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October 9, 2018

Govt approves $40.66/ton tariff for coal mining project

Business

October 9, 2018

KARACHI: Thar Coal and Energy Board (TCEB) approved $40.66/ton as tariff for the public-private coal mining project of 7.6 million tons, around 13 percent lower than the request, a document showed on Monday.

The board determined the coal tariff for Sindh Engro Coal Mining Company (SECMC) for 30 years as opposed to the petitioned tariff of $46.84/ton.

SECMC, a joint venture between the government of Sindh and Engro Powergen, a subsidiary of Engro Corporation Limited, had earlier requested for determination of levelized tariff of $46.84/ton for development and operations of 7.6 mtpa mining capacity and $57/ton for development and operations of 5.7 mtpa mining capacity.

SECMC, in the petition, said two tariffs might be determined in the ambit of the tariff for 7.6 mtpa mine capacity due to change in completion schedules of two off-takers of the enhanced mine production.

The joint venture requested a separate tariff table for 5.7 mtpa capacity for an approximate period of three months prior to the final commissioning of the 7.6 mtpa mine. Thar Coal and Energy Board said the latest tariff determination recognises the production and expansion stream of 7.6 mtpa.

“For the 5.7 mtpa capacity, there is insufficient data and development plan timelines,” it said in a statement. “The determination is based upon an initial production of 3.8 mtpa lignite, which’s ramped up to 7.6 mtpa as per the mine expansion plan, submitted by SECMC.”

The board further said SECMC is still not fully firmed up with respect to the off-taker’s schedules. “A plea at this stage is perceived as seeking an insurance against a probability of such a happening,” it said. “This approach does not fit into the genre of cost-plus tariff determinations and cannot be accommodated.”

Shamsuddin Sheikh, chief executive officer of SECMC said the determination is currently under review by the company and “it will follow the stipulated process in case there are any clarifications”.

"SECMC reaffirms its commitment to making the indigenous Thar coal a key part of the country’s energy mix which can provide sustainable and affordable power for many decades and reduce dependence on expensive imported energy resources,” Sheikh said.

Thar coal fields represent the seventh largest coal reserves in the world, having 175 billion tons of reserves, which constitute 95 percent of the total coal reserves in the country. Thar coal is of lignite quality, and perfectly suitable for electricity generation.

Analysts said Thar development potential is huge. “Even if in the future the development scale of Thar coal field is expanded to 100 million tons, it is sufficient to supply the fuel demand of Pakistan for several centuries,” an analyst said.

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