Sindh govt approves Thar coal mine expansion worth Rs15.8b
The Sindh government approved on Friday the third phase of the Thar coal mine expansion project costing an estimated Rs15.8 billion, excavating an additional 12.2 million tons of coal per year, helping save $420 million in foreign exchange every year with a reduction in the import of coal.
“The third phase would reduce coal price to $27 per ton, making it the cheapest base load fuel in the country and Central Power Purchasing Agency or CPPA basket tariff would reduce by Rs0.49/kWh to Rs15.05/kwh helping consumers save Rs60 billion annual and on top of it, the Sindh government would earn an annual royalty of Rs10 billion,” Sindh Chief Minister Murad Ali Shah said while presiding over a meeting at CM House in Karachi.
The meeting was attended, among others, by provincial Energy Minister Imtiaz Shaikh, PS to CM Sajid Jamal Abro, Secretary Energy Abu Bakar, MD 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 of Hubco Kamran Kamal, Saleemullah Memon of Hubco and chief executive of the SECMC Amir Iqbal.
Murad Ali Shah pointed out that a joint venture for developing Thar coal deposit began in 2009 between the Sindh government and Sindh Engro.
“Numerous challenges were associated with the project and each challenge had the potential of shelving the project,” he said and added “however, only due to unwavering commitment and resolve of the Sindh government the project was commissioned on July 10, 2019.
Energy Minister Imtiaz Shaikh briefed the chief minister that the successful execution of Phase-I of SECM project yielded 3.8 million tons of coal every year and 660 megawatts of electricity was being produced for the past two years.
He pointed out that 2,640MW power plants were under construction and 11.8 million tons a year incremental mine production was expected.
The chief minister said that his government would utilize the Thar coal “beyond the power sector”. Providing spot prices of raw materials used for energy production in the country, the chief minister was told that LNG was being bought at $35 per MMBTU, imported coal at $9.7 MMBTU, Residual Fuel Oil or RFO at $12.4/MMBTU and Thar coal at $5.95 MMBTU. At this the chief minister said that the figures showed that the cheapest source of producing energy was Thar coal.
Expansion: The chief minister was told that in the first phase (July 2019) 3.8 million tons a year was being excavated for generation of 660 MW. In the second phase 7.6 million tons per year was being excavated for generating 1,320 MW of energy while in the third phase, 12.2 million tons of coal per year would be excavated for generating 1,980 MW.
Sheikh said that the cost of the first phase was $627 million, the cost of second phase declined to $216 million and the third phase would drop to $93 million.
Outlining other benefits, the chief minister said it would reduce the circular debt of Rs74 billion annually — resulting in 16% reduction in rate of rise in circular debt. According to the chief minister the price of Thar coal would eventually come down to $27 per ton, making it the cheapest base load fuel in the country.
The project would be referred to the provincial cabinet for final approval.