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December 17, 2019

Implementation pact of $1.9bln Thar coal power project signed

Business

December 17, 2019

ISLAMABAD: Private Power and Infrastructure Board (PPIB) on Monday signed an implementation agreement with a Chinese consortium for development and operation of $1.9 billion worth of Thar coal-based power project having generation capacity of 1,320 megawatts.

PPIB Managing Director Shah Jahan Mirza signed the pact – on behalf of the government – with Thar Coal Block-I Power Generation Company Limited (TCB-I) Chief Executive Officer Meng Donghai.

Minister for Energy Omar Ayub Khan, who is also chairman of PPIB, witnessed the signing ceremony and appreciated PPIB’s efforts to expedite processing of independent power producers based on indigenous fuel.

The project’s power purchase agreement has already been executed. Based on modern super critical technology, the project is being developed under the umbrella of China-Pakistan Economic Corridor (CPEC) framework. Shanghai Electric Group Company is the main sponsor, anticipated to start generation in March 2021, while TCB-I is the project’s company.

The project would utilise Thar coal supplied by Sino Sindh Resources Limited, which is executing coal mining operations for coal extraction in the Thar coalfield block-I. PPIB has already issued letter of support to the project, while financial closing is expected to be achieved very soon.

The signing of implementation agreement would pave the way for timely commissioning of the project. The 1,320MW power plants would be connected with the Matiari-Lahore HVDC (high voltage direct current) transmission line project of 660 kilovolts. PPIB is implementing the transmission line project, which is currently under construction and targeted to be operational by March 2021, under CPEC.

Officials said addition of 1,320 MW of indigenous, affordable and reliable electricity would result in foreign exchange saving of around Rs75 billion spent annually on fuel cost. Mirza said PPIB is acting as the lead organisation of the government in developing indigenous resources like Thar coal and hydel for power generation.

“Exploration of Thar coal is opening a new chapter in the energy history of Pakistan and PPIB has been quite successful in implementing another six Thar coal-based power projects of 4,290 MW which are at different stages of development,” he said in a statement.

Meanwhile, UK-based energy developer Oracle Power announced two new partners for the development of a surface mine and 1,320 megawatts of mine mouth power plant at Thar coal block VI.

The company, in a notice to London Stock Exchange, said the agreement foresees the creation of a special purpose vehicle to develop and undertake both the projects, which would be funded on a 75 percent debt and 25 percent equity basis.

With the joint development agreement, Beijing Jingneng Power Company Limited and PowerChina International Group Limited are ousted, while China National Coal Development Company Limited would have 73 percent and Private Office of Sheikh Ahmed Dalmook Juma Al Maktoum would have 15 percent stake in the project. Oracle’s stake would remain intact at 12 percent.

Naheed Memon, chief executive officer of Oracle said the two partners bring with them the requisite expertise, financial wherewithal and global presence to ensure a project of this scale can be brought to fruition. “… our new partners share Oracle’s vision and can see the truly transformational impact that the development of Thar block VI can provide,” Memon said in a statement.