Energy

Thar Coal Block-I Mine and Power Plant

Taluka Mithi, Tharparkar District, Sindh Province, Pakistan
Written by Rural Development Policy Institute (RDPI) on .
The Thar Coal Block-I Power Plant is a combined coalmine and coal-powered energy generation project in Mithi, Tharparkar District, Pakistan. The 1,320 MW project is estimated to cost around 2.5 billion USD and is being developed as part of the China–Pakistan Economic Corridor (CPEC). Shanghai Electric holds the controlling share of this project. Civil works started in October 2019 and the first 660 MW power unit is planned to be operational by August 2022. The coal for this project is locally sourced lignite.

Basic Information

Chinese name: 塔尔煤矿一区块燃煤电厂
Location: Taluka Mithi, Tharparkar District, Sindh Province, Pakistan.
Type of Project: Energy
Project Developer: Sino Sindh Resources Limited (SSRL, a subsidiary of Shanghai Electric Group since 2019).
Main Contractors: Shanghai Electric Engineering Design Company Limited and Shanghai Electric Hong Kong International Engineering Company Limited (subsidiaries of Shanghai Electric Group) as engineering, procurement, and construction contractors; CCTEG Shenyang Engineering Company (a subsidiary of China Coal Technology Engineering Group) as design contractor.
Financiers: For the power plant, China Development Bank, Export–Import Bank of China, Industrial and Commercial Bank of China (ICBC), and Habib Bank each provided loans of 358 million USD. ICBC agreed to provide a 1 billion USD loan for the mining operations.
Cost: The total cost of the integrated project is estimated to be 2.5 billion USD (1.44 billion USD for the power plant and 1.08 billion USD for the mine).
Project Status: Under construction.

Project Outline

The coalmining and coal-based power generation project in Thar Coal Block-I is formally known as ‘SSRL Coal Block-I 6.8 mtpa & Power Plant (2 x 660 MW) (Shanghai Electric)’. The project is being developed as part of the China–Pakistan Economic Corridor (CPEC), a flagship development program under the Belt and Road Initiative (BRI) (for more details on the CPEC, see the Pakistan country profile).

The 1,320 MW coal-fired power plant—which is being developed by Shanghai Electric, a Shanghai Municipality–owned enterprise—will use local lignite coal supplied by Sino Sindh Resources Limited (SSRL). SSRL used to be a Pakistan-registered subsidiary of the privately owned Dongfang Hengxin Capital Holding Group, but in 2020 it became a subsidiary of Shanghai Electric. In October 2011, SSRL was awarded a 30-year mining lease for Thar Coal Block-I. A mining feasibility study was completed in 2012 and, in 2017, a licence was granted to establish a 1,320 MW coal-fired power plant. A special-purpose vehicle, Thar Coal Block-I Power Generation Company, was set up by the sponsors of the project to develop the plant.

Shanghai Electric Engineering Design Company Limited and Shanghai Electric Hong Kong International Engineering Company Limited—both subsidiaries of Shanghai Electric Group—were recruited as engineering, procurement, and construction contractors. CCTEG Shenyang Engineering Company, a subsidiary of China Coal Technology Engineering Group, was hired as design contractor.

Civil works on the Thar Coal Block-I integrated coalmine and power project started in October 2019, when Shanghai Electric mobilised its machinery and started removing topsoil for the development of a 6.8 million tonnes per annum (mtpa) open-pit mine and installation of a 1,320 MW subcritical coal-fired power plant. In December 2019, the Government of Pakistan signed an implementation agreement with Shanghai Electric for the power project.

In January 2020, SSRL achieved financial close on the integrated coalmine–power project. Despite the challenges of operating during the Covid-19 pandemic, the project did not experience any significant delays. Instead, the pace of work remained in full swing and, by July 2020, 20% of the mine’s construction in Thar Coal Block-I had been completed. The speed of the civil work was expected to increase further following the arrival of 500 Chinese engineers and managers on a chartered flight in August 2020. By February 2021, 40% of the mine work was complete, while work on the coal power plant was also progressing. Shanghai Electric in its bi-monthly newsletter reported that work on the plant’s chimney was completed by October 2020.

