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Thar Coal Reserves

There has been much emphasis during the present government’s tenure to utilize the potential of the fabled coal reserves of Thar. It has even included the development of two coal mines accompanying power plants under the early harvest CPEC projects.

The Chinese were willing to invest close to a billion dollars in developing coal power plants by using and extracting Thar coal but bureaucrats on our side haggled on the tariff like one does with fruit vendors and ultimately drove the golden opportunity away over a few cents. Thankfully this government has stepped up efforts to develop the Thar coal mines and use them to plug the power deficit by using indigenous fuel sources.

Last year Sindh Engro Coal Mining Company (SECMC) partnered with China Power International Holding (CPIH) and Sino Sindh Resources (SSR) to develop 6000MW of coal based power plants at Thar within the next ten years. According to the agreement the power projects will be developed in five phases of 1200 MW each with a configuration of 2 x 600MW. The mining activities will be undertaken independently by SSR and SECMC for Block 1 and Block 2 who will supply the required coal to power projects developed by CPIH.

So how large are the Thar coal reserves? It needs to be clarified that even though it is considered optimistic to actually include the inferred and indicated reserves, prudence demands to take account of only the proven recoverable reserves.

Whereas the “hypothetical” figure is 175 billion tons, the actual proven recoverable reserves amount to roughly 2000 million tons according to the World Energy Council and British Petroleum. The Sindh government puts the proven reserves at 2357 million tons and so the case in point is that planning should always be done on the basis of the hardcore numbers rather than mere inferences. When it comes to quality, critics argue that the Thar coal reserves are mostly lignite (least efficient form of coal) not the best when it comes to carbon content and heating value which essentially means low energy generation capacity.

Thus, most of the power plants will have to be onsite or near close proximity of the mines and using Thar coal for more inland projects such as Sahiwal would not be feasible. There is no doubt that substantial energy can still be generated from the reserves although the rhetoric about the amount and quality should be toned down a lot. Yet there are certain advantages as the pricing of Thar coal is on a “cost plus” basis which will allow electricity generation tariffs to remain independent of international energy price movements. Moreover, economies of scale will naturally be present when the amount of resource is in ample supply. Down the road when the mining operations increase in size and volume and power generation is increased the cost will have a downward trajectory. As is the case with any other indigenous product or resource it will help save precious foreign exchange. At this juncture, coal based generation and development of Thar coal mines is justifiably a national priority. Still one is yet to find a national coal policy for which there is an urgent need now more than ever.