Pakistan Coal Mines and Resources

Pakistan's largest coal reserves are found in Sindh with approximately 184,123 million
tonnes.

Coal (million
Region
tonnes)

Sindh: Lakhra, SondaThatta, Jherruck, Thar, others 184,123

Punjab: Eastern Salt Range, Central Salt Range, Makerwal 235

Baluchistan: Khost-Sharig-Harnai,Sor Range/Degari, Duki, Mach-

617
Kingri, Musakhel Abegum, Pir Ismail Ziarat,Chamalong

Grand total 184,575

http://en.wikipedia.org/wiki/Pakistan_Coal_Mines_and_Resources

According to the 2010 BP Statistical Energy Survey, Pakistan had end 2009 coal reserves of
2070 million tonnes, 0.25% of the world total.
Pakistan had 2009 coal production of 3.49 million tonnes.
Pakistan had 2009 coal consumption of 4.3 million tonnes oil equivalent, 0.13% of the world total.
Recently, the discovery of low-ash, low-sulfur lignite coal reserves in the Tharparkar (Thar)
Desert in Sindh province, estimated at 1,929 Mmst, has increased both domestic and foreign
development interest.

http://www.mbendi.com/indy/ming/coal/as/pk/p0005.htm

Thar coal Reserves

If All The Oil Reserves of Saudia Arabia & Iran Are Put Together These will be
Approximately 375 Billion Barrels,But A Single Thar Coal Reserve Of Sindh is about
850 Trillion Cubic Feet,Which is More Than Oil Reserves Of Saudia & Iran.

These reserves estimated at 850 trillion cubic feet (TCF) of gas, about 30 times
higher than Pakistan's proven gas reserves of 28 TCF.

these reserves of coal worth USD 25 trillion not only cater the electricity
requirements of the country for next 100 years but also save almost four billion
dollars in staggering oil import bill.

Just 2% usage of Thar Coal Can Produce 20,000 Mega Watts of Electricity for
next 40Years,without any single Second of Load Shedding.
The coal power generation would cost Pakistan PKR 5.67 per unit while power
generated by Independent Power Projects presently cost PKR 9.27.

It Requires Just 420 Billion Rupees Initial Investment,Whereas Pakistan Receives

annually 1220 Billion from Tax Only.

Chinese and other companies had not only carried out surveys and feasibilities of this
project but also offered 100 percent investment in last 7 to 8 years but the
“Petroleum Gang” always discouraged them in a very systematic way.

This Petroleum lobby, is very strong in Pakistan and they are against any other
means of power generation except for the imported oil.

This lobby is major beneficiary of the increasing oil bill that is estimated above 15
billion dollar this year.

http://www.friendskorner.com/forum/f39/thar-coal-reserves-pakistan-133024/

Pakistan Coal Production and Consumption by Year (million tons)

year production consumption

198
1.91 2.181
0
198
1.88 2.238
1
198
2.14 2.782
2
198
1.96 2.473
3
198
2.12 2.772
4
198
2.39 3.124
5
198
2.33 3.326
6
198
2.38 3.378
7
198
3.01 3.914
8
198
2.89 3.875
9
199
3.03 4.025
0
199
3.18 4.254
1
199
3.39 4.473
2
199
3.39 4.595
3
199
3.54 4.751
4
199
3.35 4.55
5
199
3.82 4.746
6
199
3.85 4.912
7
199
3.82 4.818
8
199
3.49 4.547
9
200
3.41 4.459
0
200
3.67 4.86
1
200
3.65 5.39
2
200
3.61 6.684
3
200
5.06 8.702
4
200
5.37 8.504
5
200
5.55 8.31
6
Source: United States Energy Information Administration

http://www.indexmundi.com/energy.aspx?
country=pk&product=coal&graph=consumption

CENMENT INDUSTRY:

Pakistani cement makers say, they expect to increase sharply their imports of South
African coal during the financial year beginning July because of the shortage of
Indonesian material.

The rise in demand is expected to boost already strong prices for South African coal
because supply is limited for the rest of this year, producers and traders said.

the country is likely to import 4 million tonnes of coal. If there is a shortage of

Indonesian, then maybe most of this will have to come from South Africa.

