Globally, demand of coal is fast increasing and its consumption has grown by 30 per cent in the past six years, twice as much as any other energy source. It is no more an abundant and cheap source of energy as it used to be in old days. It is now scarce, expensive and in high demand. It is a major source of energy, only second to oil, in industrialising countries.
While Pakistan remains one of the most electricity-starved countries, there is no shortage of coal. The only self-imposed misfortune is that its reserves are mostly lying waste. The bureaucracy has spent over a decade only in talking to interested companies and in calculating and re-calculating cost and tariff. It never reached firm decision in national interest, perhaps under the influence of oil lobby, to let the vast reserves be commercially exploited and turned into electricity whose shortage has now reached catastrophic proportions, posing a severe threat to the economy and normal life. The electricity deficit has soared to over 40 per cent and since 1947 the per capita electricity dependence has grown 82-fold.
In fact, it has been a colossal waste of time and unforgivable delay if one looks at the latest figures of oil import bill as oil’s international price hovers around a hundred dollar a barrel. The bill is set to reach $11 billion by the end of the current fiscal year; last year, it had crossed seven billion dollars. As a corollary, foreign exchange reserves have in recent months started falling. These stood at $13.84 billion on March 15, down from $16.48 billion at the beginning of November 2007, which was the highest level ever.
The new democratic government intends to embark on a 100-days crash programme to come to grips with critical deficits in vital sectors, including power, and it remains to be seen what measures it takes in this direction.
But, according to Planning Commission officials, it will still take two to three months to complete procedural formalities before international bids are invited for setting up coal fired power plants. The total coal reserves, as reported by Geological Survey of Pakistan, are around 185 billion tonnes. Of these, about 175 billion tonnes are located in the Thar desert region, discovered in 1992. The other places containing coal reserves are Lakhra, Sonda-Jherruk and Badin.
In terms of quality, the coal in Pakistan is described to be between bituminous and lignite. The Thar coal, is however, lignite and can be developed primarily as a fuel for power generation. The latest thinking is that both public and private sectors should be engaged in commercial exploitation of coal — coal mining in the public sector and power production in the private sector. For the purpose, the government has set up its own firm called Thar Coal Mining Company.
So far, coal’s contribution to power generation has been nominal — only 150MW as compared to total power generation capacity which is 19,000MW. Mainly, it is used for firing brick kilns. It is ironic to note that coal reserves which can be used for power production for at least 200 years have been ignored and instead natural gas preferred for the purpose though its reserves would last for a mere another 20 years in view of its faster consumption.
Coal is a leading component of the world’s energy mix, contributing about 40-60 per cent to the total. China, the world’s largest consumer of coal, produces 75 per cent of its electricity from this fuel. It consumes more coal than the United States, and Japan combined. And its consumption is increasing by about 10 percent a year. In 2006, it installed power plants with more capacity than all of .. Since its growing appetite has outstripped production despite the vast resources, in 2007 it imported more coal than it exported for the first time, according to official figures.
India’s coal mining is mostly in the hands of government-owned companies. The biggest, Coal India, produces four-fifths of the country’s coal. Because the government is worried about social unrest, the prices for coal and electricity are kept low. Although India’s coal reserves are vast, they haven’t been fully developed.
Developing countries are not the only ones using more coal. Britain’s coal consumption has climbed steadily over the past six years. Coal has now surpassed gas once again as the leading fuel for electricity plants.
Meanwhile, there are signs of coal crisis in the making in the wake of an untimely confluence of bad weather, flawed energy policies, low stockpiles and a rising demand in. These factors have raised international spot prices of coal by 50 per cent or more in the past five months, surpassing the escalation in oil prices.
As a result, mining companies are enjoying a windfall. Old coal mines in have been re-opened or expanded. European and Japanese coal buyers, worried about future supplies, have begun locking in long-term contracts at high prices, and world steel and concrete prices have risen already, fuelling inflation.