ISLAMABAD, Oct 3: The government has decided that only Thar coal will be used in coal-based power plants in future.

Consequently, new power plants and the existing ones that are to be converted into coal-based units will be designed as per specifications of Thar coal.

The decision was announced by Prime Minister Raja Pervez Ashraf while presiding over a meeting of the Thar Coal and Energy Board here on Wednesday.

In line with the policy decision, the prime minister agreed to provide sovereign guarantee to the Sindh Engro Coal Mining Company (SECMC) — a joint venture of the Sindh government and the Engro Power Corporation engaged in building and developing an integrated coal mine and power plant project.

The project situated in block 2 of the Thar coal project area has an estimated cost of $1.3 billion and will be producing 6.5 million tons of coal per annum. Its power plant will have a capacity of 1,200MW.

Prime Minister Ashraf told the meeting that the existing financial position of the country left only a limited space for the government to provide sovereign guarantees. However, the decision in question was a strategic one which had to be taken for meeting the country’s growing energy requirements.

The Sindh government had requested the federal government that proposed units of 600MW capacity in Jamshoro and the existing plants there of 800MW, which were to be converted into coal-based units, be designed as per the specifications of Thar coal.

The prime minister asked the water and power ministry to get an agreement between the GENCO and SECMC signed within a week, allowing for the Asian Development Bank-financed conversion of the existing 800MW plants and construction of new 600MW units.

“Today we have laid down the foundation of an energy policy based on our indigenous resources which will lead to huge savings. We spend a lot of foreign exchange on importing fuel to run our thermal power plants,” Mr Ashraf said.

The decision, he said, would ensure energy security because God had blessed the country with the sixth-largest coal reserves in the world.

“It is now up to us to utilise the huge coal deposits for the progress and prosperity of the country by generating affordable electricity,” the prime minister remarked.

He also expressed the hope that the decisions would lay the foundation for sustainable socio-economic development in the country.

The Thar coal fields are estimated to have reserves of 175 billion tons, 68 times greater than the country’s total gas reserves.