"We did not expect there to be a shortage of Indonesian coal. China, we knew, has
stopped exporting. We will have to buy more South African coal even though it is at
least $5 more expensive than Indonesian."

Pakistan relied on cheaper Indonesian and Chinese coal for almost all of its import
needs in 2006.

"We almost had to shut down our plant because of problems with Indonesian supply.
But we were able to get South African coal instead.

The coal buyer of another large Pakistani cement maker was actively seeking offers
of South African coal for delivery from July onwards and complained there were too
few suppliers offering to Pakistan.

ASIA OFFSETS FALL IN EUROPEAN DEMAND

Demand from India for South African coal this year has more than compensated for
the lack of demand from Europe, which takes the vast majority of South Africa's coal
through long-term contracts.

India could take 10 million tonnes in spot cargoes of South Africa's likely 67 million
tonnes of 2007 exports, up from three million tonnes last year.

A surge in Indian buying, led by cement makers, helped to push prices of prompt
South African coal cargoes from $46.00-$47.00 a tonne, excluding freight and
loading from Richards Bay, in January to $55.00 in early June.

Some suppliers estimate that 750,000 tonnes has been booked for delivery to
Pakistan between April and September.
Pakistan imports 3.5-4.00 million tonnes a year of coal, which is used as a fuel and
raw material in cement production.

Increased cement production is expected to fuel further growth in coal demand over
the next few years, said an official of the All Pakistan Cement Manufacturers'
Association (APCMA).

The Pakistani government's planned public sector development programme will

increase domestic demand for cement, he said. In addition, Pakistani cement makers
are expecting to increase their export sales to India.

Expected profit growth has boosted share prices of Pakistani cement makers such as
DG Khan and Lucky Cement Ltd.

http://en.in-en.com/article/News/Coal/html/200706152616.html

The Geological Survey of Pakistan organized a workshop on the Coal, Granite and other Mineral
Resources of Thar on May 31, 2005 at Karachi in collaboration with Sindh Coal Authority.
Workshop was well attended by eminent geoscientists from all over the country. This event was
dedicated to Dr. N. M. Khan and Dr. Farhat Hussain, former Director Generals of the department.
The Secretary Ministry of Petroleum & Natural Resources was the chairman and the Sindh
Minister for Mine and Minerals Development, Mr. Irfan ullah Marwat was the Chief Guest.
Pakistan is faced with a serious energy crises. It is widely known that the present level of energy
generation in the country is far short of that which is necessary to sustain the rate of industrial
growth and satisfy growing consumer requirements. In the energy based societies of today, every
indigenous source of energy must therefore be tapped and put to optimum use. Pakistan has
considerable oil, gas, coal reserves; tidal, solar and hydel potential. It is ironic that Pakistan has
fourth largest coal reserves in the world but it is importing 2.5 million tons of coal per annum for
cement industry. At the same time, due to high cost of energy resources, the government has
also decided to enhance the share of coal in the overall energy mix from 5 % to 18% up to 2018.
Among the other alternative sources, coal is the man source for producing cheaper electricity and
its availability is much higher. In view of anticipated shortfall of electricity and other energy
resources during the next 10 years, demand for indigenous coal would grow in power generation
considerably.

Pakistan has emerged as one of the leading country - seventh in the list of top 20 countries of the
world after the discovery of huge lignite coal resources in Sindh. The economic coal deposits of
Pakistan are restricted to Paleocene and Eocene rock sequences. Economists say that the
energy demand over the next 5 years is expected to grow at a rate of 7.4 % per annum. It may be
noted that in India the share of coal is as high as 54.5% in the total energy mix. To meet the
future requirements of the country with indigenous resources, domestic exploration would have to
be intensified to increase the share of coal from 5 to 25% by 2020. The GSP’s workshop provided
a platform to highlight the role of the indigenous resources in the national economy especially in
energy and industry.

