Monday, November 28, 2016

Black Gold of Thar

Majyd Aziz

Pakistan has been blessed with many resources that could thrust the nation into the ranks of major developing nations, reduce dependence on fuel imports, and provide opportunities for foreign exchange accumulation. Gwadar Port and Thar Coal are destined to be knights in shining armor of the motherland. Pakistan's history manifested a serious lack of urgency in developing these bounties. Pakistan has lost considerable momentum in the march towards economic prosperity due to the lackadaisical attitude towards these two projects. Without attempting to discuss conspiracy theories or indifferent mindset of decision makers or even machination of vested interests, it is sufficient to express the opinion, that for whatever reason, Pakistanis suffered.

Gwadar emerged in real time on the radar after the advent of CPEC and the process is moving at desired speed to enable Gwadar to become the game changing catalyst. Despite reservations of some regional countries, the fact is that fast track development and operation of Gwadar is in motion. Then there is Thar coal.

The conventional wisdom over the past many moons was that Thar coal is an illusion and not a reality. The 175 billion tons of coal reserves and the claims of 100,000 MW for the next two centuries, although over-hyped, were considered as soothing pills for the masses. There were loud whispers that, like the Quixotic misadventure of a nuclear scientist to promote underground coal gasification, the mining of coal and generation of electricity would be a far-fetched dream.

However, a well-defined private-public partnership between the Sindh government and a consortium spearheaded by Engro Corporation has taken the bull by its horns and today the dream is rapidly turning into a certainty. Recently, the Sindh Engro Coal Mining Company (SECMC) hosted a visit of 60-member delegation of energy experts, energy activists, and concerned citizens, including this writer, to Thar. The on-ground visit evaporated the misconceptions, doubts, and perceptions to a large extent.

Mr Shamsuddin Shaikh wears two hats. He is CEO of SECMC as well as Engro Power Gen Thar. He epitomizes the real essence of a gracious host. While briefing the delegation, he stated that since its formation SECMC has come a long way. It completed Bankable Feasibility Studies (BFS) on development of a mine and associated power project in Thar Block II. This was followed by a long and arduous journey to achieving Financial Close of the projects including changing perceptions that people had developed about Thar Coal following false starts of development during 1990s and early 2000s. SECMC finally achieved financial close in April 2016 and since then has made remarkable progress and remains on target to complete the projects by June 2019.

There are 13 Blocks within 9,000 square km and SECMC was allocated Block II that contains 1% of Thar coal reserves. This Block has exploitable reserves of 1.57 billion tons and can produce 5,000 MW for 50 years. He disclosed that the heating value, sulphur content, ash, and moisture are comparable to coal mines in Gujarat, India and Hambach, Germany.

