Thar Coal- A new Horizon for
Investment in Pakistan
Review of Pakistan Coal
Industry Now & the Future
By
Ajaz Ali Khan
Managing Director
Thar Coal & Energy Board
secy@sindhcoal.gos.pk
www.sindhcoal.gos.pk
Scheme of Presentation
• How will coal change the power scene in
Pakistan?
• Strategy to attract private investments in
the coal to power sector.
• Review of power purchase guarantee
scheme.
• Strategic alliance between the coal &
power sector.
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Coal’s Significance in Global
Energy Scenario
 Global energy consumption will rise by 50% by 2030. In non-
OECD region, it will rise by 85% (International Energy Outlook
Report 2008)
 Coal use is likely to grow from 40% to 44%, as a source for power
generation, by 2030* due to energy security and price volatility.
 Besides use in power generation, various countries have initiated
projects to produce Coal-to-Liquids, that entail producing diesel
and other liquid products and Coal gasification projects in China,
US, India and South Africa.
 World Proven Coal Reserves – Over 860 billion tons.
* Source IEA Report 2009
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Coal Used in Electricity Generation & Lignite Reserves
% age of Electricity Lignite Reserves
Generated from Coal Billion tonnes
South Africa
Poland
China
Australia
Israel
Kazakhstan
India
Czech Republic
94
93
81
76
71
70
68
62
30.15*
1.37
18.6
37.2
12.1
4.5
0.98
Morocco
Greece
USA
Germany
World Average
Pakistan
57
55
49
49
41
0.1
3.02
30.16
40.6
195.38
186.2**
( Source,2008, IEA)
* Sub bituminous & Anthracite reserves only
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** Thar Coal Resources are 175 billion tonnes Proven Reserve in 9 explored Blocks alone is 20 billion tonnes
A Comparison of Power Generation fuel Mix
World
Pakistan
Pakistan Power Generation Fuel Mix 2008-09
World Power Generation fuel Mix 2008-09
Nuclear,
1.8%
Others 2%
Hydel,
30.3%
Nuclear 15%
Nuclear
Coal 41%
Hydel
Gas, 32.4%
Gas
Hydro 16%
Oil
Coal
others
Gas 20%
Coal, 0.1%
Oil, 35.4%
Oil 6%
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Energy Poverty & Pakistan
1.4 billion people are denied access to electricity
around the world
• 2.7 billion people rely on the traditional use of
biomass for cooking.
• Lack of access to modern energy services is a
serious hindrance to economic and social
development
Per Capita Primary Commercial
2007
2030
Energy Use (TOE/capita)
0.42
0.77
Pakistan
•
1.82
World average
•
•
Electrification rate in Pakistan is 62.4%
Population without electricity in Pakistan is 68
million (40% of Population of Pakistan in 2010)
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Widening Demand & Supply Gap
Projection for Pakistan
Current Installed
Capacity (MW)
19,566
Project Demand
Year
MW
Gap (MW)
2010
24,474
6,577
2015
36,217
18,320
2020
54,359
36,462
2025
80,566
62,669
2030
113,695
95,798
Source: Pakistan Electric Power Company (PEPCO)
Future Energy Demand Supply Gap is Alarming!
