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November 17, 2016

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Thar coal-fired power project to be ready ahead of schedule

ISLAMABAD: The first phase of Thar coal-fired power projects with a capacity of 660-megawatt will become operational four months ahead of the scheduled date of October 2019, a senior official said on Wednesday.

“The first phase of Thar coal-fired power projects would start its commercial operation by June 3, 2019 instead of October 2019,” Shamsudin Ahmed Sheikh, chief executive officer (CEO) of Sindh Engro Coal Mining Company (SECMC) said at a news conference.

He said the financial close of the project was achieved on April 4, 2016 and since then around 10.2 percent of the total work had been completed. Works on power plant and coal mining are going on simultaneously.

"This is the first coal-fired power project in Thar and it is one of the leading energy projects of CPEC (China Pakistan Economic Corridor),” Sheikh said. “It is also the only energy project with such a majority sponsorship of private sector of Pakistan.”

Under the second phase, two more power plants of 330 megawatts would be launched in January 2016, which would be completed by December 2019. “The SECMC had committed to off take coal (7.6 million tons per annum) for phase II to Thal Limited and Hubco for setting up plants at block II.”

The company's CEO added that the SECMC also planned to add additional capacity of 11.4 mtpa coal beyond phase II by December 2021. “Moreover, by December 2021 five more coal-fired power plants would be set up in the block II of Thar and the total production capacity of coal-based electricity of Thar would be expanded to around 3,000 megawatts,” he said.

The coal mining project cost is $845 million, which would be on the basis of 75:25 debt to equity ratio and would consist of 31.5 percent foreign and 68.5 percent local debt. "The main sponsors of the project are Sindh government with 54.7 percent share, Engro and Thal Limited with 12 percent, each and Habib Bank Limited (HBL) with 10 percent share,” Sheikh said.

The total cost of two 330-megawatt mine-mouth power plants is around $1.1 billion with 75:25 debt to equity ratio and it would consist of 75 percent foreign and 25 percent local debts.

He added that the Engro with 50.1 percent share is the main sponsor of the project, “while it’s other shareholders are Liberty, HBL and China Machinery Engineering Company (CMEC) and others.”

“The Sindh government had been a key enabler for the Thar project, which committed $110 million equity investment for phase-I and provided a back-up for sovereign guarantee to the federal government of $700 million,” Sheikh said.

He said a number of major industrial houses of the country and prominent Chinese investors have expressed interests in obtaining coal from the SECMC to set up Thar-based coal-fired power plants after the financial close of phase-I in block-II.        

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