Sindh govt selling Lakhra coal against court orders

Provincial authorities deny move as union leader says mines encroached after cancellation of lease

KARACHI: The Sindh government is allegedly selling coal from Lakhra coal mines in the open market without inviting competitive bids, flouting court orders.

According to sources privy to the development, provincial authorities are currently extracting between 700 and 800 tonnes of coal a day from the 120 mines at Lakhra and selling them in the open market for roughly Rs6,575 a tonne. This is despite high court orders binding the Sindh government from extracting coal until a competitive bidding process was carried out.

Slamming the reports as a ‘malicious campaign’, Sindh Energy Minister Imtiaz Shaikh denied that the provincial government had occupied the mines or sold the coal in the open market. He countered by saying that the “LCDC [Lakhra Coal Development Company] and PMDC [Pakistan Mineral Development Corporation] have been misusing the coal reservoirs by selling it in the open market”.

Mines row: Sindh govt selling Lakhra coal against court orders

A senior coal department official, however, admitted that the Sindh authorities have taken some decisions, “in haste by not adopting competitive bidding and other measures required by the court orders.”

An LCDC union leader in Jamshoro also disputed the minister’s statement on the occupation of the mines. “On the night of May 21, a heavy contingent of police and local administration reached the site and asked [LCDC staff] to leave the venue or face the consequences,” said Mumtaz Khoso, who has been protesting along with dozens of other coal miners next to the National Highway. “The provincial government has cancelled our lease and encroached our mines,” he said.

According to the coal department official, the LCDC lease at least was cancelled in accordance with the Sindh High Court (SHC) ruling. “Apart from ownership rights, Sindh was overselling its coal in the open market. After taking over control, the government itself has started this lucrative business through the district administration,” he said.

“This land belongs to the Sindh government, which reserves the right to not renew the lease to anyone,” stressed Shaikh, insisting that the provincial authorities had acted in line with SHC orders. “We will invite open tender in the next month and are getting a legal opinion from the law department on how to absorb LCDC employees in the Sindh government or the newly-formed Sindh Lakhra Coal Mining Company,” he said.

The minister claimed that LCDC has not paid a dividend in a long time. When asked about compensating LCDC for the infrastructure, he said, “There is no such order in the verdict.”

The LCDC union leader Khosa questioned the government’s move to cancel the company’s lease without compensation. “There are a total of 120 mines and each mine is developed at an estimated cost of Rs5 million. How can the government occupy these mines without paying us?” he asked, pointing out that the infrastructure LCDC developed by spending millions of rupees had been taken over in a single night.

Regarding the SHC ruling, Khosa said, “The matter is now sub-judice as we have challenged it in the Supreme Court.”

“Both parties have been issued notices. So how can the Sindh government come and take over the mines?” he asked.

The union leader referred to another 8,000-acre mine near Lakhra coal field and said the Sindh government awarded the contract to a private company called Fateh Mill in the 1990s to set up a power plant, but it never happened and almost all coal reserves were sold on the open market with the help of government officials. “That case is in a NAB court, where government officials are facing trials for this multi-billion rupee scam. The same has been repeated with our coal field,” he claimed.

The case

LCDC was established 37 years ago with PMDC - a semi-autonomous corporation attached to the federal Ministry of Petroleum and Natural Resources - holding 50 per cent share and the Sindh government and the Water and Power Development Authority holding 25 per cent share each.

A dispute over the company and the Sindh government, which owns the mines, arose soon after the 18th Amendment came into force and devolved various federal departments to provinces. In 2013, provincial authorities sent a letter to the head of LCDC, stating: “Since the land belongs to the Sindh government, we want to cancel the lease of the coal mine and will establish our own power plant in the future. We suggest you resign and join our upcoming company that will be launched soon.”

“Despite its reservations, the provincial government, which heads the LCDC board, continued getting 25 per cent dividends till the occupation of the mines, but did they not renew our lease,” a senior LCDC official said, adding that after repeated threats and refusal to renew the contract, PMDC filed a petition in SHC against the Sindh government’s delaying tactics and threats. According to officials, the 2015 petition cited the violation of the original agreement, which states, “Whenever the lease comes to an end, the provincial government will renew it for [another] 15 years.”

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During the course of the hearings, the provincial government launched the Sindh Lakhra Coal Mining Company after holding a meeting of the mining department and transferred mining permits for 120 mines to the newly-formed company. The notification was issued by the Sindh directorate of coal mines development on April 30, 2019.

After three years, the court gave its judgment on May 22 in favour of the Sindh government, but with conditions that the Sindh government had to fulfill. It said, “The petitioner cannot claim renewal of its mining lease as a matter of right and such renewal was at the discretion of licensing authority that is Sindh government.” The judgment also quoted the coal mines committee decision, which said, “PMDC is a federal entity and minerals is now purely a provincial subject, as per provision of the constitution of Pakistan.”

With the new development, the future of around 100 employees in various pay grades hangs in balance. “Most of the employees are highly qualified and have been working for decades. No one knows what will be our future,” said a senior officer in grade 20. 

Published in The Express Tribune, June 20^th, 2019.