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By Ajaz Ali Khan Managing Director Thar Coal & Energy Board secy@sindhcoal.gos.pk www.sindhcoal.gos.pk PowerPoint Presentation
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Thar Coal- A new Horizon for Investment in Pakistan. Review of Pakistan Coal Industry Now & the Future. By Ajaz Ali Khan Managing Director Thar Coal & Energy Board secy@sindhcoal.gos.pk www.sindhcoal.gos.pk. Scheme of Presentation. How will coal change the power scene in Pakistan?

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slide1

Thar Coal- A new Horizon for Investment in Pakistan

Review of Pakistan Coal Industry Now & the Future

By

Ajaz Ali Khan

Managing Director

Thar Coal & Energy Board

secy@sindhcoal.gos.pk

www.sindhcoal.gos.pk

scheme of presentation
Scheme of Presentation
  • How will coal change the power scene in Pakistan?
  • Strategy to attract private investments in the coal to power sector.
  • Review of power purchase guarantee scheme.
  • Strategic alliance between the coal & power sector.
slide3

Coal’s Significance in Global Energy Scenario

  • Global energy consumption will rise by 50% by 2030. In non-OECD region, it will rise by 85% (International Energy Outlook Report 2008)
  • Coal use is likely to grow from 40% to 44%, as a source for power generation, by 2030* due to energy security and price volatility.
  • Besides use in power generation, various countries have initiated projects to produce Coal-to-Liquids, that entail producing diesel and other liquid products and Coal gasification projects in China, US, India and South Africa.
  • World Proven Coal Reserves – Over 860 billion tons.

www.sindhcoal.gos.pk 3

* Source IEA Report 2009

coal used in electricity generation lignite reserves
Coal Used in Electricity Generation & Lignite Reserves

* Sub bituminous & Anthracite reserves only

** Thar Coal Resources are 175 billion tonnes Proven Reserve in 9 explored Blocks alone is 20 billion tonnes

4

( Source,2008, IEA)

slide5

A Comparison of Power Generation fuel Mix

World

Pakistan

World Power Generation fuel Mix 2008-09

Others 2%

Coal 41%

Hydro 16%

Gas 20%

Oil 6%

www.sindhcoal.gos.pk 5

slide6

Energy Poverty & Pakistan

  • 1.4 billion people are denied access to electricity around the world
  • 2.7 billion people rely on the traditional use of biomass for cooking.
  • Lack of access to modern energy services is a serious hindrance to economic and social development
  • Electrification rate in Pakistan is 62.4%
  • Population without electricity in Pakistan is 68 million (40% of Population of Pakistan in 2010)

www.sindhcoal.gos.pk 6

slide7

Widening Demand & Supply Gap

Projection for Pakistan

Source: Pakistan Electric Power Company (PEPCO)

Future Energy Demand Supply Gap is Alarming!

3

slide8

Coal- a means to long term Energy

Security for Pakistan

  • Rebalance the Energy Mix
  • Ensuring economic Growth through affordable energy to reduce Energy poverty
          • Cost per Kwh RFO vs Coal
          • Means to end Circular debt of Rs 400bn (US$ 3.5 Billion)
        • Increasing industrial competitiveness
        • Checking drain on foreign exchange
        • Putting idle human capital to productive use

www.sindhcoal.gos.pk 8

pakistan s coal reserves
Pakistan’s Coal Reserves

Sindh

186.560 billion tonnes

Punjab

235 million tonnes

Balochistan

217 million tonnes

NWFP

90 million tonnes

Azad Kashmir

9 million tonnes

Thar

www.sindhcoal.gos.pk 9

slide10

CREDIBILITY OF RESERVES

Studies Conducted By:

    • United States Geological Survey
    • John T. Boyd
    • RWE of Germany
    • M/s Shenhua of China
    • Geological Survey of Pakistan
    • Sindh Coal Authority
  • All studies confirm presence of huge coal reserves

www.sindhcoal.gos.pk 10

slide11

COMPARISON OF STRIPPING RATIO, HEATING VALUE & GENERATION OF LIGNITE IN OTHER COUNTRIES

www.sindhcoal.gos.pk 11

slide12

Uses of Lignite

Ethanol

Jet Fuel

Diesel

Petrol

Paraffin

Chemicals (Ethylene  Polymers

Combustion (Steam)

Electricity (Steam Turbines)

