Thar coal mine operation risk disruptions due to LC restrictions

by index360

LAHORE: Pakistan’s energy industry is at a critical juncture as oil, petroleum, gas, and mining industries face major challenges due to the import restrictions and opening of LCs.

According to sources, the Thar Coal mine and power projects are impending doom as critical spare parts and equipment which is needed to continue operations is stuck at the port.

If the equipment is not released immediately, the country could face a shortfall of over 2500 MWs in the coming weeks as the mine which is providing indigenous coal to the power plants may halt its operations.

This will further exacerbate the energy crisis in the country and lead to power shortages as almost 30% of the total energy required in the country gets off the grid. To meet the consumer demands and bridge the energy deficit, the opening and clearance of such LCs should be included in the essential import list and executed on priority basis to ensure continuous operations of the mine which is enabling the production of cheap electricity for the national grid.

“The equipment and machinery for mining operations are stuck at the port and LCs are not receiving the required approvals”, the source added.

This has complicated the operations of the Thar Coal project which provides indigenous coal for energy production to the power plants,” said Syed Saifullah Kazmi, Head of Investment Banking at Intermarket Securities Limited.

He said the company is now facing operational challenges and there is an urgent need for the government’s intervention.

It is to be noted that Sindh Engro Coal Mining Company (SECMC) has successfully achieved a major milestone of completing phase II of its mine expansion on October 10, 2022, and the Commercial Operations Date (COD) for the 7.6 million tons per annum (MTPA) mine expansion has been announced.

“The COD of the Phase II mine expansion is a major achievement for the much-needed energy security for Pakistan,” Kazmi added.

He added that the production output of the mine from 3.8 MTPA to 7.6 MTPA allows an additional 660MW of power generation to the national grid.

“Pakistan is facing massive forex challenges due to hiked prices of imported coal after the Russian-Ukraine war which is around $400-450 per tonne” he said.

This, Kazmi added, calls for the exploitation of Thar coal to its maximum capacity as it can enable 5000 MWs of electricity generation in the coming years, provide savings of approximately $2.5 billion due to import substitutions and reduce the circular debt by more than PKR 100 billion on an annual basis leading to cheaper basket price for the consumers overall.

A strategic, game changer project, Thar Coal mine and power plants must be facilitated on all fronts by the government to ensure the short term and long-term energy security of Pakistan, he added.

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