Coal -the black gold, is found in all the four provinces of Pakistan. Country has huge coal
resources, about 185 billion tons, out of which 3.3 billion tons are in proven/measured category
and about 11 billions are indicated reserves, the bulk of it is found in Sindh province. The current
total mine-able reserves of coal are estimated at 2 billion tones (60 % of the measured reserves).
The speakers at this moot enlightened the audience with the importance of Thar coalfield and its
development and utilization as less expensive fuel for power generation and other process
industry. Because of Thar coal’s extraordinary importance for power generation, industrial
development and economy, Sindh government and GOP are making all out efforts to develop this
huge deposit for power purpose. It is one of the world’s largest lignite deposits discovered by
GSP in 1992, spread over more than 9, 000 sq. kms. comprise around 175 billion tones sufficient
to meet country’s fuel requirements for centuries. Pre-feasibility study to utilize this coal resource
for 2x300 MW indigenous, mine mouth, coal fired power plants has been completed.
Hydrogeological investigations over an area of around 650 sq. kms. have also been completed.
Estimated lignite deposits in Sindh, suitable for electric power generation and other applications
are around 218 billion tons- about 98% of coal deposits of the country. A feasibility study on coal
gasification has been undertaken and the gasification of coal was found feasible where the gas
has to travel less in pipelines. Exploration of Thar coal will supplement the existing energy output
in the country and will give boost to the economy of Sindh province. The GSP had successfully
completed coal resources evaluation in the four specific tracts/ blocks of Thar coal field. The
evaluation study of the GSP consisted of drilling 167 bore holes with a cumulative depth of over
50, 000 meters and chemical analyses of more than 2, 000 coal samples. On the basis of these
studies, the required coal potential of a minimum of 500 million tons in each block has been
established by the GSP. The recent studies on coal bed methane (CBM) proposed to be carried
out in Thar will enhance the value of this deposit.

The GSP has met the challenge of identifying the coal resource available to meet the energy
needs, to reduce dependence on its fast depleting supply of natural gas and lessen the oil import
bill. This workshop focused on technological developments with respect to coal exploration,
extraction, handling, transportation and utilization that could accelerate future development of
Pakistan’s coal. It is hoped that GSP’s workshop will be fruitful in determining whether
institutional, infrastructural and policy changes are needed to encourage exploitation of
indigenous coal resources and would evaluate potentially attractive business opportunities
associated with further coal development in the country. The workshop was attended by an
assorted audience comprising earth scientists, city planners, government functionaries and
researchers. A brief on coal deposits of Sindh compiled by S.G.Abbas and Muhammed Atiq was
also distributed on this occasion among all the delegates.

http://www.gsp.gov.pk/resources/seminars2.htm

Pakistan spends billions of dollars annually to meet its primary energy requirements. Oil and POL
import bill is expected to further increase due to inadequate gas supply and price of crude oil
remaining high. The fact that higher crude oil price is rendering local industries uncompetitive
needs no analytical elucidation. While the GoP is making efforts to make it obligatory, for the
industries, to switchover from oil and gas to coal, the objective cannot be achieved without
announcing a comprehensive Coal Policy and investing heavily in infrastructure development.

Historically, coal has been used as a major source of energy for hundred of years. The industrial
revolution and enhanced use of electricity was also due to coal. Until sixties, coal was the single
largest source of primary energy. Large discoveries of oil and gas resulted in massive switchover
from coal to furnace oil and gas. However, once again there is a shift back to use of coal as a
major source of energy. Many developed and developing countries have already reverted back to
coal. The transition is being facilitated by Clean Coal Technologies and availability of coal at
competitive price.

While efforts are being made to shift back to coal for power generation and cement
manufacturing, use of coal in other processing industries is also on a constant increase. It is
estimated that the share of coal in global electricity generation now exceeds 37 per cent.
Therefore, Pakistan, having some of the largest and superior quality coal reserves of the world,
must also initiate the transition. Cement industry, being energy intensive, can be the largest
beneficiary of this transition. Similarly, power generation sector can also become a major user of
coal and optimize cost per kwh.

Theoretically, while the switchover offers many advantages, the transition should not be difficult.
However, the real issue is availability of coal in large quantities at point of consumption.
Production of coal has remained stagnant in Pakistan mainly due to its low demand/consumption.
At present, coal is mainly consumed by the brick-kiln sector. Out of around 3 million tonnes of
coal produced annually, nearly 80 per cent is consumed by kilns. Other than this, only Lakhra
power plant of WAPDA is based on indigenous coal. According to sector experts production of
coal can be increased to 8 million tonnes per annum with the existing resources and
infrastructure.

