Chinese company has shown keen interest in the
project
From SHAMIM AHMED RIZVI
Islamabad
Aug 20 - 26 , 2001
The development of Thar coal reserves has been
included in the priority list of projects which are likely to be
launched during the current financial year. The government has already
set up a task force on Thar coal reserves, which is headed by the
President Gen. Musharraf himself.
The Pakistani delegation headed by Finance Minister
Shaukat Aziz who visited China last week to finalise various
business-cum-assistance deals with Chinese authorities also discussed
the Thar coal project. The Minister held detailed discussions with Mr.
Ye Quing Chairman of a leading Chinese company specialising in coal
mining development, who showed keen interest in the project and found
it commercially viable. Expressing willingness to invest in the
project Quing asked for some specific details about the project. The
Finance Minister Shaukat Aziz promised to provide all the required
information within one month. A team of Chinese experts may later
visit Pakistan to make on the spot studies.
The governor of Sindh province Mohammad Mian Soomro
who is the Vice Chairman of the task force told newsmen after the 3rd
meeting of the Force in Karachi last week that the government has
approached some international investors including Chinese, to form a
joint venture for the development of coal reserves in Thar (Sindh)
deserts which had largest reserves of coal in the world. Most likely
Chinese will be our partner in this venture, observed Mian Soomro.
The high powered task force is headed by President,
Gen. Musharraf and its members include Federal Petroleum Minister,
Deputy Chairman Planning Commission, Sindh Development, Chairman Board
of Investment, Chairman Wapda, Chairman Sindh Privatization
Commission, Federal Secretary Petroleum, Provincial Secretary
Industries and Mineral Development and DG Sindh Coal Authority. The
task force may also associate private sector members as and when
considered necessary.
Its terms of reference are to carry out studies
including geological exploration, investigation and project specific
feasibility studies, to prepare policy and projects on the Coal-fired
power generation, to be responsible for distribution and transmission
of electric power, infrastructure development to develop skill
development in connection with surface coal mining and coal fired
power generation related technologies to provide incentives to promote
investment in coal mining for various applications including power
generation.
It was decided that feasibility of Thar Coal
Project by Sindh Coal Authority will be expedited in consultation with
the Ministry of Petroleum whereas pace of implementation and
infrastructure development will be geared up. The feasibility of rail
link to connect Thar coal would be processed in consultation with the
Ministry of Railways. The Chinese delegation which visited Pakistan in
May last expressed keen interest in the Thar Coal project and held
lengthy discussion with Pakistan authorities including Sindh Coal
Authority on the subject.
Pakistan is not blessed with large reserves of oil
and the opportunity for the hydroelectric potential is confined to the
northern region of the country. However, large deposits of coal were
discovered at Thar over a decade ago by the Sindh Arid Zone
Development Authority. In 1991, enormous coal deposits were conferred
by the Geological Survey of Pakistan and the United States Agency for
International Development.
Pakistan's Thar Desert contains the largest coal
reserves discovered to date, covering an area of 10,000 square
kilometers. The Thar Coal Field, should it be developed, will yield
over 200 billion ton of coal used to produce electricity, it will
yield sufficient power to make Pakistan self-sufficient in Electrical
power. Pakistan has reserves of natural gas, but these will start to
diminish by 2010.
Since the discovery of Thar coal in 1991 very
little development work or study has been initiated. Thar coal has low
calorific value but is environmentally friendly with a low Sulfur
content. The Thar coal deposits extend across the border and they are
currently being mined for power generation in Rajistan in India. India
has no reservations about the use of these coal deposits. Coal
extraction from Thar will be a development requiring 3-4 years before
coal is made available for use. The ideal situation would be that GOP
uses the coal to reduce Pakistan's dependence on hydro projects, the
only alternative method is to develop the Thar coal via international
financing. This is possible only by inviting international power
companies to invest in Pakistan and provide the required funding for
the development of the Thar coal field.
The Chinese delegation offered to establish a
coal-fired power generation plant in Thatta, 125 kilometers from
Karachi with an investment of about $ 200 million. Initially the
capacity of the proposed plant would be 100 megawatt but it would be
extendable to 200 megawatt. The plant's location would be in the
vicinity of Jhirk coal mines with have reserves of 1.3 billion tonnes
of coal.
The Chinese delegation leader was optimistic about
the successful completion of the project within the timeframe of 22
months beginning from the day of start of construction. The leader of
the delegation was emphatic in her assessment that Pakistan would be
economically benefited to a significant extent if power generation was
switched over to coal firing in view of the abundance of coal reserves
in the country. In Sindh alone coal reserves are estimated at 200
billion tonnes. The Chinese leader also informed the Sindh officials
that electricity generation in China was based to the extent of 80 per
cent on coal firing thanks to domestic availability of coal.
The willingness of the Chinese National Mechanical
Import and Export Corporation to make investment in coal based power
plants in Pakistan is indeed a highly welcome development against the
long backdrop of inaction on this front by the previous government
despite the presence of high quality coal reserves in Sindh. It may be
recalled here that a Hong Kong based firm specializing in power
generation projects had, about five years ago, concluded an agreement
with the then government for the establishment of three coal- based
power generation units of 200 megawatt each at Keti Bunder near Thatta.
But the project failed to materialize because the foreign company
backed out of its earlier commitment to obtain coal supplies from the
reserves in Thar and instead insisted on import of coal from Hong
Kong. It may be noted here that the coal reserves in Jirk, which is in
the close vicinity of Thatta, were surprisingly not mentioned as a
domestic source of supply for the Keti Bunder project which was
conceived on the basis of Thar coal reserves.
Besides Power Plant producing cheap electricity
Coal can also salvage the cement industry which is in bed shape
because of heavy cost of inputs. The use of coal would result in a
saving of nearly Rs. 495 million per year for a plant producing 3,000
tons of cement per day. The use of furnace oil for producing one ton
of cement is said to cost Rs. 924, as against about Rs. 374 with the
use of coal. Among other advantages accruing from the contemplated
shift, mention has also been made of the prospect of the national
exchequer saving $170 million in the event of the cement sector
running to its full capacity, or at least $100 million a year on the
utilization of 63 per cent production capacity as now.
A sizeable cut in the cost of production,
eventually leading to the much needed reduction in prices, should
cause spurt in demand, providing a boost to production of cement in
the country. Increase in consumption thus prompted, should help solve
the problems. Eventually, reactivation of the national cement industry
with an overall reduction in cost of production, coupled with a marked
emphasis on the growth of housing sector, which figures prominently in
the government's development priorities, can certainly serve as a
strong catalyst for the country's economic revival.
However, while recalling the country's huge
potential in coal, as lately enlarged by the discovery of the world's
largest coal fields in Thar, Sonda and Lakhra in Sindh, BOI has
underlined the need for expeditiously developing the hidebound coal
industry. With the present state of coal mining, it may not be
possible to meet the conversion requirements of the cement industry
estimated at around 3-5 million tons of coal. Note has also been taken
of the fact that due to convenient access to natural gas liquid fuels,
utilization of coal for energy has shrunk from 60 per cent at
independence to six per cent at present. An idea of the enormity of
this task may also be had from the BOI recommendation that the
government earmark Rs. 20 million to conduct a feasibility study of
Thar coal field alone. It has also proposed a number of short and long
term measures, including facilities for import of machinery, tax
incentives, etc., to boost the output of coal and enable conversion of
all the cement units within a period of three years.
|
