Sindh CM’s letter regarding SECMC: Year-long dormant 3-member panel activated

ISLAMABAD: A three-member ministerial panel has become active after a year-long delay following a letter from Sindh Chief Minister Murad Ali Shah regarding the Phase-III mine expansion of the Sindh Engro Coal Mining Company (SECMC), sources told Business Recorder.

The panel — Deputy Prime Minister and Foreign Minister Senator Ishaq Dar, Minister for Economic Affairs Ahad Khan Cheema, and Minister for Power Sardar Awais Ahmad Khan Leghari — has begun deliberations on various proposals submitted by the Sindh Chief Minister.

On October 2, 2024, Murad Ali Shah wrote to the Prime Minister, seeking federal support for SECMC’s Phase-III expansion. In response, the Prime Minister formed the three-member committee on October 7, 2024. However, the matter remained unresolved over the past year.

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The Sindh Engro Coal Mining Company (SECMC), a joint venture between the Government of Sindh and Engro Energy (along with its affiliates), has been at the forefront of developing the Thar coalfield. The company has played a pivotal role in transforming Thar into a strategic domestic energy source for Pakistan.

According to the Sindh Chief Minister, SECMC currently produces 7.6 million tonnes per annum (mtpa) of coal to supply 2x330 MW, 1x330 MW, and 1x330 MW power plants operated by Engro Powergen Thar Limited, Thar Energy Limited, and ThalNova Power Thar Limited, respectively—all located at the mine mouth.

The proposed Phase-III expansion aims to increase capacity to 11.4 mtpa, enabling an additional 3.8 mtpa coal supply to Lucky Electric Power Company Limited.

However, the Chief Minister highlighted several challenges SECMC faces in achieving Financial Close (FC) for the project: (i) SECMC had anticipated achieving Financial Close by December 2024, with the Commercial Operation Date (COD) planned for Q4 2025. Meezan Bank Limited had approved a financing term sheet worth Rs 26 billion, but prior approval from Chinese lenders involved in the Phase-I and Phase-II required by SECMC remains pending.

The primary concern of these lenders is the macroeconomic situation, particularly when Government of Pakistan has sought re-profiling of power sector loans; (ii) Chinese lenders are also concerned about high outstanding receivables of SECMC amounting Rs 70 billion from IPPs (circular debt), as SECMC collection is around 90% since the COD; (iii) even with a 90% collection rate, receivables are projected to increase to Rs 150 billion over the next five years following the completion of Phase-III, which would jeopardize the entire project’s financial viability; and (iv) failure to achieve FC by December 2024 would cause the SECMC to miss the TCEB-mandated Phase-III CoD deadline of September 30, 2025. This delay would result in financial losses of USD 5 million per month, making the entire project unsustainable.

In light of these challenges, the Chief Minister had requested the Prime Minister’s support in the following areas to ensure the successful progression of Phase-III: (i) the Phase-III approval must be fast-tracked through the Joint Cooperation Committee (JCC) to ensure early approval by the Chinese lenders, particularly the China Development Bank (CDB); and (ii) the CPPA-G should implement a dedicated mechanism to promptly resolve outstanding receivables as well as current billing. This step is essential to acknowledge the critical role; the Thar coal plays as a domestic fuel source.

Copyright Business Recorder, 2025