Scuttling the boat?: ‘Bureaucrats are creating hurdles to progress on the Thar coal project’

Coal mining company exasperated by Ministry of Water and Power’s lack of cooperation.

Kazim Alam December 26, 2012
“Despite the passage of three months, the prime minister’s orders haven’t been implemented,” Shaikh says. DESIGN: FAIZAN DAWOOD


What is a private-sector energy company do when, after spending over Rs600 million on numerous studies carried out by international consultants, it discovers that the Ministry of Water and Power is not willing to even reply to its letters, let alone implement the prime minister’s orders?

“The Ministry of Water and Power has no interest in resolving the energy crisis. Bureaucrats sitting in Islamabad are bent on sabotaging the Thar coal project,” Sindh Engro Coal Mining Company (SECMS) CEO Shamsuddin Ahmed Shaikh told The Express Tribune in an interview on Wednesday.

SECMS is a joint venture between the Sindh government and the Engro Corporation, who have 40% and 60% stakes respectively in the project. It plans to develop an open pit mine that will initially yield 6.5 million tons of coal per annum. The mined coal will help Engro PowerGen generate 1,200 megawatts (MW) of electricity in the first phase.

Shamsuddin Ahmed Shaikh

Referring to the minutes of his meeting with Prime Minister Raja Pervez Ashraf and key members of the Sindh and federal cabinets on October 3, Shaikh says that none of the decisions taken by the premier has so far been implemented.

Prime Minister Ashraf had issued directives that coal mined from Thar would be used for all coal-based power generation in the country, while the conversion of existing power plants and the construction of new ones would be carried out according to Thar coal specifications.

Furthermore, it was decided that the coal off-take agreements between power generation companies and SECMC would be finalised and signed within one week. Moreover, the premier had also asked the Ministry of Finance to provide a sovereign guarantee to finance the debt portion of the Thar Block II Mining Project, which amounted to $700 million.

60% 40

“Despite the passage of three months, the prime minister’s orders haven’t been implemented,” Shaikh says. He adds that after sending several letters requesting a meeting, SECMS prepared a draft agreement on its own and sent it to generation companies. “We have written to them repeatedly, but they never respond. Then we wrote a letter to the Ministry of Water and Power. It asked us to send in our concerns in writing, which we did in November. They have yet to get back to us,” he says.

“You need between $5 billion and $6 billion to install a 2,400MW power plant,” Shaikh notes; adding that the electricity generated from Thar coal will yield a tariff of eight cents per kilowatt-hour as opposed to 12 cents per kilowatt-hour – the national average tariff in Pakistan.

He says SECMS has paid the fee amounting to Rs120 million for the letter of intent from the Ministry of Water and Power, but the authority is still reluctant to issue it. “The problem is that they do not bother to communicate with us. I promise I will fix any problem that they point out. But they should at least talk to us,” he says.

Calling the federal bureaucracy the biggest hurdle in resolving the energy crisis in Pakistan, Shaikh says the political leadership is fully supportive at both provincial and federal levels. “Being a private company, Engro cannot keep on spending money on a massive project like Thar coal,” he says, adding that the dillydallying of the bureaucracy for another six months can possibly force the company to pack up for good.

The Express Tribune tried to contact Water and Power Secretary Nargis Sethi for her response, but she was not available for comment.

Published in The Express Tribune, December 27th, 2012.          

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theorist | 10 years ago | Reply

power cost calculated by PPIB for imported coal is 11 cents/kwh. See upfront tariff petition on NEPRA website. plus it offers price control, forex savings

Khurram The Muhajir | 10 years ago | Reply

//Thar coal will yield a tariff of eight cents per kilowatt-hour//

Coal Power from imported coal costs five cents per killowatt hour whereas power generated from Thar coal costs eight cents per killowatt hour and this is the reason why bureaucracy is opposing it,

This insistence on using only Thar Coal which has high moisture content, low carbon content and consequently is expensive to power from just because it will benefit Sindh is extremely unfair to the rest of the nation!

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