CPEC projects to drive huge increase in Pakistan coal imports

Pakistan expects to see a 'huge increase' in coal imports

Pakistan expects to see a ‘huge increase’ in coal imports. Credit: Dietmar Hasenpusch

Coal imports to Pakistan could triple over the coming five years as projects related to the China-Pakistan Economic Corridor (CPEC) boost demand in South Asia’s second largest economy, the head of the company’s first international standard dirty bulk cargo terminal said in Karachi.

The terminal at Port Qasim will be ready for testing and commissioning by January next year despite a history of delays and a new controversy over the building of a conveyor belt to transport coal from the terminal to a nearby rail yard, said Shariq Siddiqui, chief executive officer of Pakistan International Bulk Terminal (PIBT).

Siddiqui said Pakistan expects to see a “huge increase” in coal imports, which could grow as high as 15 million tonnes per year by 2021 from the current five million to meet growing demand for cement and power production to support CPEC projects.

Under CPEC, China is pouring USD46 billion into the development of the three major ports at Gwadar, Karachi, and Qasim as well as multiple other road, rail, and power projects. A key artery in its ‘One Belt One Road’ programme, the aim is to link China’s northwest region to the Arabian Sea through a vast network of highways and railways.

Most of Pakistan’s cement manufacturers are adding capacity for CPEC projects and new coal-fired power plants by HUBCO, Lucky Cement, and K-Electric are due to come on stream in the next few years. A 1,320 MW government plant at Sahiwal due to open in 2018 is alone expected to consume up to four million tonnes of coal per year.

Construction works on the terminal, which is  around 50 km from Karachi, are 95% complete after more than a year-and-a-half of delays, but local industry officials are objecting to the building of a 4.5 km-long conveyor system to facilitate evacuation of coal from the facility and onto trains for distribution to meet demand around the country.

The Bin Qasim Association of Trade and Industry (BQATI) said the coal transportation system will destroy the environment in an area packed with industrial units.

“We can’t transport millions of tonnes of coal through trucks. It is a project of national interest and we must support the conveyor belt and rail transportation projects ensuring environment-friendly measures,” Siddiqui said.

Coal is the only viable solution to Pakistan’s energy needs as a huge number of infrastructure projects in the country get under way, many of them related to CPEC, he added.

PIBT will have an initial annual handling capacity of 12 million tonnes of coal with the possibility to expand it to 20 million tonnes per year. Capacity will also be available for four million tonnes of cement and clinker shipments per year.

The terminal consists of a two-berth operational jetty with two dedicated ship unloading cranes to handle 1,850 tonnes of coal and one ship loading crane to handle 1,200 tonnes of cement and clinker per hour. It has a 25 Ha (62 acre) backup area and its own 15 MW power plant.

The International Monetary Fund said CPEC inflows could add up to 2.2 points to the country’s GDP and be responsible for 11% of imports totalling around USD5.7 billion by 2020.

“During the investment phase, as the ‘early harvest’ project proceeds, Pakistan will experience a surge in FDI and other external funding inflows,” it said.

Contact Turloch Mooney at turloch.mooney@ihs.com and follow him on Twitter: @TurlochMooney