SCIO-ECONOMIC PROSPECTS OF THAR COAL MINING

Allah Nawaz Samoo

Thar coal with estimated reserves of 175.5 billion tons, offers immense potential to our
country in the area of power generation. This major discovery has uplifted Pakistan’s coal
resources to more than 184 billion tons, giving it the seventh position in the list of 12 coal
producing countries. Owing to such huge deposits, the current overall share of coal in
power production is too small to consider. It is not more than one per cent of our total
current power generation capacity, which is about 6000 MW. The government has planed
to raise this capacity to 12,000 MW by 2010 and 40,000 MW by 2025.

To achieve this target cost-effectively, Thar coal sounds as one of the best choices
available to the nation. The data released by Sindh Coal Authority indicates measured
deposits of about 11 billion tons. Of these reserves, 3 billion tons of fine coal, which is
available in surveyed blocks, is sufficient for establishing 6 coal-fired power plants, each
with capacity of 1000 MW. This collective production of 6000 MW can continue at least
for 30 – 50 years, meeting effectively the additional target set by the government.

As a fuel source, coal currently costs only paisa 50 to 60 per Kwh of electricity, which is
far cheaper than the furnace oil. Pakistan spends Rs. 66 billion on the import of furnace
oil. The country can save at least Rs. 5 billion per annum by utilizing domestic coal.
Realizing the importance, government of Pakistan is currently commissioning a wide
range of technical feasibilities in order to determine mine – mouth – extraction – cost and
selling prices of Thar coal.

While the whole country would benefit from the economic value of Thar coal, its social
and environmental repercussions would largely be area – specific. The development
would bring a new challenge for the indigenous communities. It may be an opportunity if
the communities are appropriately prepared in advance. On the other hand, it may
adversely affect them if there is a lack of information on the socio-economic perspective
of coal mining including involuntary displacement and resettlement of population.

Displacement is involuntary, when it occurs without the informed consent of the

displaced persons or, if they give their consent, without having the power to refuse
resettlement. It may be either physical or economic. Physical displacement is the actual
physical relocation of people resulting in a loss of shelter, productive assets or access to
productive assets, such as land and water. Economic displacement results from an action
that interrupts or eliminates people access to productive assets without physically
relocating them.

Coal mining causes displacement, either physical or economic, in phases over a number
of years. The nature and scale varies in line with different steps of exploration, extraction,
processing and construction. To mitigate effects on each of the stages, require a
Resettlement Action Plan (RAP), ensuring improvement in the economic conditions and
social well being of the indigenous communities.
The basic premise of Resettlement Action Plan in Tharparkar needs to be ‘investment in
human capabilities’, in a way that the people of an ‘agrarian society’ can manage a
smooth transformation into the new emerging ‘mining – culture’.

It is a challenging task, particularly in the context where the livelihood of 80 per cent of
one million population, is directly related to and dependant on rain-fed agriculture and
livestock. The crop and livestock production contributes directly to 30 – 40 per cent in
the food of indigenous people. Besides, it is also the major source of cash for them to
purchase 37 – 47 per cent of essential services from the market. The grazing lands of the
arid zone grow seasonal grasses that provide fodder to 3,656,933 heads of livestock for
whole the year.

The typical ecology of the arid zone is endowed with a natural resilience against the
recurring droughts and exploding population. The population of Tharparkar records an
increase of 68.65 per cent from 1981-98. The annual average growth rate during this
period was 3.13 and if population tends to grow at the same rate, it would be double in
the next 22 years. Agriculture share of the household economy, over this period of 17
years, has steadily declined by 25 per cent in contrast to the wage labour, which recorded
an increase of 15 per cent.

This trend indicates that an economic shift from traditional farming to market labour is
already in process. Whether the arid zone- resilience- capacity would cope with the
demands of new shift in future is a domain that needs thorough research.

At the momentum, it is however clear that the Coal Industry in

Thar, would be a major factor influencing this process of change. A latest study
sponsored by a not- for- profit organization reveals that ‘nearly 10,000 jobs may be
available in the short- medium term- half of these being the semi skilled and unskilled
support staff.’ The total human power requirement that the study estimates in long run is
about 58,580 with a break up of 23,680 in mining and 34,900 in power generation
projects.

In the first phase up to year 2010, the employment generation from Thar Coal Project is
not likely to exceed 10,000 persons. Thus, the job opportunities would also increase in
phases, same way, as does the displacement.

So far, there are only about 1,000 youth of Tharparkar, who have received pertinent short-
term training at Lakhara in skilled- based mining and power-generation related trade.
Developing ‘Mining –Technicians- Cadre’ from within the Thar is therefore the dire need
of the time. This would initiate a process of ‘community-inclusion’, enabling them to get
the benefit of opportunities in short and long run. Often, the agrarian communities do not
take self-initiative to avail such type of training for many reasons. It is the responsibility
of project sponsors and civil society organizations to play a proactive and incentive-
oriented role for mobilizing the indigenous people in this regard.
A resource- valuation exercise undertaken by senior professionals from the public sector
Universities of Sindh, estimates value of privately owned immovable resources,
relocation costs and community assets and rights in the Thar Coalfield to the tune of
Rs.2,741.247 millions. One of the important components of Resettlement Action Plan
needs to delineate a framework for valuation and operation of transparent and equitable
compensation package.

Government is currently developing physical infrastructure in Tharparkar on fast-tract

pace. It is high time for private sector, interested in future investment, to fulfill social
responsibility by value-addition in development projects.

The environmental impact of coal mining is a subject of intensive debate through out the
world. Given the context of Thar, it assumes the central place in every stage of planning
and operation. The problems caused by mining in Thar range from depletion of the scarce
water aquifer to destruction of vegetation and air pollution, ultimately leading to health
hazards. It is, therefore, essential to undertake a detailed environmental impact
assessment before launching any mega project.

The effective and rationale utilization of Thar coal can ensure a secure, prosperous and
promising future, not only for the people of Thar but also for the whole nation. The focus
on technical aspects of the project is a prerequisite that can never be compromised.
However, a reasonable balance can be achieved for the cause of community development
by taking the socio-economic perspective in the policy agenda.

Reference:

- Dr. Rajab Ali Memon, 2003, Coal Mining in Tharparkar; potential, concerns and
remedies; Netherlands Organization for International Development Cooperation
and Thardeep Rural Development Programme.
- Allah Nawaz Samoo, 2003, Water Harvesting in Arid Zones (Article); Oxford
University Press and SDPI
- Allah Nawaz Samoo, 2002, Facing the challenge of survival: State of women and
children in Thar following the drought 1999-2000; University of Engineering and
Technology, Lahore, Pakistan.
- Allah Nawaz Samoo, 2002, An Assessment of Drought in Tharparkar arid zone
2002; Thardeep Rural Development Programme, Mithi, Tharparkar.
- International Finance Corporation, April, 2002, Hand Book for preparing
Resettlement Action Plan, IFC, 2121 Pennsylvania Avenue, NW, Washington, DC
- Alam and Abbas A. Shah 1997, Thar Coal its Geology, Geological Survey of
Pakistan, Karachi.