Indigenous coal

The discovery of coal in Balochistan during the late 18th century led to its commercial utilization
mainly by North-Western Railways during the colonial regime. During fifties coal constituted 50
per cent of total energy consumption. Up to mid sixties the major consumers of coal were
railways, cement, fertilizer and power plants. The availability of furnace oil and discovery of Sui
gas field became instrumental in switching over to these fuels. It is unfortunate that instead of
capitalizing on usage of coal and constant improvement in coal technology, policy makers chose
to encourage use of imported furnace oil. Therefore, production of coal has remained stagnant
mainly due to poor demand for the commodity.

At present total coal reserves of Pakistan are estimated around 185 billion tonnes. These include
lately discovered huge deposits of low sulphur coal at Thar. The indigenous coal reserves vary in
moisture, carbon, sulphur and ash contents. The local coal fall in the lignite and sub-bituminous
categories. Coal from Lakhra and Sonda fields of Sindh has relatively higher moisture, sulphur
and ash contents. As oppose to this, Thar coal having an estimated reserves of 184.6 billion
tonnes is much superior in quality due to low sulphur content and higher heating value.

Coal mining

Coal mining is one of the oldest industries of Pakistan. It assumed new heights in fifties when
cement, fertilizer and other process industries became major users of coal. This led to an
increase in production from 0.7 million tonnes/annum in 1959 to 1.4 million tonnes/annum in
1968. Until discovery of natural gas, coal was meeting 50 per cent of country's total energy
requirement. The boom in construction activities in eighties provided new impetus and coal
production touched 3.14 million tonnes in 1989-90. Since then annual coal production has
remained stagnant between 3.2 to 3.5 million tonnes per annum.

COAL PRODUCTION
(000 tonnes)
. 1994- 1995- 1996- 1997- 1998- 1999-00
95 96 97 98 99
Balochistan 1,565 1,798 1,828 1,574 1,671 1,681
Punjab 413 515 425 366 479 454
Sindh 1,023 1,278 1,238 1,165 1,250 985
NWFP 42 47 62 54 61 46
Total 3,043 3,638 3,553 3,159 3,461 3,166
Though coal mining is undertaken at all the four provinces, Pakistan has not been able to
exploit the real benefit of huge reserves of the commodity. One of the reasons for this is
poor demand for coal. The mining sector in each province is faced with peculiar set of
issues ranging from higher cost of production to lack of infrastructure. The cost of mining
per tonne not only varies from province to province but also varies within each province.
Main reasons being different mining methods, level of application of technology and
variations in working depths of mines. Despite the fact that coal found in Balochistan is
superior in quality, it is expensive due to mines being deeper and steeper. The overall
mining cost can be reduced by upgrading the present technology used in coal mining.
This requires heavy capital investment. The payback of this investment can be reduced by
achieving higher production. Demand for coal can be increased by making its use
obligatory for various industries.

Another important area which needs massive investment is the infrastructure for coal
transportation. At present, coal from mines is transported mostly by road. While railway
lines passes through or near the coal fields, slow and outdated system coupled with
limited availability of railway wagons are the key issues faced by the miners and the
ultimate coal using industries. Therefore, transportation infrastructure requires urgent
development to facilitate the coal mining industry to cope with increased demand for coal
in future.

Shift back to coal

As stated earlier importance of shift back to coal needs no elucidation. The question is
how quickly and efficiently coal can be utilized by the process industries. The switchover,
to coal, is largely dependent on uninterrupted supply of processed quality coal. However,
the situation is, 'chicken or egg first'. Miners are not willing to increase coal production
unless there is a demand and processors are not willing to undertake switchover unless
there is adequate supply of coal. According to sector experts, demand for coal can be
increased by making its use obligatory for cement manufacturing and power generation.
This has to be done according to a programme whereby cement plants are given three
years and power plants are given five years to make the complete transition. This also
requires incentives for the mining sector to ensure higher coal production. Both, the coal
miners and the coal users, should be allowed duty free import of requisite plant and
machinery to avoid front loading of the projects.

