Thar coal mining to switch from diesel to grid power, cutting costs and emissions

The Power Division has launched a major reform to transition Thar coal mining operations from diesel-based systems to grid-powered infrastructure, aiming to save approximately Rs25 million per day in diesel costs, translating into annual foreign exchange savings of USD 25–30 million.

The initiative, undertaken under the strategic direction of Federal Minister for Power Awais Ahmed Leghari, is expected to reduce the cost of coal by around USD 0.7 per ton and cut the cost of diesel-powered electricity generation from 33 US cents per kWh to approximately 13 US cents per kWh, a reduction of over 60 percent.

Key inefficiencies in the mining process, particularly in water management, prompted the intervention. Following consultations with stakeholders including the Thar Coal Energy Board, National Grid Company, and HESCO, Thar Block-I and Block-II operators agreed to invest PKR 5.3 billion to develop grid stations and transmission infrastructure. This will connect operations to HESCO’s 132 kV Islamkot grid station, supplying around 60 MW of electricity to mining activities.

The reform is also expected to generate environmental benefits, cutting carbon emissions by an estimated 80,000 tons annually. Plans are underway to replace diesel-powered mining vehicles with electric alternatives to further improve efficiency and support long-term decarbonization goals.

Officials said the grid transition will not only lower electricity generation costs and diesel consumption but also improve national grid utilization. Savings from the reform are expected to be passed on to consumers in the form of more affordable and sustainable electricity, strengthening both economic and energy security.