)
Oct 3 - 9, 20
11

Sindh coal reserves remain in the news most of the time. Media blitz has made people believe that Pakistan has at least a way out of its present power crisis and the earthed potential to make the economy able-bodied. Will this dream come true in near future? The confidence with which DG Sindh Coal Authority (SCA) was talking in an interview with PAGE and his wits and promptness could make anyone imagine a country enjoying power surplus not in decades but in a year or two. Few of his statements however stirring excitements may sound overambitious. Since the comments come from the head of the main organization that is in the stewardship of fate changing coalfield developments, paying heed may be irresistible. Having a 23-year experience of serving as district coordination officers of different districts and various departments to his credit, he was not scared out of his wits while saying 3,000 megawatt would be in the system from coalfield in next three years, and also rubbished categorically the perception that Thar coal is a pipedream as underestimation. The following lines are put forward for the analysis of readers.

PAGE: WHAT IS THE MANDATE OF SINDH COAL AUTHORITY? CAN YOU THROW SOME LIGHT ON ITS WORKING?

MR. PATHAN: Sindh coal authority was established in 1993 to develop coalfields in the province. The developments of blocks are aimed at to attract foreign investments in coal-fired power projects and coal mining. Development signifies proven reserves at a particular site. A block is called developed when it is drilled and received certification about its potential reserves. A UK's leading integrated energy company RWE has confirmed estimated reserves of 175 billion tons in Sindh coalfields. So far, we have developed total ten (10) blocks spreading over 1,000 kilometres. Around 8,500 kilometres are yet to be tapped. Average two billion tons lignite can occur in a block.

Coal is not only an input for a number of manufacturing industries but it can also provide multiple by-products such as diesel, ethanol, etc. China extracts more than 52 by-products from this black gold. It is an amazing reality.

PAGE: WHAT ARE THE LATEST HAPPENINGS?

MR. PATHAN: Three mega power and coalmining projects are on the cards. Developed blocks have been allocated to London-based Oracle Coalfield, China Global Mining, and Engro Power Gen. Engro has already completed feasibility study, and is presently seeking external financial assistance. Its capital investment is estimated at three to five billion dollar. In the first phase, the company is expected to generate 1200 megawatts. Oracle, developing large-scale open pit coalmine at Thar, has already accumulated one billion pounds from stock market for investment in its designated area. The company has also signed agreements with KESC to supply the utility 300mw and with Dadabhoy to provide the cement maker with coal. The speed with which the company is progressing, I am sure the mining would begin very soon. China Global is expected to produce 900mw in first phase and gradually reach the production level of 10,000mw. Industrial estate at the field is also a mega project in the pipeline. Investors were taking interest in it. Unfortunately, it is still on paper.

PAGE: ARE EXPLORATION AND DEVELOPMENT OF COALFIELDS FACING ANY HINDRANCE?

MR. PATHAN: Centre-province conflict of interest was the main barrier in the progress of coalfield developments. Recently introduced 18th amendment in the Constitution ended the difference and clearly declared rights of Sindh over its resources. Thar Coal & Energy Board is to further resolve the differences over ownership. The body is entitled to ensure sale of coal-generated electricity. There is neither a lack of coordination among different government entities on attracting investments. Sindh Board of Investment and SCA are cooperating with each other to attract investments in coal resource utilization. Road shows have also been organized to bring into notice resources at international level.

At present, there is a consensus on coal exploration and exploitation to overcome power crisis. Come what may civil or military government, the coal has to be capitalized on since we have no other option to stop the country from getting close to a sheer darkness.

PAGE: HOW COULD COALFIELDS BE EXPLOITED WITHOUT HAVING PROPER INFRASTRUCTURE TO BE ACCESSED?

MR. PATHAN: Rs500 billion have been approved for construction of road from Mirupur district to Nokot. A contract for establishing Islamkot Airport has been signed with the civil aviation authority. The airport's feasibility has been completed. Its construction cost is estimated at one billion rupees. We are ready to earmark additional funds for its upgrades. China Global and Oracle have also expressed interest in helping the government for developing railway infrastructure. Rs5 billion has been allocated for a mega water supply line that can carry 300 cusecs to the main coalfield. The mining holders are bound by the agreement to drain out subsurface water in the coalfields only after treatments.

PAGE: WHAT ARE THE FORTHCOMING HAPPENINGS?

MR. PATHAN: An international coal conference has been scheduled for this month in which local and foreign business leaders engaged in coal related ventures are expected to participate. International Competitive Bidding (ICB) for the developed blocks will also be floated. Several foreign investors are eager to fetch tracts for coal exploration because of the resource's profitability. A British company operational at Africa coalmine and an Australasian company are poised to sign accords once ICB is floated. Surely, in next three years, power generation at coalfield will begin. [Commercial] coal mining will commence by June 2012. If we can produce 3,000mw in next three years, the country could save five billion dollars spent annually on purchase of furnace oil. Noticeably, Chinese companies are eager to invest in the coalfields. Mideast petroleum ventures will also be gravitating towards them. Incentives to investors are attractive. Permission to take back 20 percent of internal rate of return (IRR) and exemption from import duties on machineries are few of the benefits that can hook foreign investors.

PAGE: IS GOVERNMENT DOING SOMETHING FOR LOCAL POPULATION LIVING NEARBY OR IN THE COALFIELDS?

MR. PATHAN: To supply potable water to locals, we have installed 29 reverse osmosis plant at all the coalfields while 31 are to be added soon. One plant has a capacity to supply clean water of 60,000 to one lakh gallons per day. SCA has set up a technical and vocational institute to meet skilled workforce needs. Dislocated households from the fields would also be given compensations.