According to a report prepared by Experts Advisory Cell of Ministry of Industries and

Production cement industry could be the first and the largest beneficiary of this transition.
In the past, Wah, Rohri, Dandot and Daud Khel cement plants were using coal. Therefore,
these units have past experience of using coal and switch back does not pose too
problems. One of cement plants in Sindh, Dadabhoy Cement, is in the process of
transition and experience has been satisfactory to a large extent.

The utilization of indigenous coal by cement industry seems attractive simply on the basis
of cost per tonne of clinker produced. To produce one tonne of clinker a cement plant
uses 850,000 kcal, using any type of fuel. Since the heating value of furnace oil is almost
double than that of local coal — a cement plant uses 88 kgs of furnace oil whereas it will
use 170 kgs of coal. According to the Report, use of coal will translate to a net saving of
Rs 491 and Rs 415 per tonne of clinker for the cement plants located in the North and
South respectively.

At present, there are 23 cement plants with an installed capacity of 16.5 million tonnes per
annum operating in the country. However, capacity utilization is around 63 per cent due to
a number of factors — higher cost and low offtake being the two main reasons. Cement
industry is highly energy intensive and fuel cost constitute about 30 per cent of the total
cost of cement manufacturing. Based on the total installed capacity, furnace oil
requirement comes to 1.5 million tonnes per annum. However, based on the actual
capacity utilization, furnace oil requirement is estimated at slightly less than one million
tonnes per annum. If all the cement plants switcheover to coal and capacity utilization
remains the same, the industry will be able to save over Rs 5 billion annually. Not only this
there will be huge saving of foreign exchange currently being spent on import of furnace
oil.

Saying this much, it is also important to take into account two factors: 1) investment
required to by the cement industry to switchover from furnace oil to coal and 2)
uninterrupted supply of quality coal at cement plants. According to the Report this
investment has 12 to 18 months payback period and should be a valid reason to undertake
the switchover. However, the second factor is very crucial. Not only that coal production is
low, the existing infrastructure is highly inadequate to ensure uninterrupted supply of
processed coal to ultimate users.

Cement plants can either buy coal in raw form and then process it to suit their demand or
buy processed coal from a coal processing and distribution company (on the pattern of
existing gas transmission and distribution companies). The first option is not
economically viable. Therefore, establishment of coal processing and distribution
companies seems to be a better option — also offering economy of scale and cost
optimization.

Sindh coal

The province of Sindh posses around 99 per cent of the total coal reserves of Pakistan.
These are located at Lakhra, Sonda, Badin, Metting and Thar. The Lakhra field in District
Dadu, covers an area of over 1,309 sq. kms. However, exploration activities are confined to
an area around 500 sq. kms. The coal seams have been developed at the depth of 50 to
150 meters. Annual production from this field is estimated at about 2 million tonnes per
annum.

The Sonda field covers 1,822 sq. kms. and coal seams are at a depth of 16 to 240 meters.
The field comprises of four blocks: 1) Sonda-Thatta Block, 2) Jherruck Block, 3) Ongar
Block and 4) Indus East Block.

Badin field has been discovered recently. Geological features indicate that Badin coal field
may extend towards Indus East block of Sonda field.

Metting is the smallest field covering only 90 sq. kms. in District Thatta.

The Thar field, one of the largest coal field in the world, is spread over an area of about
10,000 sq. kms. in District Tharparkar.

Thar coal

Incentives

According to some sector experts, to ensure greater use of coal by various industries, the
GoP should follow 'carrot and stick policy'. Cost optimization is the carrot and obligatory
use is the stick. In the past, cement industry had switched over from natural gas to
furnace oil, only because the government refused to supply gas to cement plants. The
same policy can now be followed to switchover from furnace oil to coal. However, this
time the transition is difficult. Handling and using furnace oil is much convenient than
coal. Since this switchover is the need of cement industry, the willingness is there but the
only apprehension is uninterrupted supply of quality coal at cement plants.

Since the GoP will be the largest beneficiary of this switchover, it should provide
incentives to the coal miners as well as the cement industry. To avoid front-loading of the
projects, the GoP should abolish import duty on coal mining and related handling
(transport and storage) equipment and requisite plant and machinery to be installed at
cement plants.