The overarching question is whether this mine would be able to provide the required coal to the planned power plants at the mine mouth. Mr Shaikh explained that in 2010, when SECMC completed the initial BFS for 6.5 mtpa, it was decided that it was only a beginning. A conceptual study done by RWE Germany showed that the mine could be expanded up to 22 mtpa. At this size, the mine can cater to 3960 MW of generation capacity. During the development of the project, SECMC has kept updating its knowledge base on expansion. A study was undertaken by DADI Institute China for the expansion of the mine up to 7.6 mtpa to provide coal for the upcoming power plants.
The current approved power plants at the mine mouth are Engro Power Gen Thar power plant of 330X2 mw alongwith HUBCO 330X1 and ThalNova 330X1 who would be supplied coal supply by SECMC. The encouraging news is that three more power plants would be announced shortly. Moreover, Lucky Electric Power recently announced that its upcoming power plant at Bin Qasim would be based on Thar coal because the government has stopped the setting up of new power plants based on imported coal.
The good news coming out of Thar has instilled a bright ray of hope. A trip to the area of activity changes the entire perception many have about Thar coal. The road to Thar is world class, something that one would not expect to find in interior Sindh. The SECMC complex is very efficiently secured, is purpose-built, and is superbly administered. The EPC Contractor is the China Machinery Engineering Company and thus over 400 Chinese are diligently working to meet the targets.
As is usually the case, much ado is created regarding the displacement of Tharis, the critical environmental issues, and the avowed mindset of pseudo-socialists who cannot digest the fact that private sector is concerned about corporate social responsibility and not just profits. SECMC had put paid to this hullabaloo by structuring a Corporate Social Responsibility program that can be termed as a pioneering initiative unheard of previously in Pakistan.
Mr Shaikh, who is leading the project since 2012, is gung-ho about the CSR initiatives undertaken by SECMC. The CSR theme of SECMC is "Towards a Better, Brighter Thar". The company vision is "SECMC, together with its partners and the Government of Sindh, will work to provide its communities with improved quality of life and a better, brighter, and prosperous future for its coming generations". In his presentation, he highlighted the various social projects and, at times, he sounded more like a social activist rather than an enterprising technocrat. The Thar Foundation envisages five areas of CSR activity. These are health, education, livelihood support, infrastructure development, and social preservation.
The Marvi Mother and Child Clinic, that at present provides free medical services and medicines to over 2,000 patients every month, will soon become a 70 bed hospital managed by Indus Hospital. It has covered 100% school going children of Block II from Hepatitis while more than 4,000 people vaccinated under the community vaccination coverage. SECMC and The Citizens Foundation will establish school campuses in each taluka of Tharparkar. The first campus, in Islamkot, would commence in 2017 with atleast 1,000 students.
The company has set up and will continue to place reverse osmosis drinking units in all the community settlements so that Tharis would be able to drink and use quality water instead of the brackish water consumed now. The Green Park has been established with over 150,000 locally grown saplings and this process would keep on continuing. Mr Shaikh informed that for every tree felled, SECMC plants ten trees against the obligated three saplings. A very noble environmental protection gesture. This writer was also invited by Mr Shaikh to plant a tree.
Another laudatory initiative is social preservation. SECMC plans to restore archeological sites that are a part of the rich Sindh history. Moreover, it has collaborated with Sindh Endowment Fund to sponsor and produce a Coffee Book that is a pictorial tribute to Tharparkar and indigenous people of Thar.
A very impressive and highly appreciated project is the resettlement of residents of displaced settlements. SECMC is building custom-designed villages where each home, costing over Rs 3.50 million each and depicting the local architectural heritage, would be handed over to the displaced persons. Initially, 171 such homes are envisaged. Masjids, Temples, community centers, common Otaqs, water tank towers, bus stands, markets, and milk collection centers, etc are part of the resettlement scheme.
The company has assiduously pursued the program to provide meaningful employment to the denizens of the area. At present, nearly 1,000 of them are working on various jobs. Thus, a positive social paradigm shift has evolved for these residents. Most of the drivers of trucks, dumpers, and shovels are locals and the salary they earn is beyond their imagination.
A pertinent concern is that the feasibility plan of the proposed power plants has a clause that in case of shortage in coal supply, they would resort to utilizing imported coal. It is like taking coals to Newcastle! Would this not give credence to the negative reports that full supply may not be possible from SECMC in the short run? Mr Shaikh explained that since mining at this scale is being done for the first time in Pakistan, banks and investors in power projects required an alternative source of fuel to be available in case the mine is unable to fulfill its obligation due to any reason. However, this condition is no different from any other power project where plants are required to show alternative source of fuel. Thus, to make these projects bankable, the government allowed these plants to run on imported coal as a backup during periods of mine unavailability or downtime.

Thar coal, like Gwadar, will definitely be the game changer and the engine to drive Pakistan on the avenues of self-dependency, social quality, and economic prosperity. The 220 million citizens are waiting for the electricity generated from Thar coal to light up their homes, roads, and the industries. On a personal note, my company introduced imported coal in Pakistan and our determined efforts enabled cement mills to convert to imported coal. Nevertheless, as a patriotic Pakistani, I am substantially convinced that Thar coal is indeed the savior of Pakistan. A piece of Thar Coal is now in my Archives. Mr Shamsuddin Shaikh very aptly commented, "'It is your destiny to change the destiny of people of Thar.' This was the advice given to me by my President while assigning me to this job."

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