Murad Ali Shah approves Rs15.8bn third expansion project of Thar coal

Published October 23, 2021
Chief Minister Syed Murad Ali Shah chairs a meeting on coal development in Thar, at the CM House in Karachi on Friday. — Photo courtesy CM House Sindh Twitter
Chief Minister Syed Murad Ali Shah chairs a meeting on coal development in Thar, at the CM House in Karachi on Friday. — Photo courtesy CM House Sindh Twitter

KARACHI: Chief Minister Syed Murad Ali Shah on Friday approved Phase-III Coal Mine Expansion Project in Thar at an estimated cost of Rs15.8 billion to excavate 12.2 million tonnes of coal annually for generation of 1,980 megawatts, which will save $420 million foreign exchange being spent on coal imports.

“The third phase would reduce coal price to $27 per tonne, making it the cheapest base load fuel in the country and Central Power Purchasing Agency (CPPA) basket tariff will reduce by Rs0.49/kWh to Rs15.05/kWh by saving consumers Rs60bn annually and top of it the Sindh government will earn Rs10bn royalty annually,” Mr Murad said while presiding over a meeting at the CM House. The project would be referred to the provincial cabinet for final approval.

Mr Murad said that the development journey of Thar coal started in 2009 with a partnership between the provincial government and Sindh Engro. “Numerous challenges were associated with the project and each challenge had the potential of shelving the project. However, only due to unwavering commitment and resolve of the Sindh government the project was commissioned on July 10, 2019,” he added.

Mr Murad said that the provincial government would utilise Thar coal beyond the power sector, adding that the figures showed that the cheapest source of producing energy was Thar coal.

Energy Minister Imtiaz Shaikh informed the meeting that the phase-I of Sindh Engro Coal Mining Company (SECMC) with an annual production of 3.8 million tonnes coal for generation of 660MW had been in operations for the last two years. Moreover, 2,640MW power plants were under construction and 11.8 million tonnes incremental mine construction was in progress. In the second phase, 7.6 million tonnes per annum were being excavated for generation of 1,320MW.

Giving a price comparison, Mr Imtiaz said that the LNG was being purchased at $35 per mmBtu, imported coal at $9.7mmBtu, residual fuel oil (RFO) at $12.4 per mmBtu and the Thar coal at $5.95 per mmBtu.

He said that the cost of the first phase was $627m followed by $216m for the second phase and it had come down considerably to $93m for the third phase.

The chief minister decided to talk to the federal government to develop a rail link from Thar to the upcountry so that coal could be transported for power plants operating all over the country.

The chief minister said that there would be savings of $420m annually against the imported coal with the completion of third phase, adding that it would bring Rs74bn reduction in circular debt annually.

The meeting was attended among others by Energy Secretary Abu Bakar, Managing Director of Thar Coal Board Tariq Shah, DG Sindh Coal Authority Mushtaq Soomro, Chief Executive Engro Ahsan Zaffar, CEO Engro Corporation Ghias Khan, Vice Chairman House of Habib Salman Burni, Vice Chairman House of Habib Tayab Tareen, CEO Hubco Kamran Kamal, Saleemullah Memon of Hubco, Chief Executive SECMC Amir Iqbal, GM Commercial SECMC Tallah Lodhi, CFO SECMC Muhammad Mudassir, and GM Tech. Mines Expansion Faisal Iqbal Siddiqi.

Published in Dawn, October 23rd, 2021

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