Contextualizing the energy crisis in Pakistan. With a rising population and an expanding economy, Pakistan’s energy needs have outpaced its national energy supply. Exacerbating the demand-supply gap is Pakistan’s unsustainable power generation fuel mix, which contains a high share of oil-based power generation up to 32%, resulting in high cost of electricity production. Moreover, there is a heavy reliance on imported fuels which results in constant depletion of foreign exchange and insufficient control over the fuels supply chain. This inappropriate fuel mix leads to energy losses at each level of the value chain and inadequate recoveries lead to power outages, unaffordable electricity and circular debt.
Due to this inefficiency, over 51 million people are left with no electricity. In the last 5 years, with just a mere 2% net installed capacity growth, the power plants have not been able to catch up with the GDP and population growth indicators. In recent past, there has been a 5,000-7,000 MW shortfall in the country during peak hours, which has resulted in almost 8-12 hours of load shedding in various parts of the country. The sustainability of Pakistan’s power sector would only be possible if we utilize indigenous resources to produce cheap power and the power distribution system is improved by controlling electricity theft, inefficacy and improvising recoveries.
About Coal Reserves in Tharparkar
Thar coalfield, located in Sindh Pakistan, is bounded in the North, East and South by India, in the West by flood plains of the Indus River. Town of Islamkot, a population center, is 44 km to the West of the mining project site in Thar coalfield. The Thar coalfield was discovered in 1991 by Geological Survey of Pakistan (GSP) and the United State Agency for International Development bearing 6th largest coal reserves in the world – approximately 175 billion tons – enough to meet Pakistan’s current energy shortfall and meet fuel requirements for centuries, relieving the country of the prevalent energy crisis.
Bankable Feasibility Study (BFS) was developed by Sinocoal International Engineering Research & Design Institute of China, RWE of Germany, SRK (UK) and Hagler Bailly, Pakistan in 2010, for a Mine capacity of 6.5 Mt/annum. The study concluded that the project is technically, commercially, environmentally and socially feasible. In 2012-13 RWE amended the original Feasibility Study for the Mine size of 3.8 Mt/annum, which was done to reduce the capital cost of the overall project.
In 2012, RWE also developed a Competent Person Statement (CPS) for the Lignite Resources in Thar Block II, confirming that the total resources in Thar Block II are 2.039 Bn tons of which 1.57 Bn tons are mineable.
Tackling the energy crisis through Public-Private Partnership
To provide incentives for the development of local coal and encourage mining and power projects in the region, the Govt. of Pakistan through the ECC approved a number of incentives for such projects in October 2010. These included declaring Thar Coalfield a Special Economic Zone, ensuring a guaranteed return for the project investors of 20-20.5%, and exemption of various taxes and levies.
Thar Coal Project was the vision of Shaheed Mohtarma Benazir Bhutto and it has always remained one of the top priorities of the People’s Government. In 2008, after the 18th Amendment, GoS undertook a bold step and formed Sindh Engro Coal Mining Company (SECMC) – a Joint Venture Agreement (JVA) between Government of Sindh (GoS), Engro Energy Limited (formerly Engro Powergen Limited) and its Partners namely; Thal Limited (House of Habib), Habib Bank Limited (HBL), Hub Power Company (HUBCO) and China Machinery Engineering Corporation (CMEC). Houlinhe Open Pit Coal Mine, subsidiary of SPI (State Power International) Mengdong (SPIM), formerly CPIM, has joined the SECMC board as strategic investor with preference shares’ subscription.
Formation of SECMC was to develop Pakistan’s first open-pit coal mine in Thar Block-II. GoS invested US$ 110 Million as equity, but did not remain a silent investor in the project – in order to finance the USD 845 Million mining project, GoS provided the back stop to the US$ 700 Million Sovereign Guarantee issued by Govt of Pakistan. Furthermore, Government of Sindh got the Thar Coal Mining and Power Projects included in CPEC early harvest projects which allowed Chinese financing for these projects. But, all of this wasn’t enough to turn the Thar dream into reality. Key infrastructure including hundreds to kilometres of road network including the new Thatta-Sajawal bridge on river Indus, a world-class airport in Islamkot, LBOD Fresh water supply scheme for providing water to mine-mouth power plants in Thar and the 50 Cusecs Effluent Disposal Scheme were developed, financed and constructed by Government of Sindh at a cost of USD 750 Million.
SECMC was created with the vision “to develop a technically and commercially viable Coal Mining Project in Thar Block – II to bring energy security to Pakistan”. The total reserves of block II are sufficient to support 5000MW of energy for 50 years; enough to pull the country out of the energy crisis.
The total allocated area of 95.5km2 has been leased to SECMC for 30 years, further extendable to another 30 years for extraction of coal. The approximate project cost for the 3.8 Mt/annum coal mine is expected to be USD ~845 Mn with a construction timeframe of 42 months. However, SECMC is ahead on the completion schedule of the project by about 5 months and under the projected cost by a margin of 10%.
