ISLAMABAD, Feb 19: Pakistan plans to set up a mining company to tap its estimated 184 billion tons coal reserves and help meet its growing energy needs, a senior government official said on Monday.

The government has approved Rs250 million as initial paid-up capital for the Thar Coal Mining Company and will offer its shares to local and foreign companies with management control.

“As per the plan, the coal authority in Sindh province will have 20 per cent equity while the federal government will offer its 80 per cent stake in the company to local and foreign firms,” Rashid Hussian Malik, a senior official at the Petroleum Ministry told Reuters.

Thar, in the province of Sindh, is Pakistan’s largest unexploited coalfield. It is spread over 9,100 sq km and has estimated deposits of 175.5 billion tons.Other large deposits of more than 7 billion tons and 1.3 billion tons are believed to lie in Sindh’s Sonda and Lakhra fields respectively.

Pakistan produces about six million tons of coal annually, most of which is consumed by brick kilns.

Officials say the country’s economy is growing at more than 6 per cent a year and its energy needs are rising significantly.

Pakistan’s total power generation capacity is about 21,000-mw, of which 39 per cent is generated by fuel oil. Power demand last year was 15,000-16,000 megawatt-hours.

Currently, coal-fired power units contribute less than three per cent to total energy produced, but experts believe there is scope for large-scale utilisation of coal in power generation.

The absence of any pricing formula for coal-fired power units, however, has been a major impediment in attracting foreign investment into coal mining.

“There is no pricing formula, mainly because there has not been any proper coal mining at large scale. We need to produce more and increase its utilisation,” said Abbas Ali Shah, director general of state-run Sindh Coal Authority.

A Chinese firm, Shengua Group Corporation, had carried out a feasibility study in Thar area to set up two 300mw coal-fired power plants but had to wind up after it failed to reach agreement on a tariff with the government.“We will have to make use of coal’s huge potential to reduce our reliance on imported fuel,” Shah said.

Pakistan is dependent on fuel oil imports to meet its energy needs and has an annual oil import bill of more than $6.5 billion. —Reuters