Lignite

Coal

Crude Oil - Refinery

Gasification

CH4

CO2

H2

H2S

NH3

CO

H2

Coal to Liquid

Ash

Tar

Naphta

Phenol

Catechols

Carbon Dioxide

Dephenolized Cresylic Acid

Fisher Tropsch Synthesis

Ammonia

Fertilizer

Explosives

Source: Syngas and Coal Technology, R & D, SASOL – Mr Johannes Van Heerdeen

www.sindhcoal.gos.pk 12

slide13

Vision for Thar Coal

  • “To develop Thar Coal as a major source of power generation for Energy & Economic Security of the country and as a Hub of Petro Chemical Industry”
  • Goal
  • To generate at least 10,000 MW by 2020
  • offer
  • Huge proven reserves with attractive incentives
  • Higher returns for investors
  • Business friendly policies & environment
  • Excellent incentives, concessions & protections

www.sindhcoal.gos.pk 13

slide14

Strategy to attract Private Investment

  • Attractive incentives Concessions & protections for Investors
  • Power Purchase guarantee Scheme
  • Provision of Robust Infrastructure

www.sindhcoal.gos.pk 14

thar coal special economic zone
Thar Coal -Special Economic Zone

Thar Coalfield is declared as Special Economic Zone, and the projects of development of Thar (also including coal mining and power generation) declared as ‘Projects of National Security’

Rate of Return

  • 20% ($ Based) IRRto firms which achieve Financial Close before 31st December 2015 for Mine & Power Plants based on indigenous coal and additional half a percentage IRR i.e. 20.5% IRR for firms which Financial Close by or before 31st December 2014.

www.sindhcoal.gos.pk 15

exemptions concessions
Exemptions/Concessions
  • Zero percent customs duties on import of coal mining equipment and machinery including vehicles for site use.
  • Exemption on withholding tax to shareholders on dividend for initial 30 years.
  • Exemption on withholding tax on procurement of goods and services during project construction and operations.
  • Exemption for 30 years on other levies including special excise duty, federal excise duty, WPPF and WWF.

www.sindhcoal.gos.pk 16

protections
Protections

Currency Exchange Rate Protection

Mining & Power Producers are protected from the impact of exchange rate variation up to Commercial Operation Date (COD). 

EPC Cost Escalation

Cost escalation between the date of application and the Financial Close permissible as per Power Policy 2002

Return on Equity

US Dollar based Return on Equity

www.sindhcoal.gos.pk 17

power purchase guarantee scheme
Power Purchase Guarantee Scheme
  • GoP guarantees obligations of power purchaser
  • GOP provides protection against political force majeure, change in law and change in duties & taxes
  • Payment of compensation in case of termination due to GOP default
  • Tariff adjustments for variation in currency exchange rates, fuel prices and inflation
  • Government ensures conversion of Pak Rupee & remittance of foreign exchange for project-related payments

www.sindhcoal.gos.pk 18

infrastructure available at thar
INFRASTRUCTURE AVAILABLE AT THAR

Road Network

70 tonnes load carrying capacity metalled road is available up to Coal field area.

Electricity

11 KV feeder emanating from Islamkot to Thar Coal Project areas with 200 watts transformer is available.

Communication

Telephone & Internet communication through Optic fiber cable is available up to Thar Coalfield area.

Drinking Water

29 Reverse Osmosis Plants in Thar are available for provision of portable water to residents as well as project staff free of cost.

Rescue Station

Rescue Station in coal mining area at Thar coalfield covering an area of 8,200 sq. ft. is completed

Library

A Coal library is situated at office of Sindh Coal Authority, Karachi.

www.sindhcoal.gos.pk 19

slide20

INFRASTRUCTURE PLANNED AT THAR

TRANSMISSION LINE

NTDC is conducting feasibility study for lying of Transmission Line for evacuation of 10,000 MW from Thar. In the first Phase they are planning to evacuate 1200 MW.

AIRPORT

The GoS has approved a scheme at the cost of Rs.972.070 million for the construction of Airport at Thar for Coal Fields of Sindh by the Civil Aviation Authority.

PROVISION OF HEAVY DUTY ROAD

The W&S Deptt. is upgrading the road from Karachi to Islamkot through Hyderabad- Mirpurkhas- Naukot for facilitating transportation of heavy machinery by Dec. 2012.

RAILWAY LINK

PRACS has been engaged by GoS to prepare feasibility for broad gauge rail link from Port Qasim to Islamkot.

LODGE AT THAR

Lodge at Thar with 20-bedded accommodation to facilitate foreign and local investors is being constructed at Islamkot.

PROVISION OF CANAL WATER:

The GoS has planned to construct a water carrier to provide 300 Cusecs water to Thar.

www.sindhcoal.gos.pk 20

slide21

Status of Blocks

www.sindhcoal.gos.pk 21

slide22

BUSINESS FACILITATION

    • Strategic alliance between Coal & Power sector
  • High powered Thar Coal Energy Board (TCEB) established as one stop org. with Federal and Provincial agencies to facilitate investors.
  • TCEB is a decision making body on Thar Coal Mining and Power Generation Projects.
  • TCEB facilitates and coordinates with all the projects related to Thar Coal.
    • Causing concerned agencies to improve infrastructure
    • To act as coal Pricing agency

www.sindhcoal.gos.pk 22

slide23

Thar Coal & Energy Board

  • Composition of the Board is:
    • Chief Minister Sindh Chairman
    • Federal Minister for Water & Power Vice-Chairman
    • Federal Minister for Finance Member
    • Federal Minister