Hearing for coal mining tariff in November

KARACHI: Sindh government will consider a proposal to raise tariff for coal mining at the block-1 of Thar coalfield in a hearing scheduled next month, it was learnt on Thursday.

Thar Coal and Energy Board would conduct a hearing on November 1, 2019 for determination of contract stage tariff for development of 7.8 million tons per annum (mtpa) capacity lignite coal mine at block-I in Thar coalfield, a document said.

Coal mining company Sino Sindh Resources, a subsidiary of Global Mining Company (China), sought an upward revision in tariffs awarded to it by the government two years back as the project was expected to achieve financial close in October.

Sino Sindh Resources, the developer of open-pit coal mine, sought 12.37 percent increase in the coal tariff to $50.6224/ton as the project entered engineering, procurement, construction phase, another official document said.

In April 2017, Thar Coal Energy Board awarded a 30-year feasibility stage levelised tariff of $44.36/ton for 7.8mtpa mine.

Sino Sindh applied for a proposed mining capacity of 7.8 mtpa to fuel mine-mouth power plants having production capacity of 1,320 megawatts. The company has already initialed coal supply agreement with Thar Coal Block-1 Power Generation Company – a subsidiary company of Shanghai Electric Group – to continuously supply 7.8 million tons of coal on annual basis for 30 years after power complex with two plants of each 660 megawatts achieves commercial operations date and completion of coal mine construction.

Total cost of the mining project was proposed to be $1.17 billion, while the company proposed a dollar-based equity internal rate of return of 20 percent. It was reported in 2015 that the project would start mining.

Block-1 holds lignite coal resources of approximately 3.5 billion tons, including 600 million tons of measured, 1.9 billion tons of indicated and one billion tons of inferred resources. The block covers approximately 150 square kilometres in south eastern Pakistan.

Indigenous coal is one of the cheapest sources of energy to acquire the threshold required for attaining energy self-sufficiency. Increasing of coal share in the energy mix has become indispensable for the country.

Exploration of indigenous coal as compared to usage of imported coal is one of the major steps to attain sustainability in power sector.

Reducing reliance on imported coal is essential due to fluctuating increase in international fuel prices and currency rate depreciation, adversely affecting the balance of payment. Thar coal project is expected to play a pivotal role in acquiring economic stability.