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Coal- a means to long term Energy
Security for Pakistan
•
•
•
•
•
Rebalance the Energy Mix
Ensuring economic Growth through affordable
energy to reduce Energy poverty
• Cost per Kwh RFO vs Coal
• Means to end Circular debt of Rs 400bn (US$
3.5 Billion)
Increasing industrial competitiveness
Checking drain on foreign exchange
Putting idle human capital to productive use
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Pakistan’s Coal Reserves
Sindh
186.560 billion tonnes
Punjab
235 million tonnes
Balochistan
217 million tonnes
NWFP
90 million tonnes
Azad Kashmir
Thar
9 million tonnes
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CREDIBILITY OF RESERVES
Studies Conducted By:






United States Geological Survey
John T. Boyd
RWE of Germany
M/s Shenhua of China
Geological Survey of Pakistan
Sindh Coal Authority
► All studies confirm presence of huge coal reserves
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COMPARISON OF STRIPPING RATIO, HEATING VALUE &
GENERATION OF LIGNITE IN OTHER COUNTRIES
Comparison of Thar with Other International Mines
Stripping Ratio (m³ : t)
Heating Value
(MJ/kg)
6.6 : 1
11.6
Kosovo
1:1
7.8
Rhenish Area,
Germany
4.9 : 1
8.9
Hambach,
Germany
6.3 : 1
10.5
9:1
7.1
Deposit
Thar
Hungary
Greece
10:1
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5.02
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Uses of Lignite
Lignite
Coal
Combustion (Steam)
Gasification
Electricity (Steam Turbines)
CH4
CO2
Ash
Tar
Naphta
Phenol
Catechols
Carbon Dioxide
Dephenolized Cresylic Acid
H2
H2S
CO
H2
Crude
Oil Refinery
Coal to Liquid
Fisher Tropsch
Synthesis
Ethanol
Jet Fuel
Diesel
Petrol
Paraffin
Chemicals (Ethylene 
Polymers
NH3
Ammonia
Fertilizer
Explosives
Source: Syngas and Coal Technology, R & D, SASOL – Mr Johannes Van Heerdeen
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Vision for Thar Coal
“To develop Thar Coal as a major source of power
generation for Energy & Economic Security of the
country and as a Hub of Petro Chemical Industry”
Goal
To generate at least 10,000 MW by 2020
offer
•
•
•
•
Huge proven reserves with attractive incentives
Higher returns for investors
Business friendly policies & environment
Excellent incentives, concessions & protections
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Strategy to attract Private Investment
•
Attractive incentives Concessions
& protections for Investors
•
Power Purchase guarantee
Scheme
•
Provision of Robust Infrastructure
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Thar Coal -Special Economic Zone
Thar Coalfield is declared as Special Economic
Zone, and the projects of development of Thar (also
including coal mining and power generation)
declared as ‘Projects of National Security’
Rate of Return
• 20% ($ Based) IRR to firms which achieve
Financial Close before 31st December 2015 for
Mine & Power Plants based on indigenous coal
and additional half a percentage IRR i.e. 20.5%
IRR for firms which Financial Close by or before
31st December 2014.
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Exemptions/Concessions
• Zero percent customs duties on import of coal
mining equipment and machinery including
vehicles for site use.
• Exemption on withholding tax to shareholders on
dividend for initial 30 years.
• Exemption on withholding tax on procurement of
goods and services during project construction
and operations.
• Exemption for 30 years on other levies including
special excise duty, federal excise duty, WPPF
and WWF.
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Protections
Currency Exchange Rate Protection
Mining & Power Producers are protected from
the impact of exchange rate variation up to
Commercial Operation Date (COD).
EPC Cost Escalation
Cost escalation between the date of application
and the Financial Close permissible as per Power
Policy 2002
Return on Equity
US Dollar based Return on Equity
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Power Purchase Guarantee Scheme
• GoP guarantees obligations of power purchaser
• GOP provides protection against political force
majeure, change in law and change in duties &
taxes
• Payment of compensation in case of
termination due to GOP default
• Tariff adjustments for variation in currency
exchange rates, fuel prices and inflation
• Government ensures conversion of Pak Rupee
& remittance of foreign exchange for projectrelated payments
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INFRASTRUCTURE AVAILABLE AT THAR
ROAD NETWORK
70 tonnes load carrying capacity metalled road is
available up to Coal field area.
ELECTRICITY
11 KV feeder emanating from Islamkot to Thar Coal
Project areas with 200 watts transformer is available.
COMMUNICATION
Telephone & Internet communication through Optic fiber
cable is available up to Thar Coalfield area.
DRINKING WATER
29 Reverse Osmosis Plants in Thar are available for
provision of portable water to residents as well as project
staff free of cost.
RESCUE STATION
Rescue Station in coal mining area at Thar coalfield
covering an area of 8,200 sq. ft. is completed
LIBRARY
A Coal library is situated at office of Sindh Coal Authority,
Karachi.
