Poor law and order: Chinese company backs off from Thar coal project

Published: September 20, 2011
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Chinese company withdraws due to deteriorating law and order conditions in Karachi. DESIGN: SAMAD SIDDIQUI

Chinese company withdraws due to deteriorating law and order conditions in Karachi. DESIGN: SAMAD SIDDIQUI

KARACHI: 

A Chinese company, which had earlier shown interest in investing in the Thar coal project, has now refused to make any investment in view of the deteriorating law and order situation in Karachi, sources said on Monday.

Meanwhile, the Sindh government on Monday signed a memorandum of understanding (MoU) with another Chinese company for coal extraction and setting up a power plant in Thar.

Sources said that China’s King Hu was short-listed by the government in July to invest in Block VII of the Thar coalfield following an international competitive bidding process. The company had to extract coal and establish a power plant before setting up a chemical complex in Thar.

“Initially, the company was willing to invest $3.5 billion. The investment was likely to reach $19 billion, as the company agreed to establish a chemical complex. But it has now refused to proceed in view of the volatile security situation in Karachi,” one source said.

“The agreement was ready, but suddenly the company refused to invest, saying that banks and international financial institutions have refused to extend any loans in the wake of uncertain situation in Karachi,” the source added.

Commenting on the development, Sindh Board of Investment Chairman Zubair Motiwala said that the company had not refused, but only ‘suspended’ its programme temporarily.

“We are in close contact with the company because it will be a long-term and huge investment. I hope the company will agree to come and generate power from coal,” he said, adding that in addition to King Hu, the government had short-listed other companies, including Global Mining Group of China, Australasia Mining and Pakistan Petroleum.

Power generation project in Block I of the Thar coalfield

The Sindh government signed a memorandum of understanding (MoU) with China’s Global Mining Company (GMC) at the Chief Minister’s House on Monday for a coal-mining and power generation project in Block I of the Thar coalfield.

Coal and Energy Development Department Secretary Mohammad Younus Dagha and Liyang Liu, who is the chief executive officer of Sino-Sindh Resources, a local subsidiary of GMC, signed the MoU.

Speaking on the occasion, Motiwala said that the Sindh government initiated the process of international competitive bidding for the allocation of various blocks of the Thar coalfield in December 2010. “After due deliberations and diligence, the Thar Coal and Energy Board allocated Block I of the Thar coalfield, spread over 122 square kilometres, to GMC,” Motiwala said.

GMC intends to develop a mine producing five million tons of coal per annum initially with power generation of 900 megawatts (MW) to be scaled up to 2,100MW with an initial investment of $3 billion. It is also willing to invest $1.5 billion in key infrastructure projects.

In his speech, the CEO of Sino-Sindh Resources assured Sindh government representatives that GMC would complete the feasibility study within six months. He added that the ground-breaking ceremony of the mine construction project would be held in the first week of April.

He said that production of coal would start within three years, adding that power generation of 900MW would begin by 2014. He said that the GMC consortium would invest approximately $4.5 billion up to 2016, adding that another $4 billion would be invested to meet the target of 10,000MW of power generation by 2020. Sindh Chief Minister Qaim Ali Shah said that the government would provide GMC with all possible help.

Published in The Express Tribune, September 20th,  2011.

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Reader Comments (25)

  • Sep 20, 2011 - 2:17AM

    If the only earthly friend turn away where will we go. On top Almighty Allah is annoyed with us also because of our disobedience where will we go.

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  • MD
    Sep 20, 2011 - 2:46AM

    Though the Pak government foolishly gave a free hand to the Chinese Companies to exploit its natural resources, still, they find it difficult to operate in Pakistan, that shows the magnitude of insecure environment that exists in Pakistan for business to flourish.
    Nobody is going to invest in Pakistan, unless and until, it sheds jihadi agendas and comes to the terms with the civilized way of dealing with the rest of the world.