The Sindh government should also convince the federal government to allow
establishment of at least two coal-based power plants of 500MW each at/around Karachi.
This is the need of the hour because KESC has a dependable capacity of 1300MW only as
against a peak demand of over 2000MW. This can be done by following a bidding process
based on price per kwh and by following an amended Power Policy.

Environmental impact

The presence of impurities and mineral matters in coal leads to the formation of various
pollutants during combustion having adverse environmental impacts when emitted into
the atmosphere. The major environmental aspects that are associated with use of coal are:
the formation of pollutants such as fly ash, sulphur oxides, nitrogen oxides, carbon
monoxide and other mineral matters. However, the Clean Coal Technologies have been
designed to enhance the thermal efficiency of coal, reduce emissions and waste and make
coal environmentally acceptable. Therefore, use of coal by utilizing modern technologies
does not create the havoc as it used to create in the past.

According to sector experts, most of the equipment required to facilitate use of coal can
be manufactured locally. As far as the existing oil-fired burners are concerned, these can
be modified or the new multichannel burners can be manufactured by HMC and KSEW
under licence agreement with the leading manufacturers. If HMC/KSEW acquire the
engineering design, they can supply the same to entire cement industry at competitive
prices.

Global scenario

World coal consumption, despite decline in some regions, has been on a constant
increase. The countries that have witnessed increase in coal consumption include the
United States, Japan and many developing countries in Asia. Coal is mostly used for
power generation, steel production, cement manufacturing and other process industries.
However, half of global coal production is used for power generation.

Conclusion

Crude oil price is expected to remain high due to the policy followed by OPEC. Since
Pakistan has no other alternative except to make use of coal obligatory by process
industries, the GoP must announce a comprehensive Coal Policy immediately on the basis
of report prepared by the Experts Advisory Cell. The policy should address the following
points:

* Duty free import of required plant and machinery

* Establishment of coal processing and distribution companies
* Allocation of funds for upgrading infrastructure
* Allocation of special funds for exploitation of Thar coal
* Establishment of coal-based power generation plants

WORLD COAL CONSUMPTION

* World coal consumption is projected to increase to 7.6 billion tonnes in 2020

* Coal use in developing countries of Asia alone is projected to increase by 2.4 billion
tonnes
* China is projected to add an estimated 180 gigawatts of new coal fired power generating
capacity (600 plants of 300 megawatts each) by 2020 and India approximately 50 gigawatts
(167 plants of 300 megawatts each)
* The coal share as a percentage of total energy consumed worldwide for electricity
generation is projected to decline from 36 per cent in 1997 to 34 per cent in 2020.

Source: International Energy Book 2000

COAL BENEFICATION

Coal preparation, commonly known as coal benefication, is the process of cleaning,

gradation and preparation of uniform coal suitable for commercial consumption. Effective
preparation of coal, prior to use, improves homogeneity of coal, reduces transport cost,
improves utilization efficiency, results in less ash production and more importantly
reduces emission of toxic gases.

There are various technologies globally used for preparation of coal. While Pulverized Fuel
technology is in use in cement industry, other technologies, though having significant
application in power plants and other industries are more expensive. The various
technologies is used for the preparation of coal are:-

* Pulverized Fuel (PF) technology

In this process, coal is reduced to fine powder form, stored and then transported by air to
the burner as coal air mixture for combustion.

* Fluidized Bed Combustion (FBC) technology

In this method coal is added to the bed of heated particles and continuous mixing
encourages complete combustion at a lower temperature then pulverized fuel technology.

* Coal Gasification (CG) technology

In this process coal is brought into contact with steam and oxygen and thermo-chemical
reactions produce fuel gas. This process is mainly used in power generation and is a
costlier method of fuel preparation.

* Coal-Liquid-Mixtures (CLMs) technology

These include the coal-oil-mixture and coal-water-mixture. These are costly technologies.
The disadvantage of coal-oil-mixture is that 60 per cent of the total energy is derived from
oil.

