330MW Thar-coal power complex achieves commercial operation

KARACHI: Thar Energy Limited (TEL) would achieve commercial operation of its 330MW mine-mouth Thar-coal based power complex on Saturday, October 1, 2022, a bourse filing said.

TEL is a joint venture between the Hub Power Company Limited (HUBCO), Fauji Fertilizer Company Limited (FFC) and China Machinery Engineering Corporation (CMEC), formed for the purpose of establishing a 330 MGW Mine-Mouth Coal Fired Generation Complex at Thar Block, District Tharparkar Sindh.

“The project has successfully achieved commissioning with commercial operations date (COD) to take effect from October 1, 2022 in terms of power purchase agreement dated July 27, 2017 entered between TEL and Central Power Purchasing Agency Guarantee Limited,” HUBCO and FFC informed Pakistan Stock Exchange (PSX) on Friday.

TEL is a CPEC project in which HUBCO has 60 percent stakes and FFC and CMEC have 30 percent and 10 percent shareholding respectively.

This is the third mine-mouth coal power unit in Thar Block 2. TEL will produce cheapest thermal power generation as fuel cost of the power complex is expected to be around Rs4-5/Kwh compared to average coal-based power generation of Rs21-22/kwh in the country, as reported by National Electric Power Regulatory Authority (NEPRA).

“This will also mitigate chances of circular debt accumulation since overall cost (including EPP and CPP) seems to be lower than existing electricity tariff,” noted Farhman Mahmood, head of research at Sherman Securities.

The total estimated cost of the project is around $520 million which is 75 percent financed through debt while equity portion forms the rest.

Farhman said that commissioning of this plant would contribute around Rs4 per share in the annualised earnings of HUBCO. Moreover, another unit of 330MW ThalNova Power in Block 2 in which the company has 38.3 percent stake via Hub Power Holdings, is also expected to commission by the end of 2022.

These two projects would together contribute around Rs6.5/share in HUBCO’s bottom-line.

Alongside earnings contribution from these two power units, HUBCO is poised to reap the benefits through mining of additional coal in phase 2 of the existing block in which Sindh Engro Coal Mining (HUBC stake 8 percent) would enhance mining output by 3.8 million tonnes to fuel these two power plants mentioned above, Farhan said.

Additional earnings from mining would further contribute around Rs0.8 per share in HUBCO’s bottom-line, he added.

TEL would be using indigenous Thar coal to generate low cost energy, which would not only result in bridging the energy demand and supply gap, but would also preserve foreign exchange reserves of the country.