Sindh Engro Coal Mining and Power Plant Project, Thar Desert, Pakistan

In the thirsty Thar desert, Pakistan has begun to dig up one of the world’s largest deposits of low-grade, brown, dirty coal to fuel new power stations, with Chinese investments.


Description

While the rest of the world is hopefully clamping down on coal, Pakistan is planning to increase lignite mining with five new power plants scheduled to start producing electricity by 2018 and many more in the pipeline. These plants will spew billions of tonnes of carbon dioxide into the atmosphere over their lifetime further jeopardizing the future of our planet. China has become Pakistan’s partner of choice for investment, construction and operation of these new coal-fired power plants. The China-Pakistan Economic Corridor (CPEC) is a bilateral deal between the two countries under which the Chinese government and banks will financially support Chinese companies to build USD 45.6 billion worth of energy and infrastructure projects in Pakistan over the next six years. [7].

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Basic Data
Name Sindh Engro Coal Mining and Power Plant Project, Thar Desert, Pakistan
CountryPakistan
ProvinceSindh
SiteMithi, Sindh, Pakistan
Accuracy of LocationMEDIUM regional level
Source of Conflict
Type of Conflict (1st level)Fossil Fuels and Climate Justice/Energy
Type of Conflict (2nd level)Water access rights and entitlements
Land acquisition conflicts
Coal extraction and processing
Specific CommoditiesElectricity
Coal
Project Details and Actors
Project DetailsThe Thar Engro Coal Power Project (Thar-ll) is a mining project and coal-fired power plant under construction in Tharparkar District, Sindh, Pakistan 25 kilometers from the town of Islamkot near the village of Singharo-Bitra. The project is being developed as part of the China–Pakistan Economic Corridor by Sindh Engro Coal Mining Company (a joint venture between the government of Sindh and Engro Corporation) and China Machinery Engineering Corporation in the Thar Block-II of the Thar Coalfield.

According to CEO Shamsuddin Ahmed Shaikh [2] " SECMC has been involved in Thar for the last eight years, since 2008. For background, coal was discovered in Thar in the 1990s. At that time, the exploitation of Thar coal came under the Federal Government. Two attempts were made to invest and mine in Thar, but due to various reasons they came to nothing. Then in 2008, the responsibility for Mines and Minerals was devolved to the Sindh Government, which took the wise decision that since they could not handle Thar coal on their own, private sector partners should be involved. As a result, an international competitive bid was held and in 2009 Engro became a part of the Sindh Government’s joint venture and this led to the formation of SECMC. Engro and the Sindh Government pooled resources together – on a 60% Engro and 40% Sindh Government ratio – to undertake the feasibility. When this was completed in 2012, it was decided to set up a 1,200 megawatt project with 6.5 million tons per annum (MTPA) mining at a cost of three billion dollars. Then a number of factors intervened. Firstly, due to the economic situation, it was almost impossible to raise three billion dollars in Pakistan at that time. Secondly, the international commodity market went down the drain and with it the price of coal, and it was no longer economically viable to mine Pakistani coal. So the project went on the backburner. At that time Engro asked me to look at what could be done with the project. I had always been keen to work in Thar, not so much because of the coal, but because I come from Hyderabad and I wanted to do something there. After I looked at the project, we decided to redefine the project from a 1,200 megawatt (MW) one to a 660 MW one in order to make it financially feasible and to approach other companies to see whether they would partner with us in this venture. We managed to convince eight companies to join us; six were Pakistani and two were Chinese. The Pakistani companies are the Government of Sindh, Liberty Power Company, Engro Corporation, Habib Bank Limited (HBL), House of Habib (Thal) and Hub Power Company. The two companies from China are China State Power and China Machinery Engineering Cooperation (CMEC). Another positive was that the Government of Pakistan gave us a sovereign guarantee on our loan, with the Sindh Government as the primary obligator. In fact, the Sindh Government has been the backbone of this project; they have done everything possible for this company. They invested $110 as equity and spent almost $700 million providing the infrastructure, while Engro brought in the best expertise to make the project happen. The Government of Sindh-Engro collaboration has been a dream team for the development of coal fields in Thar.[2].

Two companies were formed. SECMC (the mining company) and Engro Powergen Thar Limited (the power company). SECMC has seven shareholders; the Sindh Government with a 51% stake, followed by Engro Powergen, the House of Habib, Hub Power Company, HBL, CMEC and State Power International Mendong (SPIM) and the China State Power. Engro Powergen has four stakeholders; Engro with a 51% stake followed by CMEC with 35%, HBL with 10% and Liberty Power with five percent. The mining project at $845 million is one of the biggest mining projects ever undertaken and the power project is worth $1.1 billion. Today Engro is managing both projects, and this shows the confidence exhibited by all the stakeholders in Engro’s abilities and depth. The present government made us part of the China Pakistan Economic Corridor (CPEC), which was a great help and made the financing possible. [2].
Project Area (in hectares)9,000
Level of Investment (in USD)1,470
Type of PopulationRural
Potential Affected Population12 villages, 18,000 people
Start Date2015
Company Names or State EnterprisesSindh Engro Coal Mining Company (SECMC) from Pakistan
China Machinery Engineering Corporation from China
Engro Powergen Thar Limited from Pakistan
Relevant government actorsGovernment of Sindh
International and Financial InstitutionsChina Pakistan Economic Corridor from China
Environmental justice organisations and other supportersIslamabad Sustainable Development Policy Institute.

