Thar coalfields Block-1 tariff revised 9.2 percent up

KARACHI: Thar Coal Energy Board (TCEB) has revised up the feasibility stage coal tariff for Sino-Sindh Resources Pvt Ltd (SSRL) by 9.2 percent to $44.36/ton for their 7.8 million tons per annum (mtpa) capacity mine at Block-1 of Thar coalfields.

However, the determined tariff is less than the price of $47.27/ton, which SSRL had proposed in their petition. A company official said the determined coal price was acceptable to them and they had expedited their efforts to achieve the financial close before June 30, 2017.

TCEB had initially granted a tariff of $40.62/ton in January, which according to SSRL was not economically feasible for the project, considering its challenging dynamics as well as the deadlines.

The company filed a revision petition proposing price of coal at $47.27. TCEB raised the tariff by 9.2 percent as against 16.4 percent sought by the company.

SSRL plans to develop the 7.8 million tons per annum coal mine and integrated 1,200 MW mine-mouth power plant supplying electricity to the national electricity grid network of Pakistan. The total project cost is estimated at $3.1 billion for which a bankable feasibility has been completed.   “On financial close this will be the largest direct investment in Pakistan ever totaling $3.1 billion for mine and power plant combined,” the official added.

The official said SSRL had silently made significant progress on the project and by end 2019; the mine would be fully operational. SSRL holds a 30-year mining lease for Block-1 of Thar Coalfields which covers approximately 150 square km in south eastern Pakistan.

SSRL was awarded the block after an intensive round of International Competitive Bidding in September, 2011. Block-1 holds lignite coal resources of approximately 3.5 billion tons including 600 million tons of measured, 1.9 billion tons of indicated and 1.0 billion tons of inferred resources.

“The project is being developed without government debt repayment guarantee or government equity,” the official said terming it a “huge win for Pakistan”. The official said at $44.36/ton, the coal would be much cheaper than Sindh Engro Coal Mining Company (SECMC), which is $60/ton. “Hence, SSRL will produce cheaper electricity for consumers.”

The global market for lignite mining is influenced by the increased need for energy and the rising prices of various energy production resources. Also, with the development taking place in the economies such as India and China, the demand for energy will rise, thereby, increasing the price of energy and its resources.

This rise in price tends to shift the interest of industries towards other resources of energy. Recently, countries such as Germany has stopped its nuclear power generation business and switched to other electricity generating resources. Henceforth, the global market for lignite mining is expected to grow with the rising energy prices and nuclear hazard concerns.