THE decision to hold an international conference in Pakistan to seek foreign investment to exploit the Thar coal reserves for power generation would surely help untangle many of the snags that have so far held up progress on this front. But what is needed more urgently is a national conference on the subject of coal to finalise a national coal policy. Given the escalating oil prices in the international market and Pakistan’s preponderant dependence on oil for generating electricity, the need to diversify our energy mix cannot be overemphasised. It defies all logic that with an abundance of coal reserves Pakistan has not made optimum use of them. It is time to review comprehensively on the national level as to why efforts made so far to put the Thar coal reserves to profitable use met with failure. A Chinese company, an American organisation and a local sponsor have at different times shown interest in Thar coal. The factors that jeopardised these attempts need to be analysed. It would not serve any purpose if an international conference is held and the funds mobilised without first identifying the hurdles that have blocked earlier ventures. Once these are identified and a consensus has been developed at the national level on how best to remove them, then alone would it be desirable to call an international conference of investors interested in coal mining and coal-fired power projects.

Thar coal reserve estimates are said to be equivalent to at least 850 trillion cubic feet (TCF) of gas — about 30 times higher than Pakistan’s proven gas reserves of 28 TCF. Other estimates put the reserves equivalent at a minimum of 400 billion barrels of oil — equal to the oil reserves of Saudi Arabia and Iran put together. These estimates have been confirmed by separate bankable feasibility studies conducted by Chinese and Russian experts. It is claimed that by using only two per cent of the existing Thar coal reserves, Pakistan could generate around 20,000 megawatts of electricity for almost 40 years. However, these studies recommend that in the first phase, a modern mine with an annual output of six million tons of coal be developed at Thar to cater to the fuel requirements of a 1,000MW power plant. The capital cost of developing such a mine is estimated to be around $1bn, whereas a total investment of $4bn is required to undertake fullscale coal mining at Thar. With oil at $120 a barrel — or for that matter at even $85 — the capital cost of developing coal mining perhaps wouldn’t pose a problem today if a foreign investor with the right technical expertise is convinced that his margin would be commensurate with the risks involved.

- Editorial, Daily Dawn – Monday April 28, 2008