Thar coal replaces imports at power plants
Thar coal replaces imports at Pakistan’s coal-fired power plants under a plan agreed by the federal and Sindh governments, which will build a railway track to carry the local fuel to the plants. The Express Tribune reported that the plan came up at a recent meeting of the Economic Coordination Committee (ECC) of the cabinet, where the Ministry of Railways set out how the coal would reach power stations and factories across the country.
The shift matters because Pakistan still buys coal from abroad to feed several large power plants. The PML-N government had set up several such plants under the China-Pakistan Economic Corridor (CPEC), a move that drew sharp criticism. Sahiwal also got an imported-coal plant, fed with fuel from abroad. Now the government wants those same plants to burn coal mined in Thar, in Sindh.
Thar coal replaces imports through a new rail link
The Ministry of Railways told the ECC it is building the Thar coal rail link together with the Sindh government. A memorandum of understanding between the two sides was followed by a joint-venture agreement to carry local coal to power plants and private industry.
The Executive Committee of the National Economic Council (Ecnec) has approved it as a Public Sector Development Programme (PSDP) project, titled “Thar coal rail connectivity with the existing railway network including last-mile connectivity with Port Qasim”. The aim is to make full use of the country’s own coal reserves.
Thar coal will go not only to the independent power producers (IPPs) that now run on imported coal, but also to cement, urea and steel plants across the country. Officials told the meeting that electricity would cost less if the imported-coal plants ran on local fuel, and that cement firms would also get cheaper fuel.
The timing reflects a wider fuel problem. The US-Iran war has hampered fuel shipments since the Strait of Hormuz was closed, and supply from Thar would leave the country less exposed to shipping routes it does not control.
Who pays for the Thar coal rail project
The federal government and Sindh will fund the joint venture equally. The federal share, 50 per cent of the total cost, comes from the PSDP, and Sindh will pay the other half from its Annual Development Plan. Both sides agreed to release the money on an equal and timely basis to avoid cost overruns, delays and contractor claims. The joint-venture agreement is already signed.
The ministry said it had set aside Rs2 billion from the PSDP for the project in the current financial year, 2026-27, and that Sindh had transferred its share to the federal government’s account-I.
One step remains: a technical supplementary grant of Rs10 billion is needed as budgetary cover before the funds can be used. The ministry told the ECC the grant covers money Sindh has already provided, so it puts no fresh fiscal burden on the federal government.
The plan builds on earlier work on Thar coal pricing. Feature Pakistan has already reported that Thar coal received a pricing overhaul for buyers outside the IPP system. The rail link is the next piece: it connects the mines to the plants that can burn the most coal.
Power costs remain a live issue. A recent failure in the grid added Rs400 billion to electricity bills, a reminder that the power sector’s problems run beyond fuel supply. Cheaper local coal would help on one side of that ledger, but the rail line still has to be built, and the plants will need checks for burning Thar coal at scale.
The coal comes from one of Pakistan’s poorest districts. Tharparkar was recently declared a drought-hit district as crops failed, and local groups have pressed for a fair share of the benefits from the region’s resources.
The ECC has now heard the plan in full. The next steps are the release of the supplementary grant and the start of construction.
Frequently asked questions
What is the Thar coal rail project?
It is a railway link that will carry coal mined in Thar to power plants and factories across Pakistan. Ecnec has approved it as a PSDP project, with last-mile connectivity to Port Qasim.
Which plants will use Thar coal?
The imported coal-fired IPPs, including the Sahiwal plant, will switch to local coal. Cement, urea and steel plants will also receive Thar coal.
Who is paying for the project?
The federal government and the Sindh government will each pay 50 per cent. The federal share comes from the PSDP, and Sindh’s share comes from its Annual Development Plan.
How much has been set aside so far?
The Ministry of Railways has allocated Rs2 billion from the PSDP for 2026-27. A Rs10 billion technical supplementary grant is needed as budgetary cover for funds Sindh has already transferred.
Why switch from imported coal now?
Officials say local coal will cut power costs and reduce reliance on fuel shipments. The US-Iran war has hampered shipments since the Strait of Hormuz was closed, which has added urgency to the switch.
