WITH total estimated coal reserves of over 186bn tonnes, Pakistan ranks sixth among coal-rich countries. Yet, coal’s potential has not been exploited adequately.

Only 3.45bn tonnes of coal reserves are measured, proven and mineable, as their exploration, mining and processing activities have, over time, remained a very low priority. The development of coalmines and related infrastructure has been very slow.

Currently, annual coal extraction is just 3m tonnes, whereas annual consumption is around 9m tonnes; the demand-supply gap is being met through imports.

Globally, coal has about a 40pc share in the total power generation mix. Sadly, it forms less than 1pc of Pakistan’s installed capacity, even though coal is generally suitable for power generation on a commercial scale. The utilisation of indigenous coal for power generation can help overcome the energy crisis.

The Lakhra power station of 150MW (3x50MW) installed capacity at Khanot/Jamshoro is the only coal-fired power plant in the country, which currently operates hardly at 20MW capacity. It is also on the active privatisation list.

Several public and private mining companies are engaged in mining coal from the Lakhra coalfields. However, a lack of institutional framework for coal development and mining management has constrained its further growth

The developed Lakhra coalmine has total estimated reserves of 1,328m tonnes of lignite and sub-bituminous coal, of which 244m tonnes are measured and mineable. Several public and private mining companies are engaged in mining coal from the Lakhra coalfields. However, a lack of institutional framework for coal development and mining management has constrained its further growth.

Lakhra coal is economically viable for large-scale mechanised mining, but the primitive truck- and shovel-mining method is employed for the purpose. Nonetheless, the average annual production, though limited to 1m tonnes, contributes 35pc to the national annual coal output; but only a small amount is being used for power generation.

The Lakhra coalmine is spread over an area of 1,309sq km, out of which 650sq km was dedicated in 1990 for coal-fired power generation when the Lakhra Coal Development Company (LCDC) was formed. The remaining area was given to the Sindh government to lease out to the private sector.

Based on studies by international agencies, Wapda/Gencos had proposed to set up three additional power generating units of 50MW each at the Khanot site. On the advice of consultants, the scheme was later revised to two mine-mouth units of 300MW each. The entire project, however, was shelved to encourage private investment for developing Lakhra coal-based power plants.

In 1995-96, the LCDC leased out mining to the Smith Cogeneration Management Inc., USA, in a joint venture with the Associated Group of Lahore, to set up an integrated coal mining-cum-power generation project of 450MW capacity. But they failed to even deliver a bankable feasibility report.

The Private Power and Infrastructure Board (PPIB) had also issued a Letter of Support (LoS) to the Fateh Textile Group, Hyderabad, for the development of a 200MW integrated mining and power project at Lakhra. But the project did not materialise. Instead, the sponsors resorted to mining coal to the extent of 1,000 tonnes every day, and they have been selling it in the open market for the last 10 years or more.

Habibullah Energy, which has held the lease on Lakhra coalfields for many years, also planned to develop a 150MW mine-mouth power project, but it too did not materialise. The LoI/LoS of the three IPP projects were cancelled.

In view of the poor response from the private sector, the government, through Gencos, had finalised plans in 2013 to develop two 660MW power projects using Lakhra coal. The detailed feasibility for the first unit was prepared by the Japan International Cooperation Agency (Jica), whereas Genco Holding Co. was to prepare the study for the second unit.

Genco had even advertised for the appointment of consultants for the project, which was proposed on the supercritical combustion technology. However, the project was shelved in February 2014 in favour of the Gadani power project.

Thus, the major coal resource at Lakhra still remains unexploited for power generation.

The writer is a retired chairman of the State Engineering Corporation

Published in Dawn, Economic & Business, March 30th , 2015

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