Business Recorder
ISLAMABAD: The management of Thar Block-I and Block-II has agreed to transition mining operations from diesel-based systems to grid-powered infrastructure by Rs 5.3 billion for the development of grid stations and associated transmission infrastructure, enabling connection with HESCO’s 132 kV Islamkot grid station and facilitating an offtake of around 60 MW of electricity to support mining operations. In January 2025, Sindh government requested a concessional electricity tariff to transition Thar coal mines operations from High-Speed Diesel (HSD) to grid power, aiming to enhance sustainability and cost-efficiency. READ MORE: Thar coal, renewables make Sindh energy basket of Pakistan: CM Murad A letter to Power Minister Sardar Awais Leghari, Sindh Minister for Energy Syed Nasir Hussain Shah highlighted a proposal by Sindh Engro Coal Mining Company (SECMC) offering a viable technical, financial, and regulatory solution that aligns with the collective goal of sustainable energy development in Pakistan while increasing power utilization from the national grid and reducing the financial burden on the national exchequer. It was proactively supported by the Sindh government. According to Power Division, the reform is expected to save Rs 25 million per day in diesel costs, translating into annual foreign exchange savings of USD25–30 million by reducing reliance on imported fuel. Furthermore, the cost of coal is projected to decrease by around USD 0.7 per ton, leading to a significant reduction in electricity generation costs. The cost of power generated through diesel for mining operations, currently around Cents 33 per kWh, will decline to US cents 13 per kWh (or even lower as per B4 tariff)—a reduction of over 60 percent. Power Division maintains that a key inefficiency was identified in the mining operations, particularly in the process of water management during coal extraction. Historically, diesel-powered systems were extensively used for dewatering and other mining activities. On average, around 35,000 litres of diesel per day were consumed solely for dewatering, while total diesel consumption across mining operations ranged between 200,000 to 250,000 litres per day. This heavy reliance on imported diesel substantially increased the cost of coal production. As these costs are treated as pass-through items, the financial burden was ultimately borne by electricity consumers in the form of higher tariffs. Recognising the economic and environmental implications, the Power Division, under clear policy direction from the Federal Minister, engaged key stakeholders including the Thar Coal Energy Board (TCEB), National Grid Company (NGC), and HESCO to develop a sustainable alternative. Following detailed deliberations, the management of Thar Block-I and Block-II agreed to transition mining operations from diesel-based systems to grid-powered infrastructure by investing capital for this intervention. This transition involves an investment of approximately PKR 5.3 billion for the development of grid stations and associated transmission infrastructure, enabling connection with HESCO’s 132 kV Islamkot grid station and facilitating an offtake of around 60 MW of electricity to support mining operations. This pre-planning reflects the Power Division’s foresightedness in securing long-term savings—a decision proving vital amid today’s energy crisis stemming from the Middle East situation. In addition to economic gains, the environmental benefits are also noteworthy. The initiative is expected to reduce carbon emissions by approximately 80,000 tons annually. Moreover, further directions have been issued to transition diesel-powered mining vehicles to electric vehicles, which will enhance efficiency and contribute to long-term decarbonisation objectives. Currently, SECMC relies heavily on imported High-Speed Diesel (HSD) to power its 7.6 MTPA lignite Thar coal mining operations. This reliance significantly escalates operational costs and, consequently, coal prices. It also places a considerable strain on the country’s foreign exchange reserves. Importing diesel further drains precious foreign currency reserves, which could be conserved through the optimization of existing resources. To address this challenge, SECMC has requested support for shifting Thar mines operations to a more sustainable and cost-efficient power source. Copyright Business Recorder, 2026
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