Federal and Sindh government will jointly establish Thar Coal Mining Company to develop coal as 'strategic national asset' under the Energy Security Action Plan to minimize the impact of expensive energy on national economy, sources said. Sindh had been assured a 'large amount' as coal royalty, besides cheap electricity through foreign investments to be attracted by the proposed mining company.

The company will encourage independent power producers to commission power plants on Thar coal. Power and Natural Resources Ministry and Sindh government would be partners of the proposed company which would be formally approved by the National Economic Council's Executive Committee soon, they said.

On commencement of physical activities on mine development, Private Power and Infrastructure Board would invite proposals to set up 1000MW power plant. In case of poor response, government will direct Water and Power Development Authority to commission first power plant, a well-placed source said.

According to the source, the company will produce and market the planned quantity of coal and its products efficiently and economically keeping in view safety, conservation and quality. The company will operate as per market requirements maintaining at the same time financial viability to meet resource needs.

Besides, the company will acquire and develop available cost-efficient clean coal technologies to harnessing Thar coal for other uses like liquefaction, co-generation and extraction of high unit value chemicals. It will also develop an open cast mine on an evaluated coal block(s) at Thar, supplying minimum 6 million tons annually to 1000 MW power plant(s).

Share of coal will also be enhanced in total energy mix from 7 % to 20 %. Thar Task Force will facilitate development of infrastructure and commissioning of coal projects in Thar.

The ministry informed the higher authorities that a coal mining company having verifiable experience for the proposed open cast coal mine, would be selected through international competitive bidding. The company will be assigned to develop the mine on turnkey basis.

Inadequate institutional setup, lack of focus, harsh climatic conditions, challenging conditions and location disadvantage are hindering foreign direct investment in coal mining in Sindh, official sources said. Power shortfall due to these reasons will affect growth rate of Pakistan .

Other reasons include absence of industrial support services, large capital needed for integrated coal mining and power generation, lack of professional expertise in developing large open cast mine and commissioning power project, absence of authentic data on hydrology budget, unfamiliarity with new cost-efficient and clean coal technologies and undeveloped human resources.

Looming power shortfall will affect targeted growth rate of Pakistan , particularly due to the above mentioned problems facing the government in attracting foreign investment in coal mining, officials said.

Ministry of Petroleum and Natural Resources has informed higher authorities promotional activities and fiscal incentives could not attract international companies to set up integrated coal mining and power generation projects, said the sources.

According to the sources, the ministry conceded that Pakistan had no mechanized coal mining industry and trained human resources to be developed within the country to harness huge coal reserves in the country, 175 billion tons of which existed in Thar alone. It said coal production in Pakistan stood at 5 million tons per year, and to achieve the targets set under the Energy Security Action Plan, 120 million tons needed to be mined for generation of 2000MW of power by 2030.