Tharparkar has been in the news for its extreme aridity, poverty, starvation, disease, low literacy and high infant mortality. But the fortunes of the district may be taking a turn for the better.

A $2 billion Sindh Engro Coal Mining Company (SECMC), the biggest project under the ‘game changer’ China Pakistan Economic Corridor is at the heart of the Thari’s welfare.

“Our work force comprises of 1,200 Tharis, besides 800 Chinese employees and 250 workers from other areas” Shamsuddin Ahmad Shaikh, Chief Executive Officer of both the projects — the Sindh Engro Coal Mining Company and the Engro Powergen Thar (Pvt) Limited — told this writer. “We believe that the local community should be the first to partake of any benefits that result from the Thar project”, he asserts.

The SECMC chief informs about the steps taken for local poverty alleviation. “We have set up the ‘Thar Foundation’ in collaboration with companies engaged in Thar coal projects, together with the Government of Sindh, for the betterment of the people of Tharparkar through graduated and sustainable interventions in the fields of education, healthcare, livelihood, infrastructure, social preservation and disaster management”, he says.

It was in 2014, that the Thar Coal Project was included in the CPEC as one of the early harvest projects. The venture comprises of SECMC and its associated power plant, Engro Powergen Thar (Private) Limited (EPTL) — the later will generate electricity through off take of coal extracted from the coalmine. Main sponsors of the power project are Habib Bank Limited; Liberty Power and China Machinery Engineering Corporation (CMEC).

“We believe that the local community should be the first to partake of any benefits that result from the Thar project”

The Thar projects are being financed in the debt/equity ratio of 75:25. The Mining project would cost $900m (revised to $845m in the April 2017 update) while the power arm would need $1.5bn for its construction.

Mr Shamsuddin Ahmad Shaikh proudly proclaims: “It is the biggest project in the private sector in the history of Pakistan and is also the country’s biggest ever public-private partnership”.

In the mining project the Government of Sindh has contributed 54pc of the equity portion, while other joint venture partners are Engro Powergen, Thal Limited, House of Habib, China Machinery and Engineering Corporation (CMEC) and Hubco.

The $1.5bn debt portion in the project would be shared in equal portion by Pakistan and China. While the China Development Bank would level $750m, Pakistani financial institutions in the lead of HBL would extend $750m for the project. “It is the biggest ever debt provided by the local banks to any private sector project in the history of Pakistan”, says Mr Shamsuddin Ahmad Shaikh, which is an indication of the trust and confidence of banks in the project’s prospect.

The CEO acknowledges the support of the provincial and federal governments, without which, he says, it would be difficult for the project to come to fruition. “The strategic importance of Thar Coal projects is recognised across the board and transcends political differences,” states the company’s April 2017 update.

The Sindh Engro Coal Mining Company was established in the year 2009 as a joint venture between the Government of Sindh and Engro Powergen Limited (EPL) with the primary objective of making effective use of the ample coal reserves in the Thar desert to meet Pakistan’s power generation needs, spur economic development and bring energy security to the country, the company says in one of its early presentations.

At its peak, the coalmine would have the capacity to dig out 3.8m tons of coal per annum. The power plant, using the Thar coal, would generate 660MW of electricity per annum. After seven years of diligent efforts, the two projects achieved financial close on April 4, 2016. The project is scheduled to be completed in 38 months — on June 3, 2019.

An April 2017 update about the Thar coal mining and power projects reiterates that the dependence on imported fuel sources is one of the major reasons for Pakistan’s electricity problems. Volatile prices of imported fuel, coupled with the sector’s inability to transfer its cost of production to consumers has given rise to circular debt resulting in serious solvency issues for electrical utilities and OMCs.

Thar contains the world’s 7th largest coal reserves. “With the depleting sources of energy such as natural gas, the Thar projects would provide power to the country through the indigenous sources of Thar coal mine”, says the SECMC chief executive.

The capacity of the power project is 4,000MW. “By 2020, when the power generation from our plant would reach 1,320MW, the cost would drop below the international prices of coal, which would make it the cheapest source of power per unit for the country”, Mr Shamsuddin Ahmad Shaikh affirms.

Published in Dawn, The Business and Finance Weekly, May 1st, 2017