Tariff for Thar coal Block I & II approved

Production cost declines as mines continue to expand

KARACHI:

The Thar Coal Energy Board (TCEB) in its 25th meeting held with Sindh Chief Minister Syed Murad Ali Shah in the chair approved a tariff of $37.36 per tonne for the Financial Close stage petition for 7.8 million tonnes per annum of Block-I and a levelized tariff of $30.40 per tonne for Contract stage petition for 11.2 million tonnes per annum of Block-II.

The meeting was held at the CM House and was attended by Federal Planning Minister Ahsan Iqbal (through video link) Energy Minister Imtiaz Sheikh, Minister Mines & Mineral Shabbir Bijara, Minister Education Sardar Shah, Advisor on law Murtaza Wahab, Secretary Energy Abubakr Madani, MD Thar Coal Energy Board Khadim Hussain Channa and other officers.

Energy minister, briefing the chief minister said that the mines were currently producing 15.4 million tonns of coal per annum and were being primed to scale up to 19 million tonns per annum over the next eighteen months if the board approved the proposal.

The coal being produced from the mines is powering 2,640MW of electricity, energising more than seven million households from Thar coalfields. Moreover, power generated from the Thar coalfields also has one of the lowest costs of power generation in the country.

It may be noted that power generated from Thar coalfields is considerably cheaper than imported coal, while also providing greater energy security, and saving precious foreign exchange reserves for the country.

During the meeting, the management of TCEB also briefed the Board regarding the financial close stage petition for extraction of 7.8 million tonnes per annum for Block-I of Thar coalfields, as well as the contract stage petition for extraction of 11.2 million tonnes per annum for Block-II.

During the presentation, it was highlighted that as the mines continue to scale up, the overall cost of production continues to decline largely due to the mines attaining economies of scale. As mines extract greater economies of scale, the coal tariff is expected to reduce further, which would also result in cut in electricity generation tariff from power plants at Thar coalfields.

The board approved a levelized tariff of $37.36 per tonne for the financial close stage petition for 7.8 million tonnes per annum of Block-I of Thar coalfields which is operated by Shanghai Electric, and a levelized tariff of $30.40 per tonne for contract stage petition for 11.2 million tonnes per annum of Block-II of Thar coalfields, which is operated by Sindh Engro Coal Mining Company.

It may also be noted that as the mines continue to increase production, the tariff will continue to reduce further. For the sake of comparison, when the first COD tariff was approved for Block-II of Thar coalfields, the levelized tariff was $47.92 per tonne, which has considerably reduced at this stage as the mine continues to expand.

The stakeholder consultation session included representation from more than fifty industry experts, who provided valuable input regarding the direction that Thar coalfields may take and how it can contribute positively to industrial growth in the country.

The Board also considered a proposal for making Thar coal available for non-power uses and enabled a framework that would allow the existing, and any potential mining players to create a thriving and active market for Thar coal, effectively enabling sales to various industries, and not restricting the same to power uses only. This will also support the development of a market for Thar coal and enable further expansion of mines.

 

Published in The Express Tribune, July 26^th, 2023.