According to the basic information chart on the project included on the CPEC website, the first unit (660 MW) of the power plant is expected to be operational by August 2022, while the commercial operational date for the complete project is February 2023. Proponents claim that, once completed, the project’s energy production will be enough to power four million households in Pakistan.

Thar Coal Block-I is in Taluka Mithi, Tharparkar District, in the southern part of the Thar coalfield, west of the Indian border and north of the Rann of Kutch. The project site is on Nagarparkar Road, 54 kilometres from Mithi and 12 kilometres from Islamkot. The size of Thar Coal Block-I varies between sources. The Environmental and Social Impact Assessment report on Thar Coal Mining in Sinhar Vikian Varvai Block-I prepared by Environmental Management Consultant states the block covers 155 square kilometres. However, according to energy industry media NS Energy, the block is 122 square kilometres.

Thar Coal Block-I location in relation to Mithi Township. Source: Google Maps.
Images from May 2021 show the power plant development is well under way. Source: Google Earth.

According to Global Energy Monitor, the project is financed with a 75:25 debt to equity ratio, with financial support for the coal plant coming from Chinese banks. Global Energy Monitor states that financial close for the plant was reached in March 2020, with loans of 358 million USD provided by the China Development Bank, the Export–Import Bank of China, the Industrial and Commercial Bank of China (ICBC), and Habib Bank, and the developer providing 478 million USD in equity. Global Energy Monitor also reports that ICBC agreed to provide a 1 billion USD loan for the mining operations.

Project Impacts

  • Land Acquisition, Displacement, and Resettlement: Nine villages will be impacted by the project, but no official land acquisition and resettlement plan has been published and there is a lack of clarity on compensation payments and disagreement between the government and local people over land categorisation. The impacts of mining and plant construction activities are already being felt in the villages of Bhave Jo Tar, Tilvai, Varvai, and Khario Ghulam Shah, where locals have been dispossessed of their land with minimal compensation.
  • Employment: Although the company claims to employ local people, most senior, skilled, and semi-skilled jobs have been taken by people from outside the area. There have been protests after workers were fired without notice or severance pay.
  • Land Degradation: Land degradation linked to the massive excavation for the mine will severely impact the unique drought-adapted ecology, especially drought-resilient plants that provide fodder for livestock, which is an important local livelihood source.
  • Air Pollution: Coal plants produce airborne pollutants that increase the risks of serious health problems, and carbon emissions that jeopardise Pakistan’s commitments to reduce emissions under the Paris Agreement. Dust from construction and trucks is also causing respiratory illnesses in the project area.
  • Water Crisis: Extensive water use is putting pressure on local water supplies and causing pollution of groundwater that is used by local people, who depend on wells for their day-to-day needs.

Residents of nine villages within the project area—Varvai, Male Jo Tar, Saren Jo Tar, Sinhar Vikio, Ajbe Jo Tar, Khario Ghulam Shah, Tilvai, Bhave Jo Tar, and Shahmir Vikio/Qurban Vikio—are facing displacement due to mining and power generation in Thar Coal Block-I. These villages, according to the 1998 census, have 1,013 households and a total population of 7,566 people.

Four villages—Varvai, Tilvai, Bhave Jo Tar, and Khario Ghulam Shah—are within the proposed mining area while part of Ajbe Jo Tar is at the margin. Tilvai Village, from where the project’s mining activity will be initiated, is 16 kilometres from Islamkot. Varvai Village is in the ‘initial’ mining area, while Ajbe Jo Tar is in the ‘second’ mining area.

Land Acquisition, Displacement, and Resettlement

In the absence of an official land acquisition and resettlement plan, it is difficult to ascertain how much land will be acquired for the coalmine and the power plant. According to a news report quoting SSRL’s vice-president, the total amount of land to be acquired for the project is 3,325 hectares, including 2,560 hectares of government land and 766 hectares of private land. However, the data collected from local sources (provided in the following table) by the Rural Development Policy Institute, a non-profit initiative that seeks to address vulnerabilities of resource-poor rural communities in Pakistan, show that the total land area of just three of the affected villages is more than the figure quoted in media reports. Unless otherwise referenced, the following information is drawn from the author’s fieldwork in 2019 and interviews with affected people.

Source: Rural Development Policy Institute (all values in acres; hectares in parentheses).

