58 Business The EconomistFebruary 3rd 2018
2 bankrupt in 2012 after the government re-
fused to honour a sovereign guarantee to
provide gas to one of its fertiliser plants. Yet
without similar government support, no
other Thar block-owners have secured fi-
nancing, leaving Engro’s diggers, which be-
gan work last year, to move ahead.
The endeavour benefits from being in
the group of infrastructure projects that
make up the $62bn China Pakistan Eco-
nomic Corridor, a hoped-for trade route.
Western banks shook their heads when
approached about a coal project, so Engro
has relied on Chinese financing. Analysts
note an irony in China’s promotion of coal
abroad as it withdraws from the fuel at
home. Handling the extraction at Thar is
the China Machinery Engineering Corpo-
ration, a state-owned firm with expertise
beyond Pakistan’s reach.
Around 126 metres below the sands of
Thar, with just 20 more to go, Engro’s dig-
gers can now almost touch their prize.
When the coal is reached, as is expected in
mid-2018, it will feed a pit-mouth power
station constructed by Engro, and, in time,
three others owned by partners in the
SECMC. These stations will furnish around
a fifth of the country’s electricity for the
next 50 years. The financial rewards could
be vast. “All my richest friends are jumping
up and down [because they did not get
there first]”, says the boss of one big multi-
national construction business.
Hurdles remain, not least complaints
from nearby villagers about the disposal of
the vast quantities ofwastewater from the
mine on their ancestral grazing lands in the
form of a reservoir. In reply, Engro stresses
its social work in the surrounding district
of Tharparkar, the poorest in Sindh, which
includes the construction of several free
schools. More self-interestedly, it is training
locals to drive so they can man the dumptrucks that trundle day and night around
the mine. According to Shamsuddin
Shaikh, chief executive of Engro Powergen,
the conglomerate’s energy division, Engro
also has its sights on Reko Diq, a gargan-
tuan and long-stalled copper mine in Balo-
chistan, the least developed of Pakistan’s
provinces. To tap one of the country’s two
largest and most niggardly mines is hard
enough. Imagine cracking them both. 7Engro’s national missionI
N A few years, millions of people will use
a messaging app to make instant pay-
ments to friends across the globe or in a
digital marketplace. But instead of state-
backed money, they will use a crypto-
currency, the Gram, denoted by a gem-
stone emoji. They will be able to pay to
store data—and perhaps to view content—
securely and away from governments’ pry-
ing eyes. All of this will take place on a sin-
gle platform, TON, or “The Open Net-
work”, built by Telegram.
This is the vision that Telegram’s foun-
ders, the brothers Pavel and Nikolai Durov,
are flogging to investors ahead of their ini-
tial coin offering(ICO). A “presale” round
to institutional investors is under way,
with a wider sale of Grams to retail inves-
tors expected in a few weeks. Reports sug-
gest the offering could raise as much as
$1.2bn, making it by far the largestICO.
Compared with other firms selling to-
kens on the back of vague promises, Tele-
gram has lots going for it. Its encrypted
messenger app, particularly popular with
the global crypto crowd, is already used by
nearly 200m people. With such a captive
audience, the Durovs’ ambition of bring-
ing virtual money to the masses over the
next year or so does not sound so far-
fetched. WeChat in China has already inte-
grated payments into its messaging app (al-
beit without its own currency).
The ICOoffers a way to monetise Tele-
gram, which has so far been funded by Pa-
vel Durov, and which, by the firm’s esti-
mate, needs$400m to fund its expansion
over the next three years. Mr Durov struck
gold with VKontakte, a Russian social-net-
working site, though he waslater forced
out of both the company and the country
after clashing with the government over
data privacy. Nikolai is regarded as the
technical brains behind Telegram.
Unsurprisingly, given the crypto-craze,
the presale is rumoured to be significantly
oversubscribed. Many Silicon Valley ven-ture capitalistssat on the sidelines asICOs
took off lastyear. ButTelegram, with its es-
tablished brand and the Durovs’ pedigree,
gives them an opportunity to join the fray,
says Kyle Samani, who runs Multicoin
Capital, a hedge fund dedicated to crypto-
currencies. A discount to early investors is
probably helping to stoke demand. Yet
some investors, including Mr Samani him-
self, remain unconvinced. Even if the Du-
rovs’ thesis that a mass-market crypto-cur-
rency will take off is right, their bold
ambitions could still fail to be realised.
One potential obstacle is technology.
Unlike other projects funded byICOs,
which rely on existing technology, Tele-
gram plans to build a new blockchain, a
type of decentralised ledger, with a new ar-
chitecture, notes Lex Sokolin of Autono-
mous, a research firm. That is entirely
achievable; Filecoin, for example, has al-
ready done so for data storage. But the Du-
rovs are betting that they can solve many
of the hard problems that other blockchain
programmers have already given up on,
says Yannick Roux, who runs Token Econ-
omy, a widely read crypto-currency news-
letter. Telegram claims thatTONwill be
able to process millions of transactions per
second, far faster than happens in bitcoin,
through painful-sounding processes like
“infinite sharding” and “hypercube rout-
ing”. Research into both was abandoned
years ago by other developers.
Even if the technological hurdles are
surmounted, regulation may prove a big-
ger obstacle. Telegram sells itself as being
beyond the reach of the state. But it is under
pressure to block all forms of extremist
content on its app. Islamic State is believed
to have used it to plan attacks in Berlin and
Istanbul; the Russian authorities claim that
terrorists used Telegram to plan an attack
last year on St Petersburg’s metro. In a
speech at the World Economic Forum in
Davos last week, Britain’s prime minister,
Theresa May, described the app as a “home
to criminals and terrorists” and said it
should co-operate with authorities.
And crypto-currencies in general are at-
tracting far more flak from regulators. This
week America’s Securities and Exchange
Commission halted an ICOby AriseBank,
which claimed to have raised $600m, al-
leging investor fraud; and regulators in
South Korea cracked down on allegedly il-
legal foreign-exchange deals carried out us-
ing crypto-currencies. Even Facebook this
week announced a ban on ads promoting
ICOs and crypto-currencies (although
Mark Zuckerberg, the firm’s founder, has
expressed an interest in digital currencies).
Ministers also plan to discuss a global regu-
latory framework for crypto-currencies at
aG20summit in March, aimed at protect-
ing investors and preventing illicit activi-
ties such as money-laundering. Raising
money should be easy for Telegram. Shut-
ting out the state will be far more testing. 7TelegramCrypto for the
masses
An encrypted messaging app plans the
largest ever initial coin offering