Thar Coal Block-II Phase-III inaugurated as production rises to 11.2 million tons

Pakistan Peoples Party Chairman Bilawal Bhutto Zardari and Sindh Chief Minister Syed Murad Ali Shah on Monday inaugurated the Phase-III

THARPARKAR/ISLAMABAD: Pakistan Peoples Party Chairman Bilawal Bhutto Zardari and Sindh Chief Minister Syed Murad Ali Shah on Monday inaugurated the Phase-III expansion of Thar Coal Block-II in Tharparkar, marking a major development in the country’s efforts to strengthen energy security and reduce reliance on imported fuel.

The latest expansion has increased the mine’s annual coal production capacity from 7.6 million tons to 11.2 million tons, representing an additional 3.6 million tons and a 47 percent increase in production capacity.

The mine is operated by Sindh Engro Coal Mining Company (SECMC), a joint venture between the Sindh government and Engro Energy. Thar Coal Block-II is Pakistan’s first open-pit lignite coal mining project.

The development of Block-II has taken place in phases. Commercial operations under Phase-I began on July 10, 2019, with an annual production capacity of 3.8 million tons. The capacity was later doubled to 7.6 million tons under Phase-II, while the newly inaugurated Phase-III has raised it further to 11.2 million tons annually.

The expanded production is expected to strengthen electricity generation from locally available coal. Different blocks in the Thar coalfield are currently supplying around 2,640 megawatts of electricity to the national grid. The Sindh government has set a target of increasing this contribution to 3,000MW and eventually 3,300MW.

Under the Phase-III expansion, the additional 3.6 million tons of coal will be supplied to the 660MW Lucky Electric Power Plant at Port Qasim in Karachi. The plant, which previously relied on imported coal, is expected to shift completely to locally produced Thar coal.

As a result, power generation associated with Block-II is projected to increase from 1,320MW to 1,980MW, with the additional generation estimated to meet the electricity requirements of millions of households.

One of the key features of the expansion is its financing model. According to the project details, Phase-III was completed through 100 percent self-financing by SECMC and the Sindh government, without relying on foreign or domestic bank loans.

The project is also expected to generate significant savings in foreign exchange. Officials estimate annual savings of around $220 million because of reduced dependence on imported coal, while power generation costs are expected to decline by approximately Rs15 billion annually.

The expansion has also reduced the mine-mouth cost of coal to around $3.75 per MMBtu, making locally produced Thar coal considerably cheaper than imported coal and LNG. The wider Thar coal project has reportedly generated more than $1.7 billion in foreign exchange savings so far.

Alongside the expansion, Pakistan’s first coal drying unit was also inaugurated. The facility is designed to reduce the high moisture content of Thar’s lignite coal and improve its calorific value, potentially increasing its efficiency for power generation.

The government is also exploring future uses of Thar coal, including urea production and coal gasification, to meet industrial requirements.

The project has also had a social impact in Tharparkar. According to the project’s CSR initiatives, 94 percent of the workforce and service providers are from Sindh, while around 60 percent are from Tharparkar itself. Local women have also been trained and employed as heavy vehicle and dumper drivers at the mine.

A 50-bed Mother and Child Hospital is planned in Islamkot, while local families are being provided with free electricity of up to 100 units per month under the social welfare programme.

The Phase-III expansion is being presented as a significant step towards reducing Pakistan’s dependence on imported energy and making greater use of domestic resources.