The Sindh Engro Coal Mining Company — a joint venture with the provincial government — also counts amongst its shareholders corporate houses and banks — Thal Ltd (House of Habib), Hub Power Company and Habib Bank Limited — and a leading Chinese engineering firm, China Engineering and Machinery Company.

The Sindh government is facilitating and developing infrastructure, while Engro and its affiliates are engaged in project management and contracting and financing.. The company’s mandate also includes, operations and maintenance of the project.

The SECMC has been awarded 95.5 square kilometre area of Thar Block II to explore and develop coal deposits. An estimated 1.57bn tonnes of exploitable lignite coal reserves are within this block, enough to produce 5,000MW power for 50 years. The project’s total mining capacity is 20.6MT per annum, and its power generation capacity is projected to be up to 4,000MW — to be developed in phases within the next 10 years.

Power from the project is anticipated to be made available to the national grid by December 2017. The engineering, procurement and construction (EPC) contract has been awarded and physical work is underway at the mining site. At an optimum mine capacity of 4,000MW, Thar coal can yield a power tariff of approximately Rs6 per unit — the cheapest among all options currently available. To date, $20m has been spent on mining activities. During the first phase of the project, a mine of 3.8m tonnes annual capacity will be developed, and the unearthed coal from this mine will be utilised by two mine-mouth power plants of 330MW each, which are being undertaken by Engro’s subsidiary, Engro Powergen Thar (Pvt.) Ltd (EPTL). The total investment for the integrated project is estimated at $2bn.

Term sheets of approximately $900m were signed with the China Development Bank during Chinese President Xi Jinping’s recent visit to Pakistan for both mine and power projects

Since the groundbreaking ceremony in January 2014, 6,000 acres of land has been acquired and further work for 113m bank cubic metres (BCM) overburden removal in Block II has been started with a local contractor.

The use of a local contractor will help expedite work on the mine before the Chinese EPC contractors are mobilised, saving 3-4 months of construction time. We have successfully removed 3m BCM of overburden from the mining site so far.

The federal government has provided a sovereign guarantee, which is backed by the Sindh government, for the mining project. Term sheets of approximately $900m were signed with the China Development Bank during Chinese President Xi Jinping’s recent visit to Pakistan for both the mine and power projects.

In addition to this, the SECMC has also signed term sheets of approximately $450m with HBL, the lead syndicate for the local debt portion. We expect financial closure of the mining project within this year.

The development work is almost complete. Technical and environmental studies have been conducted and an NOC from Sepa has been granted. The EPC contract on turnkey basis has been signed for both projects.

Coal pricing rules for the mining project have been notified by the Sindh government, and the coal tariff petition has been submitted. The first public hearing of Thar coal has also taken place by the Thar Coal and Energy Board. Furthermore, the coal supply agreement between the mine and power plant is being negotiated and is expected to be finalised soon.

Meanwhile, a letter of support has been issued to EPTL by the Private Power and Infrastructure Board (PPIB) for the power project, along with the generation license. The EPTL has also unconditionally accepted the upfront coal tariff announced by Nepra. On May 4, the power company signed a PPA/IA with the National Transmission & Despatch Company (NTDC) and the PPIB respectively.

The provincial government is working on infrastructural development and facilitation, which include a fresh water supply scheme and an effluent disposal line for disposal of groundwater. For other key infrastructure requirements such as the transmission line, tenders have already been issued by the NTDC.

Furthermore, the widening and the rehabilitation of the road network is also progressing at a rapid pace, with expansion work being done on bridges, culverts and bypasses of small cities. An excellent road network now connects Karachi with our site.

To further reduce travel time, an airport is being constructed in Islamkot, the airstrip for which has been completed and the entire facility is expected to become functional by the end of the year.

The SECMC was awarded the 95.5 square kilometre area of Thar Block II to explore and develop coal deposits. An estimated 1.57bn tonnes of exploitable lignite coal reserves are within this block, enough to produce 5,000MW power for 50 years. The project’s total mining capacity is 20.6MT per annum, and its power generation capacity is projected to be up to 4,000MW — to be developed in phases within the next 10 years.

Meanwhile, SECMC’s corporate social responsibility initiatives in Tharparkar include medical and livestock health camps, livelihood training and provision of technical training to students. It has signed an MoU with The Citizen’s Foundation to establish six primary and three secondary schools in Block II and Islamkot.

The project employs over 150 local staff members from Block II and Tharparkar district as labour employees, drivers, cooks, janitorial staff, mining engineers and social mobilisers.

The writer is CEO, Sindh Engro Coal Mining Company

Published in Dawn, Economic & Business, May 18th, 2015

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