Thar Coal and Pakistan's Energy Security

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Thar Coal and Pakistan's Energy Security​

Energy security has been a pipe-dream for Pakistan, with the country facing numerous economic and energy crises over its history. At its core, the issue revolves around failure to tap into domestic sources of energy in a way that benefits the country's economy.

In this episode, Uzair talks to Amir Iqbal about Thar Coal and its potential to improve Pakistan's energy security. While coal is indeed a dirty fossil fuel with environmental challenges, it is a cheap source of energy for many developed and developing countries in the world. Pakistan has failed to utilize its own coal deposits, meaning that the share of coal in the country's energy mix remains miniscule. Given today's global energy crisis, it is important for Pakistan to responsibly tap into its own coal resources to produce cheap power, which is critical to promoting economic and export competitiveness. But this does not mean ignoring the environmental challenges either, and a balanced, measured approach is necessary.

Amir was appointed as the Chief Executive Officer of Sindh Engro Coal Mining Company and Thar Foundation on 8th October 2021. He has over 27 years of experience in general management and has led various teams in sales and marketing function across Pakistan, Australia, and Africa.

In his prior roles he has served as the Chief Executive Officer for Engro Agritrade, Chief Commercials Officer for Engro Fertilizer and CEO & Managing Director for Bayer Pakistan. He also served as the adjunct faculty at the Lahore School of Management Sciences (LUMS).

 

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@farok84

 

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@VCheng Sir, I urge you to watch this podcast whenever you are free.

 

[VCheng]

@VCheng Sir, I urge you to watch this podcast whenever you are free.

I will, thank you. My concerns remain mainly the long term financial viability of exploiting Thar coal given Pakistan's historical (mis)management, compared to the potential security offered by a domestic energy resource.

 

[Bilal.]

I will, thank you. My concerns remain mainly the long term financial viability of exploiting Thar coal given Pakistan's historical (mis)management, compared to the potential security offered by a domestic energy resource.

Bro you are shifting the goal post.

 

[_NOBODY_]

I will, thank you. My concerns remain mainly the long term financial viability of exploiting Thar coal given Pakistan's historical (mis)management, compared to the potential security offered by a domestic energy resource.

Unless solar energy becomes cheaper than coal in our country, I don't see any alternative to Thar coal. Hydro power plants will help a lot but they can't match the endless potential of Thar coal. I was incredibly intrigued by the idea of connecting the Thar coal to our seaports via rail links in order to export it and according to Amir Iqbal, the guest in the podcast the process of transporting lignite coal via rail and sea is quite safe.

 

[VCheng]

Bro you are shifting the goal post.

Not really. I have said this all along, but I remain open to evaluating the results as they accrue over the longer term. I am encouraged that Phase 1 is off to a good start, but then again, many such projects do so in the beginning before things catch up.

Unless solar energy becomes cheaper than coal in our country, I don't see any alternative to Thar coal. Hydro power plants will help a lot but they can't match the endless potential of Thar coal. I was incredibly intrigued by the idea of connecting the Thar coal to our seaports via rail links in order to export it and according to Amir Iqbal, the guest in the podcast the process of transporting lignite coal via rail and sea is quite safe.

Pakistan's energy needs are such that any effective solution will need to take advantage of just about every modality available, not just coal, or solar.

 

[Bilal.]

Not really. I have said this all along, but I remain open to evaluating the results as they accrue over the longer term. I am encouraged that Phase 1 is off to a good start, but then again, many such projects do so in the beginning before things catch up.

We used to debate that Thar coal will remain buried, then it won’t be expanded beyond 660MW, to now shifting the goal post to it’s long term viability.

Also, phase 1 was done years ago. We are already nearing phase 2 conclusion of block 2 and phase 3 is being planned for next year/ year and a half and top of that a whole different block (block 1) is close to completion along with the 1320MW power plant.

So, we are well past the phase 1 already.

 

[VCheng]

We used to debate that Thar coal will remain buried, then it won’t be expanded beyond 660MW, to now shifting the goal post to it’s long term viability.

Also, phase 1 was done years ago. We are already nearing phase 2 conclusion of block 2 and phase 3 is being planned for next year/ year and a half and top of that a whole different block (block 1) is close to completion along with the 1320MW power plant.

So, we are well past the phase 1 already.

When the project was initiated, it was not cost effective to exploit. I am not sure that that has been shown to be incorrect. It is still early days for the resource, in relative terms. The financial basis and its effects still are a cause for concern.

Pretty much still the same goal posts on the same tilted playing field financed with Chinese "persuasion".

 

[Bilal.]

When the project was initiated, it was not cost effective to exploit. I am not sure that that has been shown to be incorrect. It is still early days for the resource, in relative terms. The financial basis and its effects still are a cause for concern.

Pretty much still the same goal posts on the same tilted playing field financed with Chinese "persuasion".

It was backed by bankable feasibility done by RWE of Germany, how have you concluded it was not cost effective to exploit?

Bankable Feasibility Lignite Deposit

The Government of Sindh in Pakistan assigned RWE to prepare a bankable feasibility study to international standards, in order to explore the economic potential of the Thar desert lignite resources and facilitate financing of the project by investors.

www.rwe.com

Right now the Thar power plant is third on the merit order of power plants, meaning it’s the 3rd cheapest to produce electricity (see below link). So your assertions are not well founded.

https://ntdc.gov.pk/ntdc/public/uploads/services/meritorder/2022/August/Merit%20order%20wef%201st%20aug%202022.pdf

 

[VCheng]

It was backed by bankable feasibility done by RWE of Germany, how have you concluded it was not cost effective to exploit?

Right now the Thar power plant is third on the merit order of power plants, meaning it’s the 3rd cheapest to produce electricity (see below link). So your assertions are not well founded.

https://ntdc.gov.pk/ntdc/public/uploads/services/meritorder/2022/August/Merit%20order%20wef%201st%20aug%202022.pdf

Do you know the assumed PKR exchange rate for those initial studies, for starters?

 

[Bilal.]

Do you know the assumed PKR exchange rate for those initial studies, for starters?

Do you see the August-2022 merit order? It’s beyond feasibility now. Its per real operating expense.

 

[VCheng]

Do you see the August-2022 merit order? It’s beyond feasibility now. Its per real operating expense.

Fair enough. Let us see how meritorious the order appears to be in the long term. I can wait.

 

[ghazi52]

Energy security should be one of the priority for Pakistan,

 

[farok84]

@farok84

Hi,

Thanks for the tag.

The first priority should be given at converting our existing Coal-fired Power Plants, so that they can utilize Thar Coal (Lignite), before even considering to export (obviously Engro or other mining companies, will want license to export, specially at current spot rates, and it can earn us some Forex, but will it really help us lower our per unit generation cost?).

At the moment, our 3960MW generation is dependent on imported coal (bituminous), converting them to utilize Thar's will help us save much needed forex, fuel cost and lowering down of overall per unit charges.

https://ntdc.gov.pk/ntdc/public/uploads/services/meritorder/2022/August/Merit%20order%20wef%201st%20aug%202022.pdf

Power Division has initiated a feasibility study to convert these three power plants (which can be technically achieved within a year, if we can find, relatively easier, alternate power solutions to cover for plant-wide/ phased shutdowns, but, much more complicated and worrisome, capacity payments/ take or pay related issues), hopefully we will have some clarity in future months.