Money Matters

Dark Matter

By Hussain Ahmad Siddiqui
Mon, 06, 17


A power plant based on the indigenous Thar coal is going to become a reality soon. The long-awaited first power plant, an integrated mine-mouth project, is in advanced stages of implementation and construction by Engro Powergen Thar Ltd, in partnership with Sindh Engro Coal Mining Co (SECMC) and China Machinery Engineering Corporation.

The power project of an installed capacity of 660MW (2x330MW) is being developed in two phases. The first unit of 330MW capacity is scheduled for commissioning in December 2018, whereas the second unit of 330MW would achieve the commercial operations date (COD) in June 2019. However, according to the latest reports, the coal mining project has so far achieved 40 percent of physical progress, and 33 percent on the power generation project, and therefore the COD for both the units is now set at June 3, 2019. Engro Powergen had originally planned 1,320MW (4x330MW) cumulative installed capacity, but the sponsor is not likely to take further exposure after the completion of the ongoing project.

It was in 1992 that the Geological Survey of Pakistan (GSP) discovered huge subsurface deposits of Thar coal, termed as the world’s seventh largest coal reserves, in Tharparkar district (Sindh). Spread over 9,600 square kilometers, the Thar coalfields have an assessed reserve of 175.5 billion tons. From 1993 to 2001, the GSP conducted comprehensive exploration, assessment, evaluation and appraisal studies of the Thar coal resources, establishing technical and commercial viability of mining the coal, which is classified as Lignite A-B containing low ash and sulphur, and its suitability for power generation. At present, the area has been divided into 13 blocks where exploitation and assessment of coal resources has been completed.

As the news spread globally, a number of foreign investors, including global key players in coal mining and power generation, from Hong Kong, China, Australia, Germany, US and England, showed interest, from time to time, in the exploitation of Thar coal resources for power generation, but without any breakthrough. The only serious and sincere effort was made by Shenhua Group Corporation of China in 2002 to establish a 600MW power plant at the mine-mouth with associated captive coalmines. The project, which was to be developed on build, operate and transfer (BOT) basis, was scheduled to generate electricity by 2009. Unfortunately, the project ran into various snags, primarily on tariff issue, even before the arranged groundbreaking ceremony in January 2005, and did not actualise.

Due to slow pace and lack of interest by the investors in exploitation of Thar coal and developing an integrated power plant, the government decided to unbundle the Thar coal project into mining and power generation, for setting up as separate and independent projects. Subsequently, the government established Thar Coal Mining Co, later renamed as Sindh Coal Mining Co, effectively in 2007, to undertake mining, handling and transportation of the Thar coal, for selling it to the potential independent power producers (IPPs). In subsequent years, the Sindh Engro Coal Mining Co (SECMC) came into existence as a public-private joint venture. Meanwhile, the government had launched a programme to build-up the necessary support infrastructure in the area with a total financial outlay of tens of billions of rupees.

This included water supply scheme, provision of electricity, road network, railways link, telecommunication, affluent disposal, housing, construction of a commercial airport, and laying of 50kV transmission line for dispersal of electricity from the prospective power stations to national grid. Most of these works have been completed while the others are in progress.

The Thar Coalfields are declared Special Economic Zones, and an attractive package of fiscal and financial incentives, concessions and protections are offered to the investors. Indeed, the SECMC has achieved a landmark in utilising the immense wealth of Thar coal resources after more than two decades of its discovery. The coal mining project at Thar Block II, of extracting total 6.5 million tons per year using open-pit mining technology, is being developed by SECMC at a cost of $1,470 million, under the China-Pakistan Economic Corridor (CPEC) programme. It has committed to supply, in the first phase of extracting 3.8 million tons coal annually, the required quantity of coal, to the under-construction Engro Powergen power plant.

Engro Powergen is among the four power generation projects based on Thar coal, with cumulative capacity of 5,280MW, which are currently under various stages of process and implementation under the CPEC umbrella as the “prioritised/early harvest projects”. Others are Shanghai Electric (Thar Block I), Sino Sindh Resources (Thar Block II) and Oracle Coalfields UK (Thar Block VI), each of 1,320MW (2x660MW) installed capacity. In a recent move, the Private Power and Infrastructure Board (PPIB) has given extensions in Letters of Support (LOS) to four Thar coal-based power projects, on the premise that SECMC would supply coal to these power stations on completion.

The list includes 660MW Lucky Electric Power (at Port Qasim), and Thal Nova Power (Thar Block II), Siddiqsons Energy (near Port Qasim) and HUBCO Thar Energy (Thar Block II), each of 330MW installed capacity. All these projects are scheduled to come on stream, progressively, during the period 2018-2021. The SECMC has also entered into a long term partnership with Sino Sindh Resources, the lessee of Thar Block I, to jointly supply Thar coal for the various power plants of total capacity of 6,000MW to be developed by China International Power Holding in Sindh over a period of ten years or so.

The utilisation of the indigenous coal for power generation on a large scale will assume greater significance in the projected energy scenario as it will reduce the country’s dependence on imported fuels, providing affordable electricity in long term perspective. The commercial operation of the first Thar coal based power plant will prove to be a precursor for the development of other power projects in the pipeline based on Thar coal. Unfortunately, all the Thar coal based power projects would utilise the outdated subcritical coal combustion technology, instead of the advanced supercritical or state-of-the-art ultra-supercritical technology. The government should ensure that modern coal combustion technology for power generation is employed by the project sponsors.

The writer is retired Chairman of the State Engineering Corporation