Phase-III of Coal Mine Expansion Project

The phase-III of Coal Mine expansion project in Thar at an estimated cost of Rs 15.8 billion to excavate 12.2 metric ton coal per annum has been approved by Sindh Chief Minister. It is estimated that the third phase will reduce coal price to $27 per ton, making it the cheapest base load fuel in the country and for Central Power Purchasing Agency (CPPA). Overall, the basket tariff would be reduced by Rs0.49/kwh to Rs15.05/kwh by saving to consumers Rs60 billion annually and top of it the Sindh government would earn Rs 10 billion royalty annually. Dating back in 2009, when the journey of Thar Coal was started with a joint venture partnership between the Sindh government and Sindh Engro for development of Thar Coal, a number of challenges were associated with the projects. Yet all the issues were resolved with a successful execution of phase-I of Sindh Engro Coal Mining (SECM) with 660MW in operation from the last two years. The prices of raw material used to produce energy in the country, by LNG was at $35 per MMBTU, and imported coal at $9.7MMBTU, Residual Fuel Oil (RFO) at $12.4/MMBTU and Thar coal at 5.95 MMBTU. This clearly depicts that the cheapest source of producing energy is Thar Coal. ┬áIn the second phase 7.6 Mtpa has been excavated for generating of 1320MW energy and in the third phase after expansion 12.2 Mtpa to be excavated for generation of 1980MW. However, the cost of the first phase was $627 million, while the cost of second phase came down to $216 million and the third phase would come down considerably to $93 million. It is predicted that the phase-III expansion will make Thar Coal the cheapest base load fuel in the country. With the completion of third phase, $420 million forex would be saved annually against the imported coal, that would bring reduction in circular debt of Rs74 billion annually – resulting in 16 percent reduction in rate of rise in circular debt. This will not only help the Sindh government to earn Rs 10 billion annually but will also help to be self-sufficient.