    Recommend

  • Cautious
    Sep 20, 2011 - 3:20AM

    Reality check — terrorism hurts investment which in turn hurts the economy. It’s the price you pay for tolerating and in some cases supporting terrorist.

    Recommend

  • Dat
    Sep 20, 2011 - 4:49AM

    Sad. .

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  • Mirza
    Sep 20, 2011 - 7:53AM

    Forget Chinese and other foreign companies, when Pakistani police officers are not safe who is going to make big investments? Even the Pakistanis are not investing in Pakistan and we dream about foreign investment! Is the current atmosphere in Pakistan safe for major investment?

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  • Ramin
    Sep 20, 2011 - 9:06AM

    Forget China! Iran is new best friend for Sep/Oct.

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  • Ramin
    Sep 20, 2011 - 9:08AM

    When the Chinese run away when we offered the mines for almost free .. something is terribly wrong with Pakistan!

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  • Adnan
    Sep 20, 2011 - 10:10AM

    Tell me one thing who will invest in Pakistan. As a pakistani we also afraid to invest here, how an English man can thing to invest in uncertanity.

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  • R S JOHAR
    Sep 20, 2011 - 12:29PM

    If Pakistan wants peace, economic progress and foreign investment, it has to stop patronising the jihadi outfits but instead take decisive action against them. No other mantra except this strong measure is going to work since country is moving towards total anarchy and time is also running out.

    Recommend

  • islooboy
    Sep 20, 2011 - 1:56PM

    there was so much potential in this project grrrrrrrrrrrrRecommend

  • Asia
    Sep 20, 2011 - 2:18PM

    It is sad. China is our only hope.

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  • dar
    Sep 20, 2011 - 2:48PM

    We have to do it ourself in the first place ,Dr Samarmubarak is probably the answer, other might come later on.

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  • Ashamed
    Sep 20, 2011 - 3:52PM

    Pakistan’s All Weather Friend is becoming unfriendly. Maybe Saudi Arabia will invest and export more Wahabi Terrorism to Pakistan at the same time.

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  • Akthar
    Sep 20, 2011 - 4:54PM

    Good Riddance. We should award the contract to Islamic Countries, preferably our Neighboring Iran.

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  • Friend
    Sep 20, 2011 - 5:29PM

    Why not give it to India?

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  • SaudiRules
    Sep 20, 2011 - 6:10PM

    I guess the “All weather” friend did not like the weather!!

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  • buttjee
    Sep 20, 2011 - 7:46PM

    In a deteriorating law and order scenario when most of the investors are shying away from Pakistan, Chinese proposed investment is nothing less than a blessing.

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  • M. Salim
    Sep 20, 2011 - 8:01PM

    and learning Chinese (Mandarin?, Cantonese?,) is being made a compulsory subject in Sindh schools…..joke of the century

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  • M. Salim
    Sep 20, 2011 - 8:03PM

    and learning Chinese (Mandarin? Cantonese?) is being made compulsory subject in Sindh schools…. as if Sindhi, Urdu, English is not enough. Exasperating!

    Recommend

  • Noise
    Sep 20, 2011 - 9:25PM

    @Akhtar
    Iran too is increasingly relying on Chinese Investment

    Recommend

  • Feroz
    Sep 20, 2011 - 11:58PM

    What is the point in Sindhi people learning Mandarin when the Chinese are not coming. After learning Mandarin and not getting a job where will they go – Xinjiang ?

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  • Ahmed Ali
    Sep 21, 2011 - 1:31AM

    government should learn lesson from it.

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  • Sep 21, 2011 - 11:22AM

    Maybe Pakistan should ask China to secure its territory. Then there should be a free flow of investments.Recommend

  • Habib
    Sep 24, 2011 - 4:22PM

    I think we must take China along to some solution

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  • Sep 26, 2011 - 4:33PM

    It’s quite sad for Pakistan that the Thar Coal Project isn’t starting up in Karachi. Every country should take some lesson from it, that how terrorism can hurt the economy of a country.

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