ISLAMABAD, Aug 27: The government has decided to set up a $500 million Thar Coal Mining Company (TCMC) run by the private sector to develop the country’s largest deposit after having failed to involve any major company for investment in coal mining and power generation.

The plan, approved by the president and the prime minister, envisaged unbundling of the Thar Coal project into mining and power generation to bring down the size of investment in each block from $1.5 billion to $500 million, a planning commission official told Dawn. There are more than six major blocks identified so far in Thar.

The decision was taken after realising that mining and power generation needed to be developed independently. It was also felt that energy crisis had already hit the country and it might begin to affect the economy from next year and even the power produced from natural gas was now costing 5.9 cents per unit.

“We lost six years in trying to attract large companies to finance up to $1.5 billion in mining and production of electricity from Thar coal reserve but failed to get a breakthrough because such a big investment was not forthcoming,” said a senior government official.

It has also been decided to gear up Wapda to set up first coal-based thermal power plant at Thar if foreign or local investors continue to show indifference because dependence on imported fuels has to be checked.

He said the ‘mining majors’ were not coming in for the Thar coal mining. Many companies showed keen interest in power generation at Thar coal but showed hesitation when the government asked them to also develop the mines themselves. He said an integrated project of mining and power generation required investment between $1 billion and 1.5 billion which was found to be difficult. “Thar (coal) is not worth $1.5 billion investment for a foreign investor.”