Sindh National Front.

Thar Sujag Saath, Thar Voice Forum.

Villagers from affected villages.
The Conflict and the Mobilization
Intensity of Conflict (at highest level)MEDIUM (street protests, visible mobilization)
When did the mobilization beginIn REACTION to the implementation (during construction or operation)
Groups MobilizingFarmers
Indigenous groups or traditional communities
International ejos
Local ejos
Local government/political parties
Pastoralists
Women
Hindu minorities in the Thar desert
Forms of MobilizationCreation of alternative reports/knowledge
Lawsuits, court cases, judicial activism
Public campaigns
Street protest/marches
Refusal of compensation
Sit-in, street marches against mining waste water reservoir in Islamkot [8]. [9]
Impacts
Environmental ImpactsVisible: Groundwater pollution or depletion, Biodiversity loss (wildlife, agro-diversity), Loss of landscape/aesthetic degradation, Deforestation and loss of vegetation cover, Mine tailing spills
Potential: Air pollution, Global warming, Surface water pollution / Decreasing water (physico-chemical, biological) quality, Desertification/Drought, Food insecurity (crop damage), Soil erosion
Other"The livestock becomes highly dependent on trees. “One of the most serious environmental issues is that, at present the felling of the Rohiro tree is banned. “Also, according to the UNDP and Environment Ministry, the gugrall (Camiphera mukul), phoge (Clligonum polygonoides), rohiro (Tecoma undulata), Peeloo (Salvadora persica), Kandi (Prosopis cineraria) and Kombhat (Acacia Senegal) are threatened species."[9]
Health ImpactsPotential: Other Health impacts, Exposure to unknown or uncertain complex risks (radiation, etc…), Occupational disease and accidents
OtherCoal dust, respiratory illnesses
Socio-economic ImpactsVisible: Land dispossession, Loss of livelihood, Loss of traditional knowledge/practices/cultures, Specific impacts on women
Potential: Displacement, Loss of landscape/sense of place, Violations of human rights
Outcome
Project StatusUnder construction
Pathways for conflict outcome / responseCompensation
Court decision (undecided)
Migration/displacement
Strengthening of participation
Do you consider this as a success?No
Why? Explain briefly.The lignite mining and power plant with 660MW of Sindh Engro with Chinese support and financing seems to be going ahead. There are many complaints (because of land grabbing and water pollution, and also at another scale because of climate change) against further exploitation in lignite reserves in the Thar desert.
Sources and Materials
References

[5]Pakistan’s coal expansion brings misery to villagers in Thar desert. China Dialogue. 12.09.2016. Coal excavation will displace thousands of people already living in poverty and deplete groundwater in a region ravaged by drough. By Amar Guriro. (Also in The Third Pole, https://www.thethirdpole.net/2016/08/23/pakistans-coal-expansion-brings-misery-to-villagers-in-thar-desert/).
[click to view]

Links

[1] The Guardian, 27 Febr. 2017, Locals accuse Pakistan of doing the dirty by turning to coal to meet energy needs. As Pakistan seeks to address its power crisis by mining coal, villagers in the Thar desert are fighting to prevent state acquisition of their ancestral land
[click to view]

[4] This Mile-Wide Hole Could Revolutionize Pakistan's Economy

By Faseeh Mangi. 21 March 2017.
[click to view]

[7] Maha Qasim, The dangers of Pakistan’s coal revival

Due to a crippling electricity shortage, Pakistan is all set to expand power generation through coal, but renewables may be a better option
[click to view]

[8] Hanif Samoon, 12 May 16. Mining firm comes out with "facts" to end protests against reservoir (complaints by activists and political groups in Islamkot and Gorano village)
[click to view]

Media Links

[2] Interview with Shamsuddin Ahmed Shaikh, in conversation with Mariam Ali Baig, fully describing the project.
[click to view]

[ 3 ] Interview: Shamsuddin A. Shaikh, CEO of Engro Powergen & Sindh Engro Coal Mining Company
[click to view]

[6] Lignite exploitation and combustion, Thar desert, as part of the investments in the Chinese-Pakistan economic corridor (Belt and Road projects)
[click to view]

[9]30 Dec. 2016, by Zulfikar Kunbhar. Thar’s locals are unhappy with plans for a reservoir to store coal mining effluent. (Excellent article).
[click to view]

Other Documents

Operations at the Sindh Engro Coal Mining Co. site in the Thar desert. Photographer: Asim Hafeez/Bloomberg
[click to view]

Map of the area. From Zulfikar Kunbhar, Friday Times, 30 Dec. 2016
[click to view]

Meta Information
Last update26/10/2017
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