Denying developing countries access to coal is like restricting food aid to the poor

Coal mining plays a significant role in many national economies. Developing countries rank highly among the world's major coal producing countries. In cases of China, India and South Africa coal is utilized for domestic electricity generation. Moreover, these countries have export markets generating export revenue. Colombia and Indonesia earn considerable export revenues from the coal production industry which is highly export-oriented. Coal currently provides 30% of the global energy needs, 41% of its electricity and 68% of its steel.

Coal in Electricity Generation

Pakistan is the sixth most populous country in the world with an estimated population of 184.35 million in 2012 - 2013. With a growth rate of 2.0 percent in 2012/2013, it is estimated that Pakistan will move to the fifth position by 2050. With rapid urbanization and population boom in major cities of Pakistan, the demand for electricity continues to exceed the supply. As per the Power and Water Ministry the supply of electricity stands at only 12,150 MW while demand is 16,400 MW creating a shortfall of 4,250 MW. Opportunity lies in the crisis, they say.

Increased investment in the technological development and higher labor productivity through improvement in education, health and training facilities are the main modes of increasing productivity of human resources. But how is this all possible without an investment in the energy sector, primarily coal.

Apart from being the sixth most populous state, the country is the sixth richest nation in respect of coal reserves, amounting to more than 200 billion tons. For further clarity, these coal reserves account for 2% of the reserves in the Asia-Pacific region and 0.2% of the world. Of this 200 billion tons, 185.5 billion tons (93%) of the coal reserves are in Thar in the province of Sindh which is 8 hours drive from the coastal city of Karachi. All coal is sub-bituminous and lignite in grade and is optimum for the energy sector. With the Chinese assistance Pakistan has 3 X 50 MW power plants in Lakhra, Balochistan and only 15 MW is being produced which is only 0.1% of the actual energy mix as displayed above. Majority of the electrification is via Oil which has traded above the $ 100 mark for quite some time in the international market and Pakistan nearly imports all its oil requirements. The other primary source is Gas. Gas is currently being increasingly consumed by the industries, households and the transportation sector in Pakistan. This has caused bottlenecks in timely supply of gas resulting in shortages and power cuts. The other source is hydroelectric where Pakistan faces an issue of water shortages in rivers and banks which have sources in Indian controlled Kashmir. There have been several rounds of dialogues between the two neighbors India and Pakistan to abide by the Indus Water Treaty and Pakistan has voiced its concern on international conventions and forums regarding India building dams in Kashmir. 

The current energy mix is quite expensive which is causing unrest in public and pushing businesses out of the country. The Pakistani economy can save around $26 billion in fuel costs over the next 15 years if thermal plants of only 420MW are shifted to coal.

Many of the countries with significant coal reserves also have significant coal production. However, Pakistan is counted amongst those nations whose coal reserves are yet to be utilized at a large scale. This provides economic opportunity to further develop the coal extraction industry and poses a great potential for a secure and affordable domestic energy supply using the indigenous coal reserves.

Pakistan currently imports more than 6 million tons of coal annually to meet the requirement of its thriving cement and ailing steel industry resulting in loss of foreign reserves and lost employment opportunities at home.

The current prime minister of Pakistan, Mr. Nawaz Sharif and his government, have several times shown interest in setting up greenfield power projects in Gadani and converting diesel and furnace oil based thermal power plants to coal. There has been no constructive talks on how could Pakistan mobilize its internal resource to attract capital inflow.

Earlier governments had policies directing towards exploiting the local Thar coal reserves to produce energy, but due to Asian Development Bank’s withdrawal of USD 1.4 billion in finance, Pakistan will resort to coal imports, atleast in the short run, to provide cheap electricity to the consumers and breathe life into industries, textile in particular. It appears that multilateral banks listen only to their donors, not their customers. And donor governments, like the US and the EU, are more interested in being politically correct on climate control than actually addressing poverty. It is interesting to note that US is the largest producer of coal, accounting for 13.4% of the global coal production and consumes 88% of the coal produced domestically and half of the electricity produced in the country is generated through coal.

For critics: Coal has a bad reputation due to the widely held view that it causes global warming and is responsible for death of many miners. What people don't tend to realize that coal has changed the living conditions of many in the developing countries such as India and China. For example, China, a model country for the developing world, has witnessed 536% growth in GDP since 1990 and more than 660 million people have been lifted out of poverty. Today more than 99% of the Chinese population has access to electricity. Coal has proven to be a "critical enabler" for successful economies. This has helped countries to further invest in cleaner technology and renewable energy resources. Coal is potentially the "fuel" towards any successful economy.