Thar coal deposits can help country overcome energy crisis: economist

26 Apr, 2022

LAHORE: A total of 175 billion tonnes of coal deposits in Thar can easily make the country self-sufficient in energy without depending too much on imported fuel, said energy economist Ammar Habib.

He said the current global energy crisis had disturbed the pricing equilibrium for various fuels wherein energy planners and the government had failed to proactively manage the same.

According to him, the enhanced volatility in energy prices further strengthens the case for increased reliance on indigenous fuels to avoid an energy and balance of payments crisis. “Energy security is essentially national security,” he added.

Habib said Pakistan was in dire need to exploit indigenous resources for energy production and efforts needed to be accelerated to extract indigenous coal from Thar to generate cheap energy as base load. It may be noted that the imported costly resources have contributed heavily to the country’s ever-expanding current account deficit, and with the volatility in oil prices and chances of further devaluation of rupee against dollar, this situation is all set to worsen not just in coming weeks, but for months and years, till the time a shift towards indigenous resources doesn’t happen.

He said Pakistan should double down on investing in renewable energy and hydel resources as well particularly in utility-scale renewable, while incentives should be given to further promote off-grid renewable solutions.

Ammar was of the view that the government should learn from the past mistakes and explore the viability of extracting more coal from Thar to run the coal fired power plants which will become operational in the next few years.

There needs to be an effort on war-footing to convert existing imported plants to Thar coal, either through usage of blended coal, or other methods - it is estimated that this will save more than $2 billion in imports for the country, while also ensure energy security. Thar coal could help Pakistan significantly improve its energy mix with import substitution, he asserted.

According to him, the present and future governments should focus on connecting Thar to the rest of Pakistan through the Thar Rail Link project, which is the need of the hour and on which considerable work has already been done. Once approved and deployed it will be a step in the right direction for the long term energy security of the country.

It is worth adding here that the Phase-III expansion of Thar Coal Block II Mine to 12.2 million tons per annum has been approved. It is expected to be completed by June 2023, which in turn will reduce its coal price to $27 per ton to make it the cheapest fuel source for the country, thus, leading to economic stability and energy security.

In the long term, the Thar coal project expansion and its outcome will enable Pakistan to save $420 million per annum on account of foreign exchange, while it will result in the reduction of Rs74 billion in circular debt on an annual basis. Therefore, the development of Thar Coal projects is a viable solution to arrest the increasing trade deficit and reduce the country’s reliance on imported fuels.

Copyright Business Recorder, 2022

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