Islamabad: China has offered to provide $900 million for mining and setting up power plants after the refusal of International Financial Institutions (IFIs) to extend financing to develop Thar coal reserves, whereas the decision is seeking a guarantee from the federal government in order to go ahead with the offer.
This was stated by Shamsuddin A Shaikh, Sindh Engro Coal Mining Company (SECMC) Chief Executive Officer (CEO).
He said that the SECMC required $1.2 billion for the Thar coal mining and power projects, which IFI was not ready to extend due to environmental issues and Pakistan’s credit history.
“China is the only country which is ready to extend financing but it wants a guarantee from the federal government to list Thar coal among the top 3 to 4 priority projects,” said Shaikh, adding that Chinese banks were ready to extend $900 million, out of which local banks would provide $300 million.
He further added that the government of Pakistan should include the Thar coal project in the Pak-China Economic Corridor project.
“All new conversion projects based on imported coal should be subject to blending with Thar coal at 20% at least to scale up mining at Thar,” he said.
Shaikh said that Pakistan’s power sector suffers from shortages as well as an expensive energy mix.
Pakistan’s power generation stands at 16,000 MW, which is currently short by around 5,000 MW, and will worsen as power requirements increase to 26,000 MW by 2020.
“Import of coal is very risky as its prices cannot be predicted, coupled with our currency devaluation which would again take us back to the current unsustainable position.”
“Among the four established quality measures of coal which are heating value, sulphur, Ash and moisture content, Thar coal is superior in three quality aspects as compared to lignite currently being used in Germany, India and Bulgaria for power generation,” he added.
He said that the SECMC was a joint venture with the Sindh government, which owns 51% of the share while SECMC owns 49%.