The definition of ‘government land’ used by the state has also led to friction with local people. The categories of Yaksaala (land tilled by local people under lease from the government) and Gowchar (common grazing land) are officially considered ‘government land’ and users are not being offered compensation. However, locals consider these lands to be their private and common property, respectively. As civil society representative Ali Akbar Rahimoon told the author of this profile in 2020:

The government has been acquiring land in Thar according to the laws that have nothing to do with the land tenure in Thar. Land tenure in Thar is different from other parts of Sindh. So, the land acquisition in Thar under the laws applicable to other parts of the province is not justified. Due to faulty legal and administrative processes adopted for land acquisition and resettlement, no compensation against Yaksaala and Gowchar is being made to the displaced communities.

In 2019, government representatives started to contact the residents of Varvai, Tilvai, and Khario Ghulam Shah to acquire their land for the project. The district government started holding consultative meetings regarding the displacement and relocation of Varvai and Tilvai villages. Although dozens of meetings were held at the deputy commissioner’s office in Mithi and were attended by the representatives of affected communities, private companies, the revenue department, district administration, and local elected representatives, no agreement was reached on the value, eligibility criteria, or process of land acquisition. Residents of Varvai stated during interviews with the author that few people from the villages to be displaced attended these meetings, excluding many people who could not afford to travel.

Local politicians and elected representatives also held meetings in affected villages, where they attempted to convince the communities to develop consensus on the amount of compensation and other issues involved in their relocation. Several areas were proposed for relocation, including Khario Ghulam Shah, Malhaytar, and Mari Tar, but local people said they were not ready to move there as the land available was insufficient. In these meetings, people demanded the government lease the land from villagers and provide them with royalties on the coal to be extracted from their land, as well as providing them with an alternative Gowchar. However, none of these demands was met.

Meanwhile, the Government of Sindh Province showed its concern for the families to be displaced by the project. Syed Mural Ali Shah, Chief Minister of Sindh, is reported to have directed the provincial minister of energy to ask the Chinese company to construct a residential settlement for the affected families based on the Senhri Dars Model Village. ‘The colony must have good houses, paved roads, school, park, mosque, temple, playground, and small market,’ he directed. The Senhri Dars Model Village was constructed for people displaced from Block-I. According to the chief minister, the school there was flourishing, with children who had not attended school before being resettled now enrolling. However, locals in Varvai village did not share this positive view of the model village, believing its construction to be of poor quality, and therefore opposed any such plan for their resettlement. Instead, they demanded cash compensation.

By September 2020, most of the land in Varvai, Tilvai, and Bhave Jo Tar had been acquired. The government has been paying compensation at a rate of 180,000 rupees (1,050 USD) per acre only against the ‘survey land’ acquired from villagers. No compensation is being offered for the Yaksaala and Gowchar surrendered by locals. Though physical displacement has not yet taken place, villagers in Varvai, Tilvai, and Bhave Jo Tar are likely to be relocated soon, while the residents of Khario Ghulam Shah will stay in their native village with little or no land to till or graze their animals.

In Varvai and Tilvai, the government has also been paying a lump sum of 4.2 million rupees (24,000 USD) compensation for the house of each family. However, delays in the compensation payments have been a serious problem. Many families facing displacement have been paid only a small portion of the total amount they are owed. Many do not have enough cash to cover the cost of resettling.

Most of the local population is dependent on livestock, and they no longer have enough land on which to graze their animals. Those who are most seriously impacted are landless families. Previously, they worked as labourers on the land of others and grazed their animals on Gowchar. With much of the village land now acquired for the project, they face serious economic hardships. The livelihood problems of the displaced families are compounded by each passing day.

By installing barbed wire and establishing a checkpoint, the company has started to enclose this village land, restricting the physical mobility of the locals. In July 2020, the people of Khario Ghulam Shah staged a protest against the conduct of the company. They demanded the company restore their old paths and roads and give priority to the people from the project-affected villages when hiring.

Bhave Jo Tar Village is in the immediate vicinity of the power plant under construction. The land acquisition process there started in January 2018 and, as of September 2021, was almost complete. However, the families have not yet left the village as they have received only partial payment of their agreed compensation.

