Thar Coal – Energy security for Pakistan

Estimated reserves can fuel the country’s power needs for centuries, says the government.

Discovered accidentally in the year 1989, during an exploration project of defunct SAZDA (Sindh Arid Zone Development Authority) to find drinkable water in the desert, Thar Coal has remained a matter of active national debate. The size and the quality of Thar Coal reserves were known to a great extent since 1993 after a study by John T Boyd Company, US Mining consultants, only to be reinforced in subsequent studies by other international experts. However, there have always been conflicting views which at times create confusion about technical viability and commercial feasibility of mining and power generation on Thar Coal.

Thar Lignite Coal resource was initially estimated to be around 135 billion tons which was subsequently enhanced to 175 billion tons after review of data by USGS (United States Geological Survey) and GSP (Geological Survey of Pakistan). This estimate was based on distanced bore holes over an area of 9,000 sq kms which meant a source estimate of around 194 million tons of lignite per sq km. Subsequent explorations carried over an area of 1,200 sq have provided even higher figures of proven reserves of being around 200 to 350 million tons of lignite per sq km.

According to the standard conversion rates, the Thar Lignite Coal resources are equivalent to around 50 billion tons of oil, which is more than the combined oil resources of Saudi Arabia and Iran. In terms of gas reserves, these are around 68 times the present resources of natural gas in Pakistan.

Shenhua – an opportunity missed

In 2002 China sent a team of 136 coal mining engineers, geologists, hydro-geologists and power plant specialists with M/s Shenhua Group, to open up Thar coal resources for commercial use. The company established a field camp in the desert and worked on Thar Coalfield for a period of two years. In 2004, they prepared a comprehensive feasibility report which found the Thar lignite resource suitable for commercial mining and proposed open cast mining with mine-mouth power generation of 600 MW in the first phase to be scaled upto 3,000 MWs based on the lignite reserves in Block II, with an area of 55 sq kms (0.6% of Thar coalfield area of 9,000 sq kms).

Shenhua Group asked for a tariff of 5.6 US cents per KWH for the electricity generated by its proposed power project. They asked for just a transmission line to be provided by the government. At that time we were buying electricity from IPPs at 6.5 US cents per KWH. However, Wapda insisted on a tariff of 5.3 US cents per KWH and negotiations broke down. A subsequent feasibility report by Germany’s RWE Company funded by the Federal and Sindh Governments proved that the real commercial cost for power generation in first power project on Thar Coal, as per European standards could be upto 7.6 US cents per KWH.

The revival in 2008 

In May 2008, the Government of Sindh through the Mines and Mineral Development Department (the predecessor of Coal and Energy Department) offered a joint venture, a public private partnership, to the private sector with a 60:40 (Private : GOS) equity participation and management control with the private partner. A joint venture company with the name of Sindh Engro Coal Mining Company was formed and it started working on the work left unfinished by the Chinese in Block II.

The writer is Secretary Coal and Energy Development Department, Government of Sindh.

Published in The Express Tribune, January 30^th, 2012