Located in the heart of Asia, Pakistan is the gateway to the financially liquid Gulf States and the economically advanced Far Eastern tigers. This strategic advantage alone makes Pakistan a marketplace teeming with possibilities.
Pakistan is among the important emerging economies of the region, with a consumer base of 180 million and a prime location. Pakistan’s ideal location gives her access to all the growing markets of the world. In order to capitalize on its strategic location, Pakistan has adopted liberal and investor-friendly policies, broad features of which include proactive facilitation, guarantees of equal treatment to both local and foreign investors, easy tariff structures and a liberal regime on repatriation of profits. These strategies have borne results with a record inflow of foreign investment of $23 billion. Recently, the global financial crises have affected these figures. However, the Pakistani government now plans to undertake further structural reforms in various sectors of the economy to attract investors.
According to the World Bank Ease of Doing Business Report for 2011, Pakistan ranks higher than many countries in most categories. If you take a closer look at the indicators you will see that in ease of doing business, enforcing contracts and starting a business, it ranks better than many countries.
In 2007, Goldman Sachs included Pakistan in the next 11 emerging economies of the world that after the BRIC economies would be a big part of global GDP by 2050. The initiatives taken by the Board of Investment to set up special economic zones and other industrial zones will further harness the investment, and the Board of Investment assures its full cooperation and support to the investors who come to Pakistan. While there remain some concerns about the law and order situation in the country, this has not palpably affected the ability of foreign businesses to conduct operations in Pakistan. Several foreign companies enjoy profitable business with satisfaction in Pakistan, and many of them are contemplating expanding their business.
World’s largest lignite reserves
Pakistan’s coal resource potential is estimated to be around 186 billion tons. Of these resources about 175 billion tons are located in Sindh province at Thar ― one of the largest single coal deposits in the world. Thar’s coal resources have an estimated potential of generating 100,000 MW of electricity over a period of more than 100 years. Thus, this resource provides wonderful opportunity for large-scale mining and power generation over a long period of time. Besides, Thar coal fields are located 296 km from the Karachi port in the southeastern arid region of Pakistan which is one of the most peaceful and harmonious area of the country.
Central part of future energy mix in Pakistan
To address the persistent energy gap, the large indigenous coal (lignite) resources at Thar in Sindh province form an integral part of Pakistan’s long-term energy security strategy. The Thar resource has very good potential ― depending on the scale of the mining operations ― to be an economic option compared to other energy sources. Development of Thar is envisioned to emerge through a partnership of the government and private sector, wherein the private sector would assume investment risk subject to viable commercial market conditions and the government would provide the enabling environment and stability necessary to facilitate such investments.
Comparison of coal quality at Thar
Thar lignite, having a stripping ratio of 6:1 and heating value of 6200-11000 BTUs per pound, is better than many lignite resources where successful mining and power generation are being done.
Special economic zone
Thar Coalfield is declared a special economic zone, and the projects of development in Thar (also including coal mining and power generation) are declared “Projects of National Security.”
Rate of return
A 20 percent (dollar-based) internal rate of return to firms which close their financial books before Dec. 31, 2015, for mining and power plants based on indigenous coal and additional half a percentage point in IRR i.e. 20.5 percent IARR for firms which close their financial books by or before Dec. 31, 2014.
