Challenges related to Thar rail link: LEPCL seeks Leghari’s intervention

ISLAMABAD: The Lucky Electric Power Company Limited (LEPCL) has sought the intervention of the Power Minister to address transitional challenges related to the Thar rail link in order to mitigate operational and tariff risks.

In a letter to Power Minister Sardar Awais Ahmad Khan Leghari, LEPCL Chief Executive Officer Ruhail Muhammad referred to a discussion held on December 16, 2025, during which critical issues concerning the Thar Rail Link Connectivity Project and its alignment with coal supply arrangements for LEPCL were discussed.

According to the CEO, the government’s recent policy decision to evacuate Thar coal through Pakistan Railways under the Inland Coal Transportation Agreement (ICTA) represents a structural shift from the earlier truck-based logistics framework envisaged by LEPCL. While the company supports this policy direction, it has sought ministerial intervention to address certain transitional challenges to mitigate operational and tariff risks.

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Highlighting key concerns, LEPCL stated that Segment-I (106 km) of the Thar Rail Link was awarded to the Frontier Works Organisation (FWO) in October 2024 and is expected to become operational by mid-2026. However, Segment-II (11 km), including a common unloading station, has not yet commenced as approval of incremental PSDP funding—bringing the total project cost to approximately Rs90 billion—is still pending. This delay poses a risk to the availability of a complete end-to-end rail corridor.

On mine expansion alignment, LEPCL noted that Sindh Engro Coal Mining Company (SECMC) has commenced Phase-III mine expansion, adding 3.6 million tonnes per annum. Partial supplies have already begun, with deliveries expected to ramp up from March 2026 and reach full production by the third quarter of 2026. The company warned that the non-readiness of rail infrastructure could constrain coal evacuation during this period.

Addressing operational risks, LEPCL said that in the absence of Segment-II, rail-based coal evacuation would require interim unloading and double handling, resulting in higher costs and handling losses. Moreover, the lack of a truck-loading fallback facility at the mine poses risks to supply continuity.

The company further noted that despite the rail infrastructure being funded through PSDP, the freight rates currently quoted by Pakistan Railways are marginally higher than the truck-based transportation costs embedded in existing tariffs. LEPCL is therefore evaluating international rail freight benchmarks for comparable corridors, adjusted for local conditions, to ensure that the transition to rail logistics delivers tangible tariff efficiencies for consumers.

LEPCL has sought the Power Minister’s guidance to establish effective inter-agency coordination among the Power Division, Pakistan Railways, PPIB, Thar Coal Energy Board (TCEB), SECMC, and independent power producers (IPPs). The company has already taken up the matter with PPIB, which has convened a coordination meeting to deliberate on the issue. Additionally, LEPCL has requested the Power Minister to ensure interim truck-loading arrangements at the mine until full rail connectivity is achieved, facilitate the recognition of multi-modal coal logistics within applicable contractual and tariff frameworks, and expedite the approval and execution of Segment-II.

“Early resolution of these matters will be instrumental in avoiding supply disruptions, optimising consumer tariffs, and realising the full economic value of the Thar coal value chain,” the CEO said, seeking the Minister’s direction on the way forward and continued support in coordinating the matter among stakeholders.

Copyright Business Recorder, 2025