The lignite reserves of 175 billion tons in Thar region, which could be utilised to produce 100,000 megawatt for over 200 years seems to be the only indigenous energy resource that could help Pakistan meet its current short-term and long-term energy needs, which are increasing day by day, experts believe.
Given the large energy deficit and current energy crisis in the country and lack of any reliable and sustainable indigenous energy resources, Thar Coal Mining and Power project presents a tremendous growth opportunity, which includes potential for export as well. According to an energy expert, Thar Coal energy project, which would not only help in meeting the energy demand of Pakistanis for the coming decades, and is also expected to change the economic landscape of the country, is now close to getting into the execution stage.
Sources said that ten years back a Chinese company Shenua had done its due diligence on Thar Coal project but the government rejected the proposal due to the high tariff issues. With depleting gas fields, lack of investment initiatives in the oil and gas sector, slow movement on foreign LNG, TAPI and Iran gas - the other alternatives look bleak and expensive.
The reliability of Thar Coal as an energy resource and the scalability potential of the project make it one of the most suitable and sustainable growth propositions to end the energy crisis and bring energy security to the country. Sources revealed that out of all the Thar projects in the pipeline. The Sindh Engro Coal Mining Company (SECMC) project based in Block-2 is in most advanced stage right now. It has reached a state of readiness towards project execution and is close to starting financing activities.
SECMC, a joint venture between the government of Sindh and Engro Powergen has ascertained technical, environmental, social and financial viability by engaging several international consultants. It has also obtained firm EPC proposals for mining and power projects from a Chinese company. The expected date of completion of the coal mining and power project is 2016 at a total cost of $3 billion US dollars. Despite all the positive developments, political moves are afoot that could jeopardise the whole Thar coal dream.
Sources claimed that there are forces that would prefer status quo and ensure Pakistan meet its energy needs through oil imports. As it stands, Pakistan is heavily dependent on importing furnace oil and high speed diesel to meet its energy needs and if the current trend continues, international projections (Morgan Stanley 2010 report) predict the price of crude oil to reach US $200 per barrel by 2020.
In that scenario, a Pakistan Business Council study estimates the import bill would reach a staggering US $124 billion by 2020, which is unsustainable. Sources said that apart from certain vested groups, who would like the current situation to remain same, there is an issue of political will as well. Though the federal government and the government of Sindh should be commended for certain initiatives, sincere political will is still lacking to take the Thar coal project to the next level.
Funds for infrastructure projects are yet to be allocated and while there is a lot of talk in Islamabad and in Sindh on allocations and plans, but nothing concrete has started on the ground. For Thar to function, development and infrastructure investment needs to be fast tracked to provide comfort to prospective investors and sponsors. Secondly with upcoming elections, the government is focused more on short-term interests than on long-term investments, as long-term plans do not provide immediate benefits to the ruling party.
The government focus is on short-term fixes to ensure the electoral base is maintained, public agitation is minimised and opposing parties have less to attack and criticise. Sources claimed that companies who have invested or shown interest in Thar coal are also having second thoughts due to the current situation. The key concern is that the government has still not been able to resolve the circular debt crisis facing the country and, therefore, their ability to attract investment in Thar becomes more difficult as the risk profile increases.
Government bodies such as the Board of Investment and the Thar Coal Board are also facing an uphill task to allure foreign investment due to these issues. And as time goes on it will get harder for government to convince investors in case Thar Coal gets further delayed.
Sources said that even Engro Powergen a partner with the Sindh government in SECMC is having financial difficulty with the project and is being forced into a difficult position with government on a number of issues. It remains to be seen if they will be able to continue to champion this project with the government, he added.
The primary objective of Thar Coal should be to provide affordable, reliable and sustainable electricity to consumers across Pakistan. If as a nation and as a growing economy Pakistan could become self-reliant on energy then load shedding and closure of industries could become a trait of the past. It remains to be seen if once again Pakistan's energy projects are sacrificed at the altar of political and vested interests, sources said.