Pakistan’s power sector is undergoing a seismic shift, with locally mined coal emerging as a game-changer in the country’s energy landscape. The latest data from Topline Securities reveals that power generation in March 2025 hit 8,409 gigawatt-hours (GWh), a 5% annual increase and a 21% jump from February 2025. The real headline, however, is the 62% year-on-year surge in electricity produced from local coal, which soared to 1,393 GWh in March 2025 from 862 GWh in the same month last year. This surge has catapulted local coal’s contribution to the national energy mix to 17%, up from 11% a year earlier, marking a strategic pivot towards indigenous resources.
For decades, Pakistan’s vast coal reserves in Thar, Sindh, estimated at 175 billion tons, lay dormant due to technical challenges and limited investment. The energy crisis of the 2010s, characterized by prolonged blackouts and skyrocketing import bills, forced a rethink. By 2014, under the China-Pakistan Economic Corridor (CPEC), projects to develop Thar’s coal fields and build associated power plants gained traction. The coal-fired plants operational since 2019 have generated over 27,000 GWh of electricity at a fuel cost of just Rs4.8 per unit, a fraction of the Rs19.5 per unit cost for imported coal. This shift has saved Pakistan approximately $1.3 billion in foreign exchange, according to the Sindh government.
The Sahiwal Coal Power Plant, commissioned in 2017, was one of CPEC’s early ventures, initially relying on imported coal but gradually incorporating Thar coal into its operations. The development of Thar’s coal fields faced hurdles, including scepticism about the quality of lignite coal, which has high moisture content and lower energy efficiency. However, advancements in mining technology and boiler designs tailored to Thar’s coal specifications enabled breakthroughs. By 2022, the Thar coalfield began supplying coal to power plants across the country, including Port Qasim Electric and Hubco’s plants, which were converted to handle local coal. The expansion of mining operations and infrastructure, such as upgraded railways for coal transport, further accelerated adoption.
Yet, environmental concerns linger. Coal combustion emits greenhouse gases, and Thar’s arid region faces water scarcity, raising questions about sustainable mining practices. “Thar coal is a double-edged sword,” said a power sector official. “While it provides affordable energy and energy security, we are actively investing in technologies to minimise ecological impact, including plans for carbon capture and renewable energy hybrids.”
The increased use of local coal has directly lowered power generation costs. In March 2025, the average fuel cost per unit dropped to Rs12.2, down 27% from Rs16.8 a year earlier. Monthly comparisons also showed an 11% reduction from February’s Rs13.8 per unit. “These savings are critical for a country where high energy prices have troubled industries and households,” the official noted.
Local coal has been a game-changer for Pakistan’s energy independence, but the country is not resting on its laurels. “We are equally committed to expanding solar, wind, and hydro projects to ensure a sustainable mix,” the official stated. “Coal is a bridge, not the destination, and as a country we are balancing cost-effective energy with global climate commitments by diversifying into renewables, while optimising coal use.”
This strategic shift in Pakistan’s power sector is not just about energy security and cost savings; it’s about redefining the country’s energy future. The development of Thar’s coal fields and the integration of local coal into the national energy mix is a testament to Pakistan’s resolve to overcome technical challenges and leverage its indigenous resources. However, the path forward is not without its challenges. Balancing the need for affordable energy with environmental sustainability will be crucial. As Pakistan continues to invest in renewable energy technologies and sustainable mining practices, it sets a precedent for other countries grappling with similar energy dilemmas. The world will be watching as Pakistan navigates this complex energy landscape, seeking inspiration and lessons from its journey.