Sino Sindh Resources seeks upward revision in coal mining tariffs

KARACHI: Coal mining company Sino Sindh Resources has sought an upward revision in tariffs awarded to it by the government two years back as the project with annual 7.8 million tons capacity is expected to achieve financial close by next month, The News learnt on Friday.

Sino Sindh Resources (Pvt) Ltd (SSRL), the developer of 7.8 million tons per annum (mtpa) open-pit coal mine in Thar coal block-1, sought 12.37 percent increase in the coal tariff to $50.6224/ton as the project entered engineering, procurement, construction phase, an official document said. In April 2017, state-backed Thar Coal Energy Board (TCEB) awarded a 30-year feasibility stage levelised tariff of $44.36/ton for 7.8mtpa mine. Sino Sindh Resources, 100 percent owned by Global Mining Company, is developing the project.

SSRL initialed coal supply agreement with Thar Coal Block-1 Power Generation Company (Private) Limited – a subsidiary company of Shanghai Electric Group – to continuously supply 7.8 million tons of coal on annual basis for 30 years after power complex with two plants of each 660 megawatts achieves commercial operations date (COD), and completion of coal mine construction.

The company intends to achieve financial close by October 2019. Subsequent to the commencement of construction works, a time period of 36 months has been planned for achieving COD by Q4 of 2022. Correspondingly, the power plant is scheduled to achieve COD during the same timeframe.

SSRL proposed total levelised production payments at $18.0365/ton, while total levelised capacity payments are evaluated at $32.5859/ton, taking the overall proposed engineering, procurement, construction stage tariff at $50.6224/ton for the mine. SSRL has approached TCEB requesting adjustments in the project cost at financial close due to any changes in financial assumptions. On the date of financial closing, reference tariff table will be updated by the prevailing indices, exchange rates, and base numbers at that point in time. The coal mine developer has sought approval of reference coal tariff of 7.8mtpa coal mine in Thar along with the approval of relevant adjustments and indexations.

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. It holds lignite coal resources of approximately 3.5 billion tons, including 600 million tons of measured, 1.9 billion tons of indicated and one billion tons of inferred resources.

In the wake of the increasing demand for electricity and existing shortfall of supply of energy, power projects under China-Pakistan Economic Corridor have been prioritised by the government of Pakistan and government of Sindh.

Indigenous coal is one of the cheapest sources of energy to acquire the threshold required for attaining energy self-sufficiency. Inclusion of coal in the energy mix has, therefore, becomes indispensable for the country. Exploration of indigenous coal as compared to usage of imported coal is one of the major steps to attain sustainability in power sector.

Reducing reliance on imported coal is essential due to volatility in international fuel prices and currency rate depreciation, adversely affecting the balance of payment. Thar coal project is, therefore, expected to play a pivotal role in acquiring economic stability.