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The long shot of ‘black gold’

April 06, 2019

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The writer is an analyst specialising in energy policy and political economy.
The writer is an analyst specialising in energy policy and political economy.

AT a recent rally in Thar, Prime Minister Imran Khan thundered that the desert region’s abundant coal reserves — its ‘black gold’ — would bring prosperity to the people there. Coming from a self-proclaimed environmentalist, these words are not only disappointing, but potentially dangerous. In fact, they may pose an existential threat to not only the people of Thar and Sindh, but the entire nation.

When the prime minister launched the Clean Green Pakistan initiative last October and promoted the idea of the ‘10 Billion Tree Tsunami’, it triggered a sense of optimism among those who care deeply about the nation’s sustainable future. Perhaps for the first time, it appeared as if the reins of the state were finally taken over by someone who was driven by a vision that encompassed the long-term well-being of the people and not just his own re-election. That optimism seems to be eroding now.

It is a fact that the people of Thar are devoid of economic opportunities. With a population of 1.7 million — 75 per cent live below the poverty line, which shoots up with every drought — the region’s welfare should be our policymakers’ top priority. The available choices, however, should be evaluated on the basis of a criterion that ensures multidimensional development. In this regard, coal is possibly the least potent means of all.

What plans are in place to offset the looming damage of coal-related commercial activities for Thar?

To start with, Thar’s coal deposits comprise inferior quality lignite and sub-bituminous characteristics. The Geological Survey of Pakistan analysis proves that these are among our least-valued coal grades due to the high moisture content and low heating value. Furthermore, of the oft purported ‘reserves’ of 175bn tonnes, less than 5pc are measured and the rest are theoretical estimates. The proven reserves of 7bn tonnes are not fully recoverable either.

The PML-N administration built an entire case on the massive coal power buildout on the basis that the fleet will provide cheap electricity and improve the balance of payment. If the present government believes in a fraction of that narrative, it must realise that it is misled. The operational and permitted plants vividly indicate why tariffs shouldn’t be accorded for coal power producers in the future.

Between 2015 and 2016, the National Electric Power Regulatory Authority granted tariffs to developers for about 9,500MW of coal capacity. Over 60pc of that capacity will burn imported fuel because policymakers agreed that it is a better alternative to Thar’s lignite. Moreover, coal power producers were guaranteed an overly lucrative rate of return, which could be higher than the rates offered for other technologies during that period and was awarded at the behest of the federal government.

Since imported fuel cost is over half the total tariff, these plants could worsen our trade imbalance through 2050 and generate expensive electricity. A case in point is the 1,320MW Sahiwal plant, which produced power for Rs11.25/kWh in February 2019, compared to the originally estimated tariff of 8.2 Rs/kWh. The cost for the consumer soars if the equity and loan repayments are repatriated in a foreign currency since the rupee has depreciated substantially.

On the technical front, coal power plants offer some merits which are overvalued by bureaucrats who usually run the show in ministries. With uninterrupted fuel supply, coal plants can provide electricity without varying generation and load. The so-called baseload characteristic of these plants causes inflexibility because they should keep running regardless of the electricity demand. Notwithstanding the fact that our power demand is highly seasonal ranging between 25,000MW to 10,000MW, depending on the weather— the politicians and bureaucrats professed the need for baseload generation and permitted an excessive capacity of coal-fired power projects.

The coal power value chain emits large amounts of pollutants and clean water is among the key input requirements for thermal power stations. If employed, the Tharis will be paid poorly to ensure “commercial viability” of the mines. While at work, the miners will be exposed to chemical substances and coal dust that cause a host of lung and respiratory diseases. For those who escape these miseries, the stacks of power stations will emit enough sulphur, nitrogen, carbon dioxide and mercury that they will be worse off by not leaving their ancestral lands.

On behalf of the Tharis, it is worth asking the provincial and federal authorities: when coal projects are building infrastructure to consume trillions of litres of water every year, why do the locals not have access to clean drinking water? What mitigation plans are in place to offset the looming damage of coal-related commercial activities for the Thar region and for the rest of the country? The pitiful irony is that the functionaries and politicians who are wrestling to take the ‘credit’ for Thar’s recently built coal power project blame each other for the region’s destitution, and its starving children.

Surely, the people of Thar deserve better. They would be better served not by earning a few thousand rupees while mining for some billionaire corporates of Karachi and Beijing, but by economic opportunities that do not jeopardise their health and environment — and are identified in consultation with them.

Interestingly, at the same rally, the prime minister lauded Thar’s solar energy endowment. He rightly noted that instead of constructing a miles-long grid, solar power is a cost-effective technology for the region’s power needs. I wish someone in the audience had asked that since such a commendable realisation exists, why are the policymakers in Karachi and Islamabad drawing up plans for the local villages’ displacement. Why is the rest of the country being deprived of this ‘yellow gold’ (solar energy), which is available through the length and breadth of the country? Arguably, Clean Green Pakistan and massive coal mining in Thar cannot go hand in hand. We will have to choose one or the other.

The writer is an analyst specialising in energy policy and political economy.

Twitter: @sohaibrmalik

Published in Dawn, April 6th, 2019