Move to separate coal mining, power generation in Thar
By Khaleeq Kiani
ISLAMABAD, Feb 22: The government is reported to have been convinced that integrated coal mining and power production in Thar is not possible and, therefore, it should proceed with coal mining in the public sector and power production in the private sector.
In recent top-level consultations, the president and the prime minister were informed that it would be technically impossible for a private power company to deal with the twin jobs of coal mining and power production. Also, in the absence of a bankable feasibility study, private investors will keep on demanding higher tariffs which will be difficult for the government to accept on economic principles, as happened in the recent case of Hassan Associates which proposed to set up a 1,000MW power plant in Thar.
The National Electric Power Regulatory Authority (Nepra) had offered an indicative tariff of 7.8 cents per unit for the project whereas the company demanded a tariff of not less than 10.5 cents per unit. The case was taken up by the provincial government at the highest level which led to the conclusion that the development of 185 billion tons of coal reserves lay in the economic fundamentals rather than political solutions.
Informed sources told Dawn that integrated coal mining and power production was almost impossible in the absence of a bankable feasibility and even Chinese companies were not ready to take up any major project in Thar.
The fresh plans envisage separating of the Thar coal project into mining from power generation to bring down the size of investment in each block from $1.5 billion to $500 million.
There are more than six major blocks identified so far in Thar for mining. The decision was taken after realising that mining and power generation needed to be developed independently.
It has also been decided to gear up Wapda to set up first coal-based thermal power plant in Thar if foreign or local investors continue to show indifference.
The sources said the government had now decided that the newly-established Thar Coal Mining Company (TCMC) in the public sector would start mining of the least prospective coal block in Thar to minimise loss and damage to the entire coal resource. After reaching a reasonable mining stage, the TCMC will be in a position to announce a specific quantity of coal to be available on a given date.
On the basis of this assessment, generation companies will be able to set up their plants depending on the quality of coal and its heating value.
This means that the government will initially encourage smaller power projects of about 200 to 300MW. It will move to larger excavations and bigger power projects of 600 to 1,000MW when the TCMC enters most prospective coal blocks.
The government had decided to set up $500 million Thar Coal Mining Company in August 2006, but it took more than 18 months to become operational. The provincial and federal governments are still in dispute over the location its head office. The Sindh government wants the company to be based in Mithi, a town close to the coal deposit, while the centre wants its head office in Karachi or Hyderabad.
