Thar coal to turn around Pak economy

Electricity generation from Thar coal will initially cost 6 cents per unit that will drastically come down after seven years

THAR (Sindh): The days are not far off when real prosperity starts emanating from within and the source of affluence in the country will be none other than the black gold ----- coal reserves---buried deep down in the Thar Desert. 

The countrymen will by consuming from June 2019 the electricity of 660 MW to be generated from Thar coal as coal production is scheduled to begin in fourth quarter of 2018. Once the pilot project gets operational, then the Thar will be the destiny for the investment from across the globe that will really change the fate of Pakistan.

The electricity cost will be at 10.50 cents per unit in 2019 which will tumble to just 6 cents per unit eventually in 6-7 years period as the cost in mining the coal will climb down in the years to come. Under the ongoing project, the electricity generation will be ensured in 38 months instead of 42 months mentioned in the agreement.

The 6 cents per unit will (when more power projects will be installed at Thar) really expose the country to unending prosperity as it will virtually help bring down the cost of doing business in Pakistan.

Mr Shamsuddin Ahmad Shaikh, chief executive officer of Sindh Engro Coal Mining Company and Engro Powergen Limited while briefing here at the site of the project the media persons from Islamabad said that the real prosperity in the country will stem from the utilisation of the Thar coal.

The Thar desert possess 175 billion tons of coal reserves equal to 50 billion tons of oil equivalent (TOE) which is more than the Saudi Arabia and Iranian oil reserves. 

And on top of that Sindh will also be having the royalty of two and half percent on each ton of coal. So the project is clearly a win-win story. More importantly, it is a consensus project of national importance as the federal government has extended the sovereign guarantee against the Chinese loan of 700 million dollars whereas government of Sindh has provided the back up of the sovereign guarantee.

In the first year of mining the coal, the cost will be 10 percent higher than that of imported coal, but after one and half year the price will be equal to the imported products, but after that, the price of the indigenous product will start going down. 

Initiating the pilot projects by Engro both in electricity generation and mining the coal will herald the prosperity, progress and development for the locals as many other eminent business tycoons within and outside the country are in the process of investing in the power generation at Thar. 

Mr Shaikh disclosed that that internal rate of return of the project stand at 20 percent. “The power project would be operational as IPP (independent power producer), whereas the mining of coal will continue under SPV (special purpose vehicle) mode.” The huge amount of $2 billion will be invested in both the projects. Under the mining of coal project, 3.8 million tons per annum will be excavated and its cost will stand at $845 million and for 2x330 MW mine mouth power plants $1 1 billion will be invested.

The total area of the of the Thar coal field stands at 9,000 kilometers square and has been divided in 13 blocks. And the Thar Bock II has been allocated to SEMEC that contains 1% of the Thar reserves meaning by that black II posses 2 billion tons of coal out of which 1.57 billion tons of coal is exploitable reserves. “The Block II reserves will generate the electricity up to 5,000 MW for 50 years,” Mr Shaikh said. 

In the near future there are indications from some investors to install 9 projects of 330 MW meaning by that 2,970 MW will be generated. To a question he said that mine depth of 40 meters has been achieved and the current progress is 10.2 percent as against 8.5 percent planned.

Highlighting the mine expansion timelines, Mr Shaikh said that by June 2018, the commission of date (CoD) for 3.8 million tons of coal per annum will start will from the open pit lignite coal mine, by December 2019, 7.6 million of tons of coal will be mined for power generation, by June 2020, 9.5 million tons per annum, by October 2020 11.4 million tons of coal and by October 2020 13.1 million tons and by December 2021, CoD for 19 million of tons per annum will kick start for electricity generation.

Towards the uplift o the local people, the CEO of the two projects said at present we have 2,000 employees out of which 700 employees are Chinese, 1,000 are Tharis (out of which 250 are those who were made skilled drivers) and 300 are non-Tharis. The 250 local young people who are divers are getting Rs3,000 per month each as salary. In addition, every local employee is provided over-time, three time food and free of cost accommodation. For local people who will suffer because of the expansion of coal mine will be provided accommodation, gardens, schools and health facilities.