Mining activities at Thar Block II
The total planned mining capacity of the project will be 20.6 MT/annum with a capacity to scale it to 30.4 MT/annum while the power generation capacity is projected to be 3,960 MW at full capacity. The mining project is planned to be executed in 5 phases with phase I to be completed by December 2018 and Phase II commenced thereon. In the first phase, the Mine is being developed for a capacity of 3.8 MT/annum whereas the construction of two 330 MW sub critical coal fired power plants have been completed; out of which 1st unit was successfully synchronized in March 2019 and the 2nd on April 2019. In the second phase the mine will be further expanded to 7.6 MTPA and additional 2 x 330 MW of power will be added whereas in the third phase Mine will be expanded to a capacity of 15.2 MT/annum with an additional power generation capacity of 1,320 MW. Similarly, in the fourth phase the mine will be expanded to a capacity of 22.8 MT/annum with additional 1,320 MW added to the system while in the fifth and final phase Mine is expanded to its full potential of 30.4 MT/annum with additional 1,320 MW added into the system bringing the combined total to over 5,000 MW of power generation through Thar coal from Block II.
Alhamdulillah, the relentless efforts of Sindh Government finally reached fruition on June 10th 2018, when Sindh Engro Coal Mining reached the first seam of Thar Coal at a depth of 141 meters.
Generating power to address the energy shortfall
On 1st August 2018, EPTL made history by successfully connecting the power plant with national grid to receive back-feed power supply for plant start up. The next part of this dream achieved when electricity from the first unit was successfully pumped into the system by Engro Powergen Thar (Private) Limited (EPTL), realizing the nation’s dream of producing electricity through Thar coal. EPTL tested and energized the first unit of 330MW of the combined 660MW power plant – located in Thar Block II.
The injection of the electrons produced for the very first time from Thar coal has redefined Pakistan’s energy landscape and secured the country’s energy future on an indigenous, native footing which will eventually relinquish Pakistan’s dependence on foreign fuel mix.The COD is expected to be achieved by May/June 2019.
Empowering and uplifting communities in Thar
Thar Foundation has been established as a Section 42 Company under the Securities and Exchange Commission of Pakistan (SECP) framework with an objective to improve the lives of the underprivileged communities living in Tharparkar district of Islamkot in the Sindh province of Pakistan. The Foundation aims to improve live for these people through graduated and sustainable interventions by adopting the UNDP’s Sustainable Development Goals framework to ensure that Islamkot becomes SDG-compliant by 2024 – six years ahead of the global timeline for SDG implementation
Since these goals are a universal call-to-action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity, the Thar Foundation has adopted these Global Goals with a vision to uplift the communities in Thar and usher in a new era of peace and prosperity. By adopting the SDG Framework, the Thar Foundation has divided these 17 Global Goals into three key categories: Overarching Goals; Prioritized Goals and Advocacy Goals.
For the first time in Pakistan, inhabitants of the project area have been made Project Beneficiaries by the Government of Sindh. This has been achieved by diluting 3% of the Government’s shareholding for the Project Affected Persons who will become shareholders in the project. In addition, as part of the SGD framework, the Foundation continues to work on key impact areas such as education; health; livelihoods; gender equality; water and women empowerment amongst other focus areas.
In the area of education, the Thar Foundation has established 24 school units which it runs in collaboration with The Citizens Foundation and the Charter of Compassion. The schools together provide functional schooling experience to over 4,000 children., Moreover, the Foundation is sponsoring the adaptation of the 3-Language curriculum whereby students will be taught in their native language – Sindhi – first and later graduated to Urdu and English languages as medium of instruction Other achievements by the Foundation in education includes founding four adult literacy centres in the area, signing an agreement with IBA to offer 100% scholarship to Thari students, collaborating with Higher Education Commission to establish a world-class NED campus at Islamkot for Thari youth. Both, HEC and NED, have principally agreed on it and further development is under way.
The Foundation is also focused on providing quality healthcare to the people of Thar. It has established a free-of-cost healthcare clinic for residents of block II, which is managed by the Indus Hospital. A second clinic was inaugurated at Gorano in July 2018 Together both these clinical interventions continue to provide quality and free of cost healthcare to residents in and around a radius of approximately 90 kilometers of Block II. Additionally, the Foundation is setting up an 82-bed state of the art hospital in Islamkot in collaboration with GoS and Indus Hospital. The 82-bed hospital will be commissioned by middle of 2019 whilst it will be expanded to a 250-bed the subsequent year.
