Engro avoids exposure to Thar power project

KARACHI: Engro will not take further exposure to the Thar power project after the completion of two 330-megawatt plants, expected to be commissioned by the end of 2018, said the company’s senior official.

Shamsuddin Shaikh, chief executive officer at Sindh Engro Coal Mining Company (SECMC) said the company has already taken huge exposures in the project.

“It has not been formally decided, but Engro will not be taking further exposures in the project,” Shaikh said. 

“We are investing a total of $200 million both in (coal) mining and power plant, which is the largest investment on the part of Engro.”  He said a number of local and foreign companies are interested in setting up the plants and “we would like other groups to come forward.”

“However, the mine would remain with the SECMC and we would provide the coal for these generation facilities,” he said.

As many as six companies, along with the government of Sindh, are mining coal under the banner of SECMC. 

Engro, HBL, Liberty Power and China Machinery Engineering Corporation, led by Engro Powergen Thar Limited, will set up two 330MW mine-mouth power plants.

“A number of local and foreign companies have approached us to partner in the project, but there is no more room. Besides our equity has already been completed,” Shaikh said.  The funding agreements have been signed but the money has not started pouring in. 

“There are certain conditions, which we need to meet and then the institutions would start releasing the money. It would not take more than a month,” he said.

SECMC CEO said the company is out of funds at the moment. He said around $150 million of shareholders’ equity would be pumped in January.

The mine will be expanded to a capacity of 7.6 million tons per annum in phase 2 of the project and another 660MW power plant facility will be added. 

This expansion has also been included into the China-Pakistan Economic Corridor. Thar Block-II, allotted to SECMC, has the capacity to fuel six 660MW power plants.  Earlier this month, the provincial government signed an implementation agreement with SECMC and water utilization agreement with Engro Powergen Thar Limited.   Under the implementation agreement, the government committed to provide the required infrastructure to facilitate the mining project amounting to $600 million.  Shaikh said things are proceeding as planned. He added that the work on airport and road network is underway, while the National Transmission and Despatch Company would lay the transmission network.

He said the Prime Minister Nawaz Sharif may visit Thar in early February to perform the ground-breaking ceremony of generation facility as well as the transmission network.