A special purpose vehicle (SPV) will be created to execute the Thar rail connectivity project to transport coal to the power plants in the country’s north.

“The Ministry of Railways in partnership with the government of Sindh will lay a railway link from Thar Coalfield (Islamkot) to Chorr (105km) and Bin Qasim to Port Qasim (09km),” said Shariq Hussain, Director of Sindh Energy Board.

Talking to WealthPK, he said the cost of the project was Rs53,726 million and the completion timeline was 18 months. “The Sindh government is mandated to provide Rs26,863 million under a 50% cost sharing formula.” 
He explained the modus operandi of financing for the project was equity sharing, and a SPV would execute it. 
He said the Ministry of Railways had allocated Rs15,100 million in PSDP for FY25 and released Rs4,600 million as mobilisation advance to the contractor, the Frontier Works Organisation.

Shariq said that the railway network would have the capacity of transporting 10MTPA of coal, helping Pakistan shift its power generation from imported to domestic coal and reduce reliance on costly fuel imports. He added that the project could save the national exchequer from importing fuel amounting to $1.5 billion annually.
The Thar coal railway connectivity project is part of the government’s efforts to shift coal-based power plants from imported coal to Thar coal. But Thar coal’s transportation is a big issue as it is located far away from the national railway track.

The government is desperately working to cut electricity prices, which have skyrocketed in recent years, triggering a public backlash. Imported coal is the main reason for soaring electricity prices in the country, and the government wants to shift toward Thar coal, which is an indigenous cheap fuel for electricity generation.
Tariq Ali Shah, Managing Director of Thar Coal Energy Board (TCEB), said that the provincial government was working on the project at a fast pace, and it was expected that the project’s groundbreaking would be done soon.
He pointed out that the project’s total cost was Rs58 billion, which would be shared between the federal and Sindh governments equally.

In his recent visit to China, the finance minister, who was accompanied by the power minister, had a discussion with Chinese authorities on the conversion plan developed under the China-Pakistan Economic Corridor.

“The government wants to go ahead with the conversion plan. However, it will not be possible without the Thar coal railway connectivity project. The transportation of coal through a railway network is a feasible option,” Tariq said.
Coal consumption in power generation and the industrial sector is expected to almost double by 2030 with coal usage to reach 50 million metric tonnes by the end of the decade, up from 23.9 million metric tonnes in the current fiscal year due to the government’s preference for utilising domestic coal resources.

This would elevate coal to the country’s second-largest primary energy source.

Thar coalfield spans more than 9,000 sq-km in Thar Desert, Tharparkar, with coal reserves totaling 175 billion metric tonnes.