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Pakistan plans $500m TCMC

ISLAMABAD — Pakistan government has approved the setting up of a $500 million Thar Coal Mining Company (TCMC) in Sindh province to develop first coal mine at the country's largest deposit.

According to an official, the decision was taken after having failed to involve any major company for investment in coal mining and power generation.

The plan approved by the President Gen. Pervez Musharraf and Prime Minister Shaukat Aziz envisaged unbundling of Thar Coal project into mining and power generation to bring down the size of investment in each block from $1.5 billion to $500 million.

There are more than six major blocks identified so far at Thar. The decision stemmed from realisation that mining and power generation could not go together and needs to be separated and developed independently.

It was also felt that energy crisis has already hit the country that might choking the economy from next year and even the power produced from natural gas was now costing 5.9 cents per unit.

"We lost six years in attracting large companies that could finance up to $1.5 billion in mining and production of electricity from Thar coal reserve but failed to get a breakthrough because such a big investment was not forthcoming," the official said.

It has also been decided that Water and Power Development Authority (WAPDA) should be geared up to set up first coal-based thermal power plant at Thar if foreign or local investors continue to show laxity because dependence on imported fuels has to be checked.

He said the "mining majors" were not coming in for the Thar coal mining. Many companies showed keen interest in power generation at Thar coal but showed hesitation when the government asked them to also develop the mines themselves. He said an integrated project of mining and power generation required investment between $1-1.5 billion which was found to be difficult.

"Thar is not worth $1.5 billion investment for a foreign investor."

He said the planning commission chief Dr Akram Shaikh has also recommended to the President to hold an enquiry and take to task those responsible for shying away Shenhua group of China that had offered to set up a power plant at 5.7 cents per tariff compared with 5.9 cents per unit being offered to investors for gas based projects.

"It has become pretty clear that many within the government were discouraging cheaper projects of natural resources like water and coal to promote imported fuels," he said.

An official delegation is being dispatched to Beijing early next month to hold road shows for attracting Chinese coal mining companies to become part of the project directly as management partners and also financial institutions for financing.

He said only China could invest into uncertainty of Thar where there was no industrial base and no infrastructure but was discouraged by a lower tariff and would have to be brought back.

The $500 TCMC would be responsible for mining, research and introduction of latest mining and refining technology. The whole plan prepared on the basis of a year long study by Rhein Braun Energy of Germany of one coal block of Thar project, was presented to the President and the Prime Minister on July 28 who cleared it for implementation.