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Pakistan hands over Thar coal project to Sindh

(By our correspondent) / 10 July 2008

ISLAMABAD - The Pakistan government has finally handed over the development of Thar coal project to the Sindh government, mainly to expedite the building of a 1000MW coal-fired power plant at a cost of $1.5 billion.

A senior government official told this correspondent that tussle that had been delaying the project has ended with the Centre agreeing to a 'supporting role' for itself in the $1.5 billion project while the Sindh administration 'spearhead' and sort out all the issues relating to the project.

He also said that the federal government has set up a Sindh Coal Authority by abolishing two existing federal and provincial agencies to expedite mining, development and gasification of Thar and other coal deposits in Sindh. A formal notification to this effect was issued by the Prime Minister Secretariat yesterday that technically empowers provincial government to take all decisions relating to coal development and power generation in consultation with provincial and federal agencies.

Headed by chief minister of Sindh, the authority will comprise federal minister and secretary water and power, a provincial minister to be nominated by the chief minister, chief secretary sindh and managing director Thar Coal Authority. The authority has come into effect immediately as Sindh Coal Authority (SCA) - a provincial agency - and Thar Coal Mining Company - a joint venture of federal and Sindh government - have been abolished, says the notification issued by federal government.

The authority will act as one stop organisation on behalf of all ministries, departments and agencies of the federal and provincial governments in mining, development, leasing and sub-leasing of Thar coal area. This will also be responsible for development of clean coal technologies, research and development, gasification, bracketing on Thar coal.

The authority will also be required to attract investment for coal mining and coal gasification at Thar and other Sindh areas for power generation and other purpose. The official said the mining of Thar coal will cost $400

million, while the power plant will be set up at a cost of $1.1 billion. It will be a complete integrated coal mining power plant whose first megawatt will start flowing in six years time.

He regretted that the project could not be handled and set up by RWE company of Germany, Shenhua of China and Hasan Associated of Pakistan as they were demanding upfront tariff which kept on increasing from 5 cents to 9 cents for the development of each megawatt and that too without having any back up data about the project.

The federal government, he pointed out, is finalising arrangements to hold a conference in Washington D.C later this month to prepare a "policy document" with a view to help develop Thar coal reserves. A number of international experts and investors have been invited to participant in the conference.

He said that there were 175 billion tonnes of "inferred" coal reserves at Thar but there was no idea about the "recoverable" reserves. "We may not know that at the end of the day we just have 75 billion tonnes of coal reserves out of 175 billion tonnes of these reserves as there is no bankable feasibility study available about it".

He said there will be six coal blocks to be developed at Thar. For the setting up the project, the official said that 5 million tonnes of coal will be developed every year for the proposed power plant to be installed by the Independent Power Producers (IPPs).

Responding to a question, he said that German, Chinese and Pakistani companies had spent about $0.5 to $0.6 million each and in return were seeking upfront tariff which was not justified and was not acceptable to the government due to which the project continued to "languish" during 2004 and 2007.

Pakistan is said to be at seventh in the list of top 20 countries of the world after the discovery of huge ignite coal reserves amounting to 185 billion tons which includes 175 billion tonnes of Thar coal. At the time of Pakistan's independence, the share of coal in overall commercial energy consumption was about 60 per cent but this utilisation gradually trimmed with the discovery of gas in 1952. Currently the share of coal in the overall energy mix is only 7.4 per cent against more than 50 per cent of India.

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