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INFRASTRUCTURE PLANNED AT THAR
TRANSMISSION LINE
NTDC is conducting feasibility study for lying of Transmission Line for
evacuation of 10,000 MW from Thar. In the first Phase they are
planning to evacuate 1200 MW.
AIRPORT
The GoS has approved a scheme at the cost of Rs.972.070 million for
the construction of Airport at Thar for Coal Fields of Sindh by the Civil
Aviation Authority.
PROVISION OF HEAVY DUTY ROAD
The W&S Deptt. is upgrading the road from Karachi to Islamkot
through Hyderabad- Mirpurkhas- Naukot for facilitating transportation
of heavy machinery by Dec. 2012.
RAILWAY LINK
PRACS has been engaged by GoS to prepare feasibility for broad
gauge rail link from Port Qasim to Islamkot.
LODGE AT THAR
Lodge at Thar with 20-bedded accommodation to facilitate foreign and
local investors is being constructed at Islamkot.
PROVISION OF CANAL WATER:
The GoS has planned to construct a water carrier to provide 300 Cusecs water
to Thar.
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Status of Blocks
Thar Coal Block
Status
Block-II
Sindh Engro Coal Mining Company
(JV: 40% Sindh Government; 60% Engro)
2X600 Power Plant planned
Open Pit Mining @ 6.5 Mtpa
Bankable Feasibility completed
31st August 2010
Project financing activity continued.
Project financing is being arranged through Pak-China
Joint Energy Working Group.
Block III-A
Cougar Energy (UK)
400 MW Planned
Under Ground Coal Gasification Project
Ergo Exergy Technology planned
Pilot Burn planned in 36 Months
Work on DFS in progress.
Block-V
UCG Project
Under Ground Coal Gasification Project
2X50 MW IGCC Power Plant Planned
Unit gasifier design prepared,
Technical team mobilized and desktop studies under
process.
Drilling in Process by GSP
Pilot Burn is expected soon
Block-VI
Oracle Coalfields, PLC (UK)
Strip mining;
MoU signed with KESC for 300MW
Geotechnical drilling in process through DRD
ESIA completed
BFS completion June 2011
Mines Development to begin June 2012
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BUSINESS FACILITATION
Strategic alliance between Coal & Power sector
► High powered Thar Coal Energy Board (TCEB)
established as one stop org. with Federal and Provincial
agencies to facilitate investors.
► TCEB is a decision making body on Thar Coal Mining
and Power Generation Projects.
► TCEB facilitates and coordinates with all the projects
related to Thar Coal.
► Causing concerned agencies to improve infrastructure
► To act as coal Pricing agency
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Thar Coal & Energy Board
Composition of the Board is:
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
ix.
x.
xi.
xii.
xiii.
Chief Minister Sindh
Federal Minister for Water & Power
Federal Minister for Finance
Federal Minister for Law and Justice
Deputy Chairman, Planning Commission
Provincial Minister (Irrigation & Power)
Provincial Minister (Revenue & Relief)
Female MNA from Thar Region
Federal Secretary, Ministry of Water and Power
Chief Secretary, Govt. of Sindh
Secretary, Coal & Energy Development Dept.
One eminent Person
Managing Director, TCEB
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Chairman
Vice-Chairman
Member
Member
Member
Member
Member
Member
Member
Member
Member
Member
Member/Secretary
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Investment Options
1.
Coal Mining
Investors interested only in mining may apply
for a mine lease for mining the coal.
2.
Integrated Coal & Power Generation Project
Investors may also opt for investing an
integrated coal
mining and power generation
projects.
3.
Mine Mouth Power Project
Thar coalfields present best opportunity for mine
mouth power projects in view of the great
demand for energy in the country.
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Investment Options
4.
Coal Gasification
Investors may propose to convert coal into gas
and market the syngas and bye
products in
open market, or may develop a forward
integrated project on any one or more bye
products from gasification project
5.
Coal to Liquid Projects
Investors may propose to convert coal into Liquid
and market the byproducts in open market, or
may develop a forward integrated project on
any one or more bye products from CTL project
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Thar today
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Thar Tomorrow
Thank You
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