Karachi / Thar, January 31, 2014: Prime Minister Mian Muhammad Nawaz Sharif and former President Mr. Asif Ali Zardari inaugurated the work today on The Sindh Engro Coal Mining (SECMC) project, a joint venture between government of Sindh and Engro Corporation. This marks the beginning of coal extraction from Thar Coal block II. Mian Nawaz Sharif and Mr. Asif Ali Zardari were accompanied by the Chief Ministers of Sindh and Baluchistan, Federal Ministers for Finance, Water & Power, and Petroleum & Natural Resources besides federal & provincial government officials and Senior Management of Engro Corporation. The event reflects complete political consensus on Thar coal being a sustainable indigenous solution for Pakistan’s energy security. The project envisages initial mine capacity of up to 6.5m tpa along with mine-mouth power plant(s) of up to 660 MW. Part of coal production will also be supplied to other coal fired plants being planned.
Speaking at the occasion, Prime Minister Mian Nawaz Sharif said, “I congratulate the Government of Sindh and Engro Corporation for initiating the project to utilize indigenous resources for power generation. It is an important milestone in attaining the sustainability in Pakistan’s energy mix. Pakistan is fortunate to have abundant coal reserves, and the investment in Thar Coal project is a first step towards building the capacity, which will foster a more developed and energy-efficient Pakistan”.
Speaking at the occasion, former President, Mr. Asif Ali Zardari said, “I would like to congratulate the Government of Pakistan and the Government of Sindh for bringing this landmark initiative to fruition. The Thar Coal will not only bring together all the key players of economy on one forum to highlight potential of investment in Pakistan but will also help the initiatives which will put the country on the path of rapid, equitable and sustainable socio-economic growth.”
The Chief Minister for Sindh, Syed Qaim Ali Shah addressed the gathering and said, “Sindh Government attaches high priority to investment facilitation which it believes would take the province and country to the path of progress and help achieve its true economic potential. The ground-breaking ceremony of this site is the manifestation of Sindh Government’s commitment to bring about continuous improvement in investment climate in the province. Moreover, our success in signing this key joint venture project with Engro Corporation is also in pursuit of our objective to bring prosperity to our people and provide them with jobs and socio-economic development opportunities.”
Mr. Murad Ali Shah – Advisor for Finance & Energy, GoS, spoke at the ceremony and said; “Sindh with its numerous competitive advantages has always remained an obvious choice for investors. The initiation of the Thar Coal project reflects Sindh’s potential for investment particularly in relatively untapped areas and this momentous effort will eventually culminate in fulfilling Sindh Government’s commitment to provide equitable development in all parts of the province – thereby improving the life of the common man.”
Mining and power project at block II is being established by Sindh Engro Coal Mining Company (“SECMC”) which is a joint venture of Engro Powergen Limited & Government of Sindh (GoS). Soon after its establishment, SECMC engaged world class consultants including RWE Germany, Sinocoal China and Inner Mangolia China for carrying out detailed feasibility study which confirms the technical, commercial, environmental and social viability of Thar coal mining project. The Initial mine production will cater to around 600-1200 MW of electricity generation which will be gradually scaled up to eventually yield power generation of 5,000 MW for 50 years.
This historic groundbreaking is in line with the Government of Pakistan’s vision of promoting indigenous fuel based projects to create a sustainable energy future for the country. Firm EPC bids from Chinese contractors for both mining and power project have been received while EPC contracts are likely to be awarded by end of February 2014. Chinese banks have expressed interest in providing financing for the project. The financial closure of the project is expected by third quarter – with Chinese banks expressing interests in providing the requisite financing – while the project is estimated to commence its commercial operations within four years from the time of financial closure.
Cost of power generated from Thar coal is estimated at under USD 9/kwh which is almost 50% of cost from furnace oil based electricity generation. Consequently, development of this project not only provides cheaper electricity but also bodes well for tackling the monster of circular debt since expensive power generation from liquid fuels remains the root cause of energy crisis plaguing this nation.
Expressing his views, Hussain Dawood – Chairman Engro Corporation said, “On behalf of Engro Corporation and Sindh Engro Coal Mining Company, I wish to place our gratitude to the Government of Sindh and the Federal Government for its continued support and partnership in this key project; and remain confident that together we will continue to boost development across Pakistan, paving the way for national prosperity in the years to come”.
This project is one of the few projects in Pakistan that enjoys bipartisan support of both federal and provincial governments. Besides being the majority shareholder in SECMC and thereby taking up role of the main equity investor, GoS has also taken the role of developing requisite infrastructure at Thar including road, effluent disposal and provision of water. In the last six years, the GoS has spent more than USD 300 Million to develop the infrastructure. The project also enjoys complete support of federal government, which has shown its commitment through sovereign guarantee for mining project. Project was listed as the priority energy projects to be financed by China in a recently held Pak-China Energy Working group in Beijing.
Thar Coal has the potential to change the energy landscape of Pakistan; the coal can also be used for gasification of fertilizer and petrochemicals industry opening up new avenues of progress and development in Pakistan.