The ongoing US-Iran conflict has once again highlighted Pakistan’s economic exposure to the global black swan events and its heavy reliance on imported fuels, reinforcing the need to accelerate Thar coal utilisation across key sectors of the economy.

Pakistan is currently producing 2,640 megawatts of electricity from Thar Block I and II, with four of the six most economical power plants now based on Thar coal. “With the expansion of Block II, the 660MW Lucky Power Plant will also be shifted to Thar coal. The government is also focused on blending Thar coal at three other imported coal-based IPPs, but its potential extends far beyond the power sector,” said AAH Soomro, an economic and investment analyst. He said that to fully harness the potential of Thar coal, the government must facilitate the operations and expansion of Thar coal projects by removing hurdles related to local project financing, import of machinery and equipment, circular debt and tariff.

Given the strategic national importance of Thar coal projects and the unavailability of global lenders, Soomro stressed that the State Bank of Pakistan (SBP) should mandate increased financing from local commercial banks for the expansion of both Thar Block I and II. Similarly, the government should consider introducing mandatory blending targets for imported coal plants to encourage Thar coal utilisation in other sectors of the economy. The power and cement sectors remain heavily reliant on imported coal, leaving the economy exposed to global price volatility and geopolitical risks. In recent weeks, imported coal prices have risen more than 20% compared to 2025 levels, reaching approximately $110 per ton (free on board).