The government is promoting the development of a newly discovered coal field, with estimated reserves of 78,000 million tonnes, in the Thar desert, near the Indian border. A prefeasibility study has shown production could be viable and the government is asking investors to look at the project. It has made an unprecedented commitment to guarantee a purchase price for power produced by the private sector.

The results of preliminary studies of the Thar field show that developing a tract of 50 square kilometres is commercially feasible, experts told a conference in Karachi on 2-3 May. The tract contains between 2,000 million and 4,000 million tonnes of coal and is suited for open pit mining. 'It could be a major source of energy in the future,' says an expert involved in the study.

An estimated investment of $4,000 million-6,000 million would finance the mining work and construction of a 4,000-MW power station to run for 30 years, the study says. The coal find comes at a time when peak local power demand exceeds supply by 2,000 MW. Installed capacity is 9,000 MW, and last year's peak demand was 1,100 MW.

For every kWh produced by the private sector, the government is prepared to pay the equivalent of $0.065, it announced at the conference. The incentive is part of the government's policy to attract private power generation and will apply to all power produced by the private sector, including from Thar coal.

Problems associated with developing the coal field are the lack of infrastructure in the remote Thar desert and long development times required for the project. It will be at least 6-10 years before the first coal is burnt, experts say. Geological Survey of Pakistan (GSP) is to carry out further studies on the tract, involving the drilling of 10 more holes to test coal quality and quantity.

The US' John T Boyd carried out the preliminary study, financed by the US Agency for International Development (USAID - MEED 29:4:94). In accordance with US aid sanctions, USAID will no longer finance the project. The government is expected to approach the World Bank and the Asian Development Bank for funds, industry sources say.