There is more to Thar coal than power

In the ongoing economic and political crises, it is heartening to see a few institutions thinking ahead. Thar Coal and Energy Board (TCEB) in Sindh is one of them. Within a decade or so, the myths that Thar coal is of inferior quality, that the sulphur content is too high and that the moisture is an insoluble problem have been exploded. Out of the 13 blocks identified for development, coal has been successfully mined in two, used in producing over about 1000 MW of power and supplied to the national grid as the third cheapest source. At the end of this year, it is estimated to rise to 2600 MW. While the capacity of the two blocks has not exhausted, the TCEB brought together stakeholders and experts from all over the country on last Wednesday in Karachi to seek advice on opening up more blocks and explore new, non-power uses of coal. Other than the POL products, the big and unmanageable import bill includes $2-3 billion import of coal as well. In addition to the coal-based power projects, the major consumer is the cement industry. This industry is suffering from increasing cost of imports. Interestingly, the cement industry has also been importing moisturised coal from Indonesia. Drying at mine mouth reduces cost of transport and producing cement at mine mouth saves transport cost and caters to its ashes needs almost free. Urea is another big ticket item.

All this information will help TCEB move away from the inefficient cost-plus pricing to more competitive pricing. This is necessary to avoid a re-play of the Sui gas story of a never-ending cheap source of energy, with people optimising the use of match sticks by keeping the heat on continuously. Mercifully, the neglect of the people of Sui is not being repeated in Thar as the rights and the needs of the locals, without any discrimination witnessed elsewhere in the Islamic Republic, seem to be receiving due attention. The people of Thar come first, declared the Sindh energy minister in his concluding remarks.

Transporting coal is a business that requires a fresh look. Diesel-using trucks are prohibitively costly. Rail links to transport coal from the minefields to other parts of the country do not exist. It is an open secret that the railways have been systematically destroyed in the unending process of the elite capture of the state. A promise by the federal government at the highest level to link Thar by rail has not gone past the PC-I preparation stage. With the austerity imposed by the IMF programme, there is little to hope for. The subject of railways is in Part II of the Federal List in the Constitution. The Government of Sindh could legitimately go ahead on its own or in the public-private mode. It will be surprised by the returns that would flow back.

With Pakistan among the leaders to have placed the Loss and Damage financing facility on the agenda of COP27, should the country be going all out for “dirty” coal? While this scheme of things can take years to take shape, coal is all that Pakistan has to reduce dependence on an increasingly uncertain world. It must, however, use modern technologies of mitigation. As an expert pointed out at the meeting, burning coal should be out of question. Cleaner coal energy is possible. All alternatives should be explored in deciding future investments. As a regulator, TCEB has to face up to the challenge of coming up with a pricing formula that would incentivise such investments.