In October 2024 the Sindh government warned publicly that the expansion of the Sindh Engro Coal Mining Company's Block-II mine at Thar was stuck short of financial close. Business Recorder reported that the mine produced about 7.6 million tonnes a year for Engro Powergen Thar, Thar Energy and ThalNova, and that the expansion would take it to 11.4 million tonnes, partly to supply Lucky Electric. Chinese lenders to earlier phases had not given their consent. Their concerns, as reported, were the re-profiling of power-sector loans and SECMC's receivables from the IPPs it supplies, put at around Rs70 billion even with collection rates near 90 per cent.
What the expansion is worth
The expansion is a 50 per cent increase in output (11.4 divided by 7.6). To put that in national terms, the Pakistan Economic Survey 2023-24 reports that the power sector consumed 11,906.7 thousand tonnes of coal in July to March FY2024, 68.9 per cent of all coal used in the country. Annualised, that is roughly 15.9 million tonnes a year. On our arithmetic an expanded Block-II mine alone would produce coal equal to about 72 per cent of the power sector's coal use at that rate, although lignite's lower energy content means the tonnes do not substitute one for one.
The survey records the policy context: a moratorium on new imported-fuel power projects since 2016, and an effort to start blending Thar coal at three CPEC imported-coal plants totalling 3,960 MW. Each tonne of lignite used instead of imported coal saves foreign exchange. The expansion is how that policy gets fuel.
Why lenders hesitate
Reporting cited a Meezan Bank term sheet for local financing, but consents from the Chinese lenders to earlier phases are still needed because of cross-default and security arrangements. The Chief Minister's requests, as reported, were for the federal government to speed up the CPEC Joint Cooperation Committee process and for CPPA-G to clear outstanding and current bills.
The receivables problem is circular debt arriving at the mine. SECMC sells coal to IPPs, which are paid by CPPA-G, which is paid late by DISCOs that lose and fail to collect a large share of what they distribute. A domestic fuel supplier with a 90 per cent collection rate is in better shape than most of the power chain, and still cannot raise expansion finance on those terms. Reporting also cited potential penalties of around USD 5 million a month if commitments to the Thar Coal and Energy Board slipped beyond end-September 2025.
Our view
We would treat payments for Thar coal as a priority within the circular-debt plan. A dedicated payment mechanism for indigenous fuel, funded from a fixed share of collections and with receivable days published monthly, would cost little and would give lenders something concrete. The alternative, where the expansion waits on the general health of CPPA-G, could take years.
There is a caution too. Expanding the mine makes sense only if the coal displaces imported fuel. If Thar tonnes simply add another capacity-heavy claim on CPPA-G without retiring costlier imported-coal contracts, the system will be paying for both. Water use and resettlement obligations in Tharparkar also need to stay on the timetable alongside finance, since a stoppage after financial close would be more expensive than a delay before it.