At the optimum mine capacity of 4,000MW, power produced from Thar coal can yield a tariff of approximately Rs6 per unit. This is the cheapest among the options currently available, as compared to residual fuel oil or imported coal.

The Sindh Engro Coal Mining Company (SECMC), a joint venture between the Sindh government and Engro Corporation, has been working on the project for the past 4-5years. Engro, as manager of the project, has been working on the technical and commercial aspects, whereas the Sindh government is developing the requisite infrastructure for the project. As the developer of Thar Block II, SECMC plans to expand the mine in phases and reach a sustainable capacity of coal output for the production of 4,000MW in 10 years, which will remain available for the next 50 years.

The first phase of the project envisages mining 3.8m tonnes of coal per annum, to be utilised by a mine-mouth power plant of 660MW. The total investment for the integrated project is estimated to be $1.8bn.

The company has achieved substantial progress on the mining and power projects. An internationally reputed Chinese EPC engineering, procurement and construction (EPC) contractor has been selected, and the term sheets signed. EPC contracts will be finalised within weeks. Six thousand acres of land has been acquired for which no resettlement is required. Work for the 113m cubic metre overburden removal in Thar Block II was started with a local contractor on April 30. Use of a local contractor will help expedite the work before the Chinese EPC contractors are mobilised.

The ground breaking of the project was jointly performed by Prime Minister Main Muhammad Nawaz Sharif and former President Asif Zardari in late January. The presence of both gentlemen greatly enhanced the project’s profile. The project has been declared as one of national significance by the prime minister, and assured full support of the government.

The development of a regulatory and pricing regime for Thar coal is also underway, and the reference coal tariff for Thar coal is expected to be announced as early as next month. Nepra has already announced acceptable power tariff for Thar coal-based power generation.

The Government of Sindh, on the other hand, as the joint venture partner and a developer of Thar, has been diligently working on the necessary infrastructure development. Operations in Thar require critical infrastructure, which includes a fresh water supply scheme and an effluent disposal line for disposal of groundwater. These are being executed as per the project requirements.

The Sindh government, through the Sindh Irrigation and Drainage Authority (SIDA), is developing freshwater supply from Nabisar, which will support 1,200MW of power generation. Work is ongoing at a fast pace, and 50pc work of Phase I has already been completed, with the installation of a reverse osmosis plant at Nabisar. Meanwhile, the tendering process for Phase II is also complete. The scheme is expected to be completed by end-2016, much before the requirement of the power plant in December 2017.

But there are some concerns on the effluent disposal line, which was expected to be finalised by June, and the contract has not been awarded yet. The Sindh government has, however, assured SECMC of its timely availability, and as per the project schedule, the line is now required by July 2015. The SECMC has been made responsible for technical vetting of all specifications for both the projects.

Despite several challenges relating to land acquisition in populated areas, the widening and rehabilitation of the road network is also proceeding at a fast pace, with expansion work being done on bridges, culverts and bypasses of small cities. To further reduce travel time, an airport is being constructed in Islamkot, whose airstrip has been completed and the construction of terminal building has to be initiated. It is expected to be completed by end-2015.

Moreover, for the bankability of projects and timely execution and reliable operations of critical infrastructure, the provincial government is drafting an implementation agreement, with adequate coverage in case of non-performance, which will be signed with the SECMC.

Other infrastructure requirements such as the transmission line, which is the responsibility of the NTDC, has also been assured.

The federal and the Sindh government are also facilitating the SECMC in achieving financial close. With their support, the Thar coal projects of SECMC have been listed as ‘early harvest projects’ under the China-Pak Economic Corridor.

On the financing front, significant headway has been achieved and discussions are ongoing with Chinese and local banks for the finalisation of term sheets. The SECMC is confident of achieving financial close within this year, with the availability of sovereign guarantee for mining and an acceptable security package (IA, PPA) for the power plant in place. The integrated project is expected to come online by December 2017, if financial close is achieved within this year.

Thar dream is on the verge of realization, and this has been made possible through the federal and provincial governments’ unwavering commitment towards the development of Thar. Thar is the most viable power generation option for Pakistan. Development of indigenous Thar coal reserves will not only address the severe power shortage crisis in medium to long term, but also bring energy security to the country.

The writer is the CEO of the Sindh Engro Coal Mining Company

Published in Dawn, Economic & Business, July 21st, 2014