Rising global tensions, particularly between the United States and Iran, have once again underscored Pakistan’s heavy reliance on imported fuel, prompting calls to accelerate the use of Thar coal across key economic sectors.
Currently, Pakistan generates 2,640 megawatts of electricity from Thar Block-I and II, with four of the six lowest-cost power plants already running on Thar coal. Independent economic analyst A.A.H. Somro noted that with the expansion of Block-II, an additional 660 MW Lucky Power Plant will also switch to Thar coal. The government is reportedly working on blending Thar coal into three other imported coal-based independent power producers (IPPs), though its impact is expected primarily in the electricity sector.
Somro emphasized that to fully leverage Thar coal’s potential, barriers related to local project financing, machinery imports, working capital, and tariffs must be removed to facilitate operations and expansion. He suggested that, given the national significance of Thar coal projects and limited access to global lenders, the State Bank of Pakistan should direct local commercial banks to provide greater financial support for the expansion of Blocks I and II.
The analyst also recommended introducing mandatory coal-blending targets for imported coal-fired power plants to extend Thar coal use into other industries. Currently, the electricity and cement sectors remain heavily reliant on imported coal, leaving the economy vulnerable to price fluctuations and geopolitical risks. In recent weeks, imported coal prices rose by more than 20% compared to 2025, reaching approximately $110 per ton (FOB).
Research by the Pakistan Institute of Development Economics warns that a prolonged disruption in the Strait of Hormuz could increase Pakistan’s monthly petroleum import bill by $3.5–4.5 billion and push inflation to 15–17%.