Amir Shehzad
THE narrative around Thar coal is changing fast. What until recently was mostly a theoretical resource prospect has begun to look like a working part of Pakistan’s power mix and the early results are forcing a rethink about energy strategy, industrial competitiveness and fiscal resilience. Between noticeable drops in fuel costs, growing generation share and rising provincial claims of foreign exchange savings, local lignite is no longer just a policy talking point; it is a real-world experiment with tangible winners. By March 2025, local coal had captured roughly 17% of thermal generation and helped push average fuel costs down to about Rs12.2 per unit from Rs16.8 a year earlier, according to recent reports. Provincial authorities now claim cumulative foreign exchange savings measured in the hundreds of millions. If accurate, these figures point to an unexpectedly fast payoff from policies encouraging domestic off-take. These are not trivial shifts; lower fuel costs feed directly into cheaper electricity for industry and reduced import pressure on the state, resulting in a more predictable base-load profile for planners.
The headline figures mask a deeper reality. Thar’s vast lignite reserves, estimated at 175.5 billion tonnes, promise energy independence, jobs and reduced coal imports. But turning this geological potential into lasting economic benefit requires far more complex planning than originally anticipated. Technical realities are blunt. Thar lignite is high in moisture and behaves differently from the higher-grade imported coals many plants were designed for. Long-distance, bulk transport remains uneconomical without efficient rail links; moving thousands of tonnes by road simply does not scale. Older plants built around imported-coal specifications lose much of the “cheap fuel” advantage when they encounter efficiency penalties and higher maintenance. The upshot is that without coordinated investment in rail, mine scale-up and plant retrofits, early savings risk being episodic rather than structural. Policy, therefore, matters more than ever. Two kinds of interventions look indispensable. First, create predictable demand: phased blending mandates and clear off-take contracts give miners and investors the confidence to scale and modernize. Second, fix logistics and technology: a dedicated rail corridor from Thar to major thermal hubs, plus targeted retrofits to enable supercritical or circulating fluidized bed combustion where appropriate, materially improve the economics and reduce emissions per unit. Analysts and policy briefs emphasize exactly these priorities—coordinated infrastructure, technology upgrades and market signals—as the recipe to move local coal from episodic use to dependable supply.
Sindh Chief Minister Murad Ali Shah recently emphasized Thar coal’s pivotal role in ensuring Pakistan’s energy self-reliance. He highlighted the progress of the Thar Coal Block One Project, which has seen a $3 billion investment and provided jobs for 3,000 locals. Thar coal has saved Pakistan $681 million in foreign exchange, reducing reliance on imported coal. He also reviewed the expansion of Thar’s power generation capacity and ongoing village electrification programs, reiterating commitment to a locally beneficial energy system. The Jamshoro Power Company Limited (JPCL) project comprises two 660 MW units originally designed to use 80% imported coal and 20% local coal. One 660 MW unit is expected to be struck out owing to lack of funds, while K-Electric is working on converting the other 660 MW unit to operate entirely on local coal, aiming to provide more affordable energy to Karachi. This includes feasibility studies and technical assessments, followed by approvals from relevant authorities.
Thar’s coal development can create jobs, boost local services and support downstream industries if the development model is inclusive and royalties and employment accrue to local communities. Without enforced revenue-sharing, employment quotas and environmental safeguards, however, the region risks remaining an extractive periphery—a political challenge that federal and provincial governments must address transparently. Environmental critics call for scrutiny, noting that replacing imported coal is not impact-free, though domestic coal need not be entirely rejected. Modern technologies such as drying, blending, emission controls and efficient plant design can reduce environmental costs. Public policy should therefore allow conditional approval based on performance standards, emissions monitoring, reclamation funds and enforceable community benefits.
Estimates from detailed studies suggest that greater use of local coal can reduce tariffs by about PKR 3 per unit and save roughly $800 million a year in import costs. These figures are powerful in a country where foreign-exchange management is a perennial challenge. What comes next will depend on governance. If policymakers use this window to lock in rail connectivity, guarantee phased demand, enforce environmental performance and ensure genuine local development, Thar can become a pragmatic bridge to a diversified system. For now, the lesson is clear: local coal is reshaping Pakistan’s power story, but turning that momentum into durable public good will require far more planning, transparency and technical discipline than the headlines suggest.
—The writer occasionally contributes to the national press.
