Sino-Sindh Resources seeks rise in coal mining tariff

KARACHI: Sino Sindh Resources (Pvt) Ltd, a coal mining and power joint venture of China and provincial government, has sought an increase in mining tariff for its project at Thar coalfield, an official said.

Sino Sindh Resources (SSRL) sought the tariff at $47.27/tonne as against $40.62/tonne determined by the Thar Coal Energy Board.    The company planned to mine 7.8 million tons of coal per annum and set up 1,200 megawatts of mine-mouth power plant at the Block-1 of Thar coalfield. 

The total project cost is estimated at $3.1 billion for which a bankable feasibility has already been completed. The official said determined tariff was not economically feasible for the project, considering its challenging dynamics as well as the deadlines.

“In view of absence of sound economic feasibility of the determined tariff, we have proposed a higher tariff in order to ensure that the project remains financially feasible,” he said on condition of anonymity. 

Earlier, SSRL had proposed a tariff of $48.5/tonne. SSRL was awarded the block after an intensive round of international competitive bidding in September 2011. 

SSRL holds a 30-year mining lease for the Block-1 of Thar coalfield. The block covers approximately 150 square kilometres in south eastern Pakistan.

Block-1 holds lignite coal resources of approximately 3.5 billion tonnes, including 600 million tonnes of measured, 1.9 billion tonnes of indicated and one billion tonnes of inferred resources.

The official said SSRL had silently made significant progress on the project, which would be the country’s biggest private sector investment.

SSRL is undertaking the project without any government investment and sovereign guarantee. “Government should realise that the company is taking a big risk in developing a mine twice the size being developed at the Block-II and within the same timeline,” the official said. 

Sino Sindh Resources planned to achieve financial close by May 2017 and the equity would be mobilised by April. “By the end of 2019, the mine would become operational,” the official said.   He said SSRL has a strong case and they are hopeful that the tariff would be revised to a feasible level.

Sindh Engro Coal Mining Company was awarded the mining contract for the Thar Block-II. The company is also expecting a 660MW coal power generation by 2019. The provincial government is taking initiatives to set up coal-fired power plants based on indigenous coal to mitigate the power shortage in the country.

Thar Coal and Energy Board of Sindh is developing coal embedded in Thar Desert, estimated to have 180 billion tons of coal, to generate 8,680MW by 2021. Six energy companies are already operating in the desert.