The Foundation promotes sustained, inclusive and sustainable economic growth in Tharparkar by providing full and productive employment opportunities and decent work to locals. To date, 3303 Tharis out of total workforce of 4399 – approximately 75% – are employed at the projects, whereas over 1000 Tharis have been trained for various technical skills under the Khushaal Thar initiative of Thar Foundation. In addition, to train the next wave of Thari graduates 75 Tharis have received on-job training at the project and are currently in training in China. Moreover, another program titled Thar Associate Engineering Program is operational and provides technical training to select candidates from Thar at the Technical Training College in Daharki., Another program – Thar Information Technology Program – has been instituted in collaboration with the Saylani Institute in Karachi where approximately 25 students are currently under training to become Android & mobile Application Developers. Khushaal Thar Driving School, initiated by the Thar Foundation, is training approximately 700 male & female students from Thar and adjoining areas to become professional truck and heavy vehicle drivers
Thar Foundation is also cognizant of its duty to Thar’s ecology and to this effect has signed an agreement with Hashoo Foundation to develop Gorano as an ecotourism spot with an enhanced focus on commercialization of Moringa plant to develop livelihood opportunities for locals whilst also contributing to the natural flora of the desert environment. The Gorano reservoir has not only been developed into a recreation spot for the locals but also boasts successful fish-farming experiments on bio-saline water.
The Foundation also ensures availability and sustainable management of clean drinking water and other livelihood facilities for all. This is being achieved through installation of 12 RO plants and supply of clean drinking water to communities in and around Block II and Gorano.
Another flagship program that is receiving acclaim from both local and international quarters is the Women Dump Truck Driving Program. Under this program the Foundation is promoting gender equality and ensuring women empowerment at all levels in Islamkot. The Women Dump Truck Driver Program has uniquely trained 26 of Thar’s females to drive 60-Ton heavy dump trucks, while another program the Khushaal Naari focuses on developing enterprise and go-to-market opportunities for females across Thar.
In the area of infrastructure development, the Foundation is working to promote inclusive and sustainable industrialization and foster innovation. Priority is given to local vendors, who have received contracts worth over PKR 1 billion. Meanwhile, over 100 local vendors have been developed and registered in the area.
Under its environmental conservation and care for climate initiatives, Thar Foundation is working to make Thar Block II a plastic free site and distributes re-usable cotton bags among workforce as an alternate to plastic. Another significant campaign for the betterment of the environment is the Thar Million Tree project which aims to plant 1 million trees across Thar by 2019. To date through various drives and interventions the Foundation has planted over 300,000 native plant saplings.
Some of the key achievements of Thar Foundation include:
• Thar Foundation (TF) is a section 42 company working for development of Tharparkar
• TF has set up 24 school units with a capacity of 5,000 students – As of Aug 2018, 3000 students already attending these schools
• Next year we plan to work with GoS to take-over 50 Government schools in Islamkot Taluka
• Within 5 years 100% of all Schools in Islamkot will be operated by TF
• In Healthcare, TF has a set up two Mother and Child Health Facilities in Block-2 & Gorano area. Lady doctor, Sonologist, EPI service, Lab Tests and medicines are being provided free of cost. Block-2 is now TB free area. By Dec this year the block will become Hepatitis Free.
• By June 2019, a 250 bed Thar Foundation hospital will start its first block with 82 beds.
• A Mobile health clinic service will start functioning in Islamkot by Dec this year
• To create gainful employment for Thari females, Women Dump Truck Drivers Training Program has been launched. 26 women have completed training of dump truck driving. By mid 2018 another 150 women will be trained to drive dumpers in coal field. These women will earn a minimum salary of Rs 25,000 / month.
• 75 Engineers of Sindh have been sent to China for a 6-month training program to operate coal based power plant. Next year these engineers will take charge first power project on Thar coal
• Experiments of biosaline agriculture and biosine aquaculture have proved successful. Next year these models will be scaled up with the support of Sindh Agriculture University, Karachi University and Pakistan Agriculture Research Council
• More than 600 local drivers have been trained and employed at the Mine. An exclusive Drivers Training schools has been established to train another 500 drivers next year. These drivers are earning up to Rs 35,000 per month
• Under the Khushhal Thar Training Program, more than 900 Thari youth have been trained on technical and vocational skills. Another 500 will be trained in the coming year. With the support of STEVTA Thar Foundation will adopt and manage Polytechnic college of Mithi to start a series of diploma courses to train a large number of Thari youth
• 12 RO plants have been installed in Block 2 and Gorano area to benefit more than 10,000 people
• Under the Thar Million Tree Project, more than 350,000 trees of local species have been planted. Next year another 300,000 trees will be planted
• With the support of GoS a Master Plan of Islamkot City is being developed. Execution of the plan will start next year.
• GoS, Thar Foundation and UNDP are working together to develop Islamkot as first SDG accelerated model taluka of the country by 2024. GoS plans to handover all schools, health facilities and RO plants of Islamkot to Thar Foundation to bring sustainable change in the lives of local communities.