Kohli Para, a neighbourhood of Bhave Jo Tar Village, is occupied by some of the poorest of the landless Kohli community. The land on which Kohli Para sits is required neither for mining nor for the power plant. To avoid paying compensation, the company has decided to not acquire this piece of land, leaving the residents of Kohli Para to fend for themselves. Due to ongoing developments in the area, the Kohli Para neighbourhood has been squeezed and exposed to the prying eyes of outsiders. The barbed-wire fencing installed by the company surrounds Kohli Para on three sides while on the fourth side, there is a road linking Islamkot to Nagarparkar.

Being adjacent to the power plant under construction, the neighbourhood is exposed to CCTV cameras and floodlights installed on the fencing. The villagers, particularly the women, now have concerns about privacy. Hundreds of company workers walk through the village daily. As a result, the women, who were previously free to graze their animals or work in the fields, have now been confined to their houses. Privacy concerns have been compounded by the fact that local communities largely use open land to attend to the call of nature, as there are no toilets in Kohli Para. Residents have been demanding that they should be able to move from this now highly commercial area to a residential area elsewhere. In January and February 2021, 300 of them held an 11-day protest over these privacy issues in front of the Press Club in Islamkot.

Employment

In interviews with the author, locals challenged the company’s public claims to have provided jobs to the local people of Thar. According to my field observations and interviews with local people, high-level jobs are provided to non-locals from other provinces, especially Khyber Pakhtunkhwa and Punjab, or other parts of Sindh Province. The local Thar people are mostly hired for low-paid unskilled and semi-skilled jobs like officeboy, watchman, construction worker, foreman, and driver.

In January 2021, many workers who had been sacked from the mining company held a protest at Engro Roundabout in Islamkot. They complained that 150 workers had been sacked without notice, and the company had refused to pay them severance and other dues, and they demanded that the Sindh Government acknowledge the labour rights violations by the company.

Land Degradation

Open-pit mining in Thar Block-I involves massive excavations into different layers of earth. The soil removed in this process will be dumped on the surface and, once the coal resources are fully exploited, the pit will be closed by depositing the excavated soil therein. This will seriously disturb the geology that has formed over millennia, with serious consequences for the local ecosystem.

In particular, Thar is home to drought-resilient animal and plant species, the latter of which can survive even the harshest and most prolonged droughts with deep roots that tap into aquifers. Once a drought breaks, rains regenerate the desiccated plants. Many of these drought-resilient plant species provide fodder for livestock—a major livelihood source for the local population. The whole process of massive excavations and closing of pits will disturb the roots of these plants, which may result in their extinction.

In addition, disposal of brine from the mine and effluent contaminated with coal ash from the power plant will leach underground and cause severe land degradation. Land degradation due to seepage from Gorrano Reservoir (set up to store effluent from a nearby project) has already started to occur in Gorrano and neighbouring villages. This will destroy the local ecology and result in the loss of forest and grazing lands.

Air Pollution

Coal combustion produces enormous quantities of air pollutants that harm public health and the environment. Emissions of five major air pollutants—particulate matter (PM), nitrogen oxides, sulphur dioxide, mercury, and carbon dioxide—are especially high. The health effects of exposure to PM include chronic bronchitis and heart attack, aggravation of respiratory and cardiovascular illness, changes to lung structure and natural defence mechanisms, and premature death. Lignite, the type of coal used in Thar, is notorious for its poor energy efficiency and high carbon dioxide emissions. Coal combustion for power production involves emissions of greenhouse gases that have serious implications for air quality and public health at the local level. At the national level, this will compromise Pakistan’s pledge, made at the UN climate conference in Paris in 2015, to reduce its greenhouse gas emissions.

Khario Ghulam Shah Village is in the immediate vicinity of the mine. Large numbers of cranes and trucks are busy around the clock excavating and shifting sand. In my interviews with them, residents complained that dust and noise pollution had become a permanent nuisance in the village due to the mining operation. Some villagers said the noise was so loud at night they could not sleep, while some complained of increasing respiratory disease, particularly among children and older people, due to the dust pollution from trucks.

