Mining for Thar coal to begin in first quarter of 2014

Sindh Engro Coal Mining Company seeks to expedite development after receiving $700m worth of sovereign guarantees.

KARACHI:

With all the disruption and delays in the development of Thar coal, the Sindh Engro Coal Mining Company (SECMC) is nonetheless confident that it can kick off mining activity in Thar during the first three months of 2014, saying that it is “now or never”.

While presenting the Sindh Budget 2013-14 on Monday, Sindh Chief Minister Qaim Ali Shah – who holds multiple portfolios, including the province’s finance ministry – said that the provincial government will continue to invest in Thar coal as it is the most reliable future source of energy for Sindh and for Pakistan.

Reiterating his commitment to develop the Thar coal reserves, Shah said that the groundbreaking ceremony of the SECMC – a joint venture between Engro Corporation, one of the biggest conglomerates operating in Pakistan, and the Government of Sindh – is expected in January 2014.



“It [the groundbreaking ceremony] will be conducted by January 2014 or maximum by March 2014, but it has to be in the first quarter of next year,” Shamsuddin Sheikh, SECMC CEO, told The Express Tribune. “There is immense pressure on us from the Sindh government as well as the federal government to start this project. We know it is now or never.”

Dismissing any impressions that there will be further delays, Sheikh said the project is a unique mining project in Pakistan, which needs sovereign guarantees from the government to kick off. “Now that we have a sovereign guarantee of $700 million, we are confident that things will move fast in the right direction in the coming months,” he said.



Industry officials say that the biggest hurdle for the SECMC has been financing, because lenders were hesitant after the government fell short in its sovereign commitments to independent power producers.

In his budget speech, Shah also mentioned that the sovereign guarantee will help in overcoming financial problems, but he still requested further support from the federal government. Even if the SECMC starts mining from January next year, it will take at least 3.5-4 years to produce the first megawatt of power from Thar coal.

The Sindh government has allocated Rs12 billion for fiscal 2014 for the development of Thar coal, up 16% from last year’s Rs10.1 billion.

Disagreeing with analysts who say that Rs12 billion is not enough, Sheikh said that the amount will be sufficient since the Sindh government only has to take care of infrastructure development in the area.

“It is wrong to say that nothing has been done [so far] to develop infrastructure in Thar. A lot of work has been done to build roads and maintain the infrastructure, especially in the last few months,” Sheikh said, when questioned about the slow progress of development in the vicinity of the mines.

“You can gauge the interest of Prime Minister Nawaz Sharif in Thar coal, as he asked our team to give him a detailed presentation on Thar coal development even before the general elections,” he said; adding that Sharif pressed the SECMC to swiftly complete mining so that Pakistan can resolve the energy crisis and reduce its dependence on expensive fuel imports.

With all the support of the provincial and the federal governments behind it, Sheikh feels confident that the company will move fast in the future. “We know Pakistan has no other reliable energy option other than Thar coal,” he stressed.

Published in The Express Tribune, June 19^th, 2013.

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