ISLAMABAD: A three-member federal ministerial committee has been reactivated after lying dormant for nearly a year, following a letter from Sindh Chief Minister Murad Ali Shah urging support for the Phase-III expansion of the Sindh Engro Coal Mining Company (SECMC), sources told Business Recorder.
The committee — comprising Deputy Prime Minister and Foreign Minister Senator Ishaq Dar, Minister for Economic Affairs Ahad Khan Cheema, and Minister for Power Sardar Awais Ahmad Khan Leghari — has resumed deliberations on proposals submitted by the Sindh government to facilitate the project’s financial and regulatory progress.
The Sindh Chief Minister had written to the Prime Minister on October 2, 2024, seeking federal assistance to expedite SECMC’s expansion plans. In response, the Prime Minister constituted the ministerial panel on October 7, 2024, but the matter remained stalled for over a year until recently revived.
Thar Coal Expansion and Its Significance
The Sindh Engro Coal Mining Company (SECMC) — a public-private joint venture between the Government of Sindh and Engro Energy Limited — has been instrumental in developing the Thar coalfield, transforming it into one of Pakistan’s key domestic energy sources.
Currently, SECMC produces 7.6 million tonnes per annum (mtpa) of lignite coal, supplying four mine-mouth power plants:
- Engro Powergen Thar Limited (2×330 MW)
- Thar Energy Limited (1×330 MW)
- ThalNova Power Thar Limited (1×330 MW)
The proposed Phase-III expansion aims to raise coal production to 11.4 mtpa, enabling an additional 3.8 mtpa supply to the Lucky Electric Power Company Limited (LEPCL).
Challenges in Achieving Financial Close
In his letter, CM Murad Ali Shah outlined major hurdles delaying the project’s Financial Close (FC), initially targeted for December 2024, with Commercial Operation Date (COD) planned for Q4 2025.
Although Meezan Bank Limited had approved a Rs 26 billion financing term sheet, the approval of Chinese lenders — who financed SECMC’s earlier phases — remains pending. Their concerns stem from:
- Macroeconomic uncertainty, especially after Pakistan sought re-profiling of power sector loans.
- High outstanding receivables of Rs 70 billion owed to SECMC by independent power producers (IPPs), linked to the circular debt crisis.
- Even with a 90% collection rate, receivables are projected to rise to Rs 150 billion within five years post-Phase-III, undermining the project’s financial viability.
- Failure to secure FC by December 2024 would cause SECMC to miss the Thar Coal Energy Board’s (TCEB) Phase-III COD deadline of September 30, 2025, resulting in financial losses of USD 5 million per month.
Sindh CM’s Requests for Federal Support
To prevent delays and ensure project sustainability, CM Shah requested the Prime Minister’s intervention in two key areas:
- Fast-tracking Phase-III approval through the China–Pakistan Economic Corridor (CPEC) Joint Cooperation Committee (JCC) to facilitate early endorsement from Chinese financial institutions, especially the China Development Bank (CDB).
- Directing the Central Power Purchasing Agency (CPPA-G) to establish a dedicated mechanism for prompt settlement of SECMC’s outstanding and current receivables, ensuring stable cash flow and acknowledging Thar coal’s strategic role as a domestic energy source.
The reactivation of the committee marks a renewed push to resolve these financial and policy bottlenecks as Pakistan seeks to strengthen its energy security through indigenous resources.
Story by Mushtaq Ghumman