Water Crisis

As mentioned above, Thar has a precarious hydrology and is overwhelmingly dependent on limited rainfall. Rains replenish the groundwater, regenerate the local plant species, and help subsistence agriculture in Thar. Both coalmining and power plants are highly water intensive. Coalmining involves extensive dewatering and coal washing while the power plant needs huge quantities of water to produce steam for the boilers to generate electricity.

Dewatering is essential in open-pit coalmining as depressurisation is necessary to reach the deep coal, which is 150 metres underground in Thar. Dewatering uses submersible pumps installed in sumps at the bottom of the pit to lower the groundwater table, helping keep the mine dry and safe. The water used in this process, the huge volumes of freshwater used to run the power plant, disposal of brine from the mine, and effluent discharged from the power plant will undermine the fragile hydrology, contaminate groundwater, and create a serious water crisis in Thar. In my interviews with them, local civil society activists and communities have raised concerns about the water crisis.

For another project in nearby Thar Block-II in Gorrano, in Mithrau Chuto, Islamkot, a reservoir was built in 2016 to contain saline water extracted in the dewatering process and effluent produced by mining and power generation. The Gorrano Reservoir, 26 kilometres from Thar Coal Block-II, covers more than 600 hectares in a natural depression with the capacity to hold 30 million cubic metres of water.

The company working on Thar Block-II, Sindh Engro Coal Mining Company, did not line the Gorrano Reservoir with a geomembrane or soil sealant, and seepage of saline water has started to impact the people of 13 nearby villages: Gorrano, Burd, Gawaran, Shivay Jo Tarr, Gopay Ji Dhani, Bhopay Ji Dhani, Khokhar Jo Tarr, Mutu Jo Tarr, Nibbay Ji Dhani, Suleman Jajjam, Kattan, Chothay Ji Dhani, and Esan Shah Jo Tarr. As in other parts of Thar, the 13 villages near the reservoir are highly dependent on wells for their drinking and other domestic water. The seepage of saline water and effluent from the Gorrano Reservoir has led to contamination and is raising the water level in the village wells.

There is no clarity regarding the disposal of the water to be discharged from the coalmine and power plant in Thar Coal Block-I. According to some interviewees, a proposed reservoir at Dukar Chau will be used for the disposal of wastewater. However, others say that Thar Coal Block-I will also use the Gorrano Reservoir and that only once it reaches capacity will extra water be discharged into the proposed Dukar Chau reservoir.

In February 2021, a delegation from Thar Coal Block-I Power Generation Company met with Syed Mural Ali Shah, the Chief Minister of Sindh, and the provincial Energy Minster Imtiaz Shaikh. The delegation, led by the company’s CEO, Meng Donghai, apprised the Sindh Government of the project’s water problems, including the need for a disposal site for water extracted from the mine and a steady supply of water for the power plant’s boilers, and requested the chief minister resolve these issues. The chief minister directed the provincial energy minister to conduct a feasibility study for a reservoir, and the delegation was assured that the power plant would have a reliable water supply through a scheme taking water from Farsh Makhi Canal to Nabisar to Vajihar and then to the plant.

In-Depth Sources

Global Energy Monitor. n.d. ‘Thar Block-I Power Station.’ https://www.gem.wiki/Thar_Block-I_power_station

Rural Development Policy Institute. 2019. ‘Thar Coalfield Block-I (TCB-I).’ Project Brief. https://acjce.com/wp-content/uploads/2021/09/Project-Brief-on-Thar-Coal-Block-1.pdf.

Rural Development Policy Institute. 2021. Coal Rush: The Impacts of Coal Power Generation on Tharis’ Land Rights. https://acjce.com/wp-content/uploads/2021/09/Research-Study-Coal-rush-The-impacts-of-coal-power-generation-on-Tharis-land-rights.pdf.

Updated on 7 December 2021.


Rural Development Policy Institute (RDPI) is a civil initiative aimed at stimulating public dialogue on policies, informing public action, and celebrating capacities and addressing vulnerabilities of resource-poor rural communities in Pakistan. RDPI undertakes research, planning, training, and advocacy endeavours to streamline appropriate and people-centred rural development at village, union council, tehsil, and district levels. Since 2020, the organisation has been carrying out an advocacy campaign to promote renewable energy, reduction in emissions of greenhouse gases and CO2, and de-carbonisation in Pakistan.