* Coal-Briquetting (CB) technology

In this process coal is compacted for use, transportation or further processing. The main
purpose of briquetting is to convert low grade coal into compact mass having higher
calorific value.

CONSUMPTION OF VARIOUS FUELS

(Per tonne of clinker)

Fuel Heating Value Fuel quantity
Furnace oil 9,700 kcal/kg 88kg
Natural gas 7,700 kcal/M3 110M3
Local coal 5,000 kcal/kg 170kg

COST PER TONNE OF CLINKER

Fuel Fuel quantity Rate Cost

Furnace oil 88kg Rs 11,370/tonne Rs 1,001
Natural gas 110M3 Rs 490/M3 Rs 539
Local coal (South) 170kg Rs 3,000/tonne Rs 510
Local coal (North) 170kg Rs 3,450/tonne Rs 586

http://www.pakistaneconomist.com/database2/cover/c2001-41.asp

Pakistan’s energy sector needs long-term sustainable policy

If we analyse the financial and economic impacts of the current years load-shedding
the cost could be up in the billions. The demand for electricity is growing at an
average rate of 9.5 per cent per annum over the past four years and a stagnant
power supply and growing demand has created severe power shortages in the
country

By M. Osman Ghani

Coal energy: In Pakistan, coal reserve is estimated at 185 billion tons, which,
according to Dr. Akram Sheikh (ex-Deputy Chairman, Planning Commission) is
equivalent to at least 400 billion barrels of oil, in other words equivalent to the oil
reserves of Saudi Arabia and Iran combined. According to the vice chancellor of
Punjab University, Professor Dr. Mujahid Kamran, these coal reserves equal to 618
billion barrels of crude oil. At $50 per barrel this asset is worth up to $30.0 trillion
and equivalent to more than 187 times of Pakistan’s current GDP. By using only two
per cent of these colossal reserves we can generate around 20,000mw of electricity
for almost 40 years.

Coal is found in all the four provinces of Pakistan, Tharcoal being one of the biggest
coal mines in the world, it would turn out to be a less expensive fuel for power
generation and other process industries. To achieve a share of about 20 per cent in
the energy-mix by 2030, the existing efforts to exploit coal, are not enough.
The government, as a first step, has addressed the challenges of identifying
availability of coal resources to meet the energy needs of the country and reduce
dependency on its fast depleting supply of natural gas and oil. Currently, the share of
coal in the overall energy-mix is only 7.4 per cent while in India; the share of coal is
more than 60 per cent. At present, about 53 per cent of the total coal production in
the country is being utilised in the brick kilns industry and the second major coal
consumption industry is cement.

Overall, energy is the single most important input for rapid socio-economic
development and national prosperity. It is the basic requirement for driving the
engine of growth up to the desired level. This is the reason for rapidly growing
economies like China, Russia, Brazil and India are doing all it takes to increase their
energy supply. With the rapid growth of China’s economy, its production and
consumption of energy is also increasing significantly. The output of coal which is
China’s primary source of energy was equivalent to 2.37 billion tons in 2007, while
consuming 2.65 billion tons, making China the second largest energy user in the
world. With the accelerated development of industrialisation and urbanisation in
China, and the intensified integration of the global economy, it has assigned top
priority on energy supply issues.

To meet her growing energy demand China has made a comprehensive plan to
improve both energy availability and an energy-mix. Presently, coal provides 70-75
per cent of the energy in China. It plans to increase the share of alternative energy
to 15 per cent and that of nuclear energy to 5 per cent in its total energy mix. The
present shares in the energy mix for India are: coal 60 per cent, hydro power 20 per
cent, oil and gas 11 per cent alternative 6 per cent and nuclear 3 per cent. It also
aims to increase the share of nuclear and alternative energy in the overall energy
mix. The country is making an all out effort to increase the share of nuclear energy
to 6 per cent by 2025 and boost the capacity of other renewable sources of energy
from six to ten per cent in the energy mix by 2025. It is also planning to establish
coal powered-power stations with zero emissions for the long run in collaboration
with some advanced countries; it presently also has a million solar installations
operating in her vast rural areas.

