Taking a cue from China for using coal as a fuel for cement, fertilizer production and power generation, the government has taken steps to make the best use of our coal resources, estimated to be at 184,655 million tonnes. Almost every province of Pakistan possesses coal.

In Sindh, coal reserves have been estimated at 184,123 million tonnes, followed by Punjab with 256 million tonnes, Balochistan’s 195 million tonnes and the NWFP’s 81 million tonnes.

Latest study on indigenous coal by a foreign qualified mechanical and mining graduate from the University of California, Berkeley, (USA), Mian Saifullah Piracha, a former President of the Pakistan Chambers of Commerce and Industry (FPCCI) shows that coal is the biggest source of fuel reserves in Pakistan. It is much more than the reserves of oil and gas. The coal mining— both in public and the private sectors—, has not made much headway, because it is mostly used for brick kiln industry. Now electric power generation based on indigenous coal is under planning.

While the study suggests coal mining should be encouraged, the previous government imposed general sales tax (GST) of 18 per cent which caused a great damage to the mining industry, although the government was already charging fixed-rate GST from brick kilns owners.

As such, it was a double taxation. The study suggests that indigenous coal should be placed in the five per cent slab of GST with a minimum of Rs60 per tonne. The study has submitted nine recommendation for the growth of the industry which are as follows:

1. GST levy on coal should be withdrawn.

2. Mining machinery and equipment should be allowed to be imported free of custom duty.

3. Import of trucks for coal transportation should also be free from custom duty.

4. The private sector should be promoted as it produces over 87 per cent of the annual coal production.

5. Bank loan should be made available to the industry at conessional rate of 3 per cent.

6. Income tax rules should be amended to allow 100 per cent depreciation on expenditure made by mining firms on construction work such as building, houses and roads.

7. Depletion allowance be allowed to all mining firms.

9. The government should help the mining industry in producing at least another 10 million tonnes of coal annually for installing the 2,000 megawatt coal-fired thermal power plants on Chinese pattern.

China is already actively engaged in Sindh coal-mining industry and the coal-based power houses— of 100 to 200 mw each. In Balochistan the private sector is likely to provide cheap electricity for agriculture, industry and commerce very soon.

Balochistan coal is comparatively better— both for power- generation and cement production. On average, Quetta coal has 9500 BTU per pound. It has sulphur less than 3.5 per cent. As against this, Lakhra coal has 7500 BTU per pound. It has 5 per cent sulphur. The country’s 23 cement producing plants have an installed capacity of 17m tonnes per annum. These plants run at 58.4 per cent of the capacity, mostly based on imported furnace oil, producing only about 9.9m tonnes of cement annually.

Furnace oil: One tonne of furnace oil costs about Rs10,517. Even at 58.45 per cent, the consumption, comes to 84460 tonnes of furnace oil, costing about Rs8.882 billion. Once, all the 23 manufacturing plants start producing cement at their full installed capacity, 1.445 million tonnes of imported furnace oil costing Rs15.197 billion would be required annually. The coal consumption for power generation would not only save a big drain on foreign exchange, but would also enhance coal and cement production and exports.