According to some estimates, Pakistan’s demand for electricity by the year 2015 will
be nearly 22 per cent greater than the anticipated supply. By 2030 this energy deficit
will be 64 per cent. These are threatening figures and estimations especially when
Pakistan needs to jump start the economy as fast as possible. If we analyse the
financial and economic impacts of the current years load-shedding the cost could be
up in the billions. The demand for electricity is growing at an average rate of 9.5 per
cent per annum over the past four years and a stagnant power supply and growing
demand has created severe power shortages in the country, ranging between 4,000
to 5,000mw.

If adequate attention and appropriate investment is made, Pakistan can also achieve
rapid progress in its energy sector, in the line of target propounded by Vision 2030.
The existing lower price of crude oil in fact, provides a unique opportunity to rapidly
develop Pakistan’s energy sector. Crude oil price in the international markets have
come down to such a low level (around $40 per barrel at present) that it can be
termed as a windfall, especially for oil importing countries. A few months ago, the
price curves of crude oil and refined oil were rising steeply, shaking the macro
economic foundation of most non-oil producing countries including Pakistan. Looking
at the POL import bills of Pakistan during FY08 and FY09, we see that in FY08 POL
imports at $11.38 billion which constituted 28.5 per cent of the total imports. In
FY07 the POL imports at $7.34 billion which constituted 24.0 per cent of the total
imports. During July-December of the current fiscal year, the imports of POL at
$5.88 billion constituted 30.7 per cent of the country’s total imports. Due to lower oil
prices at present Pakistan will have to pay less during the second half of FY 09, and if
this trend persists for a short-term it will give a real benefit to the country. Now, if
during FY09 the import bills come down say by $2 billion from $11.4 billion in FY08,
due to lower crude oil prices, this $2 billion may be termed as net saving. Pakistan
may strive to invest this net savings for the rapid development of its energy sector.
A sub sector-wise priority list of energy could be prepared and the net savings of $2
billion invested accordingly in addition to PSDP allocation. Fortunately, Pakistan has a
number of readily exploitable energy heads and if even 50 per cent of it is utilised
Pakistan could be a net exporter of energy to other neighbouring countries within a
decade. Apart from accelerated development of oil, gas and hydel potential three
most potential energy areas namely coal energy, nuclear energy, which is renewable
energy need urgent attention,

Renewable energy: Pakistan has a huge reservoir of renewable sources of energy

including biomass, wind energy, solar energy and ocean tidal power in the vast
coastal areas of Sindh and Balochistan. During the fiscal year 2005-06, the
government of Pakistan initiated several new projects on renewable energy. It
approved a number of recommendations under the Energy Security Action Plan in
2005-06 including development of wind and solar energy to ensure that at least 5
per cent of total power generation capacity is met through these resources by 2030.

For windmills, potential areas are Karachi, Thatta Quetta, Jiwani, Hyderabad and
other areas on the coastlines of Sindh and Balochistan. Two-thirds of Pakistan’s 170
million populations live in its villages. For them, local-energy sources hold a great
promise. Pakistan’s wind power potential is estimated at 20,000 megawatts but no
major break through has yet been made. On the other hand, Germany is generating
18,000 megawatts, Spain 8,000 megawatts and the United States 7,000 megawatts
using their wind power. Pakistan needs to make an all-out effort to push forward its
wind energy programmes. The same applies to solar power. The county’s
government has also chalked out a comprehensive plan to expand nuclear power
generation capacity to 8,800mw by the year 2030 and to minimise capital costs;
Pakistan Atomic Energy Commission (PAEC) is planning to build multiple units on the
same site. For manufacturing of nuclear fuel, the PAEC is establishing a Pakistan
Nuclear Power Fuel Complex (PNPFC).

If the country is to be successful in its motivated plans for economic progress,

quality of living has to be increased, followed by optional utilisation of indigenous
energy resources especially coal and renewable. Pakistanis must get serious about
their future energy needs. A well defined mission, a vision strategy and going for
renewable and clean coal energy options would reduce Pakistan’s energy
environmental and economic problems which would improve the socio economic
conditions, and would lead to a better Pakistan for its entire population. For this a
new and vigorous initiative is essential.

http://jang.com.pk/thenews/feb2009-weekly/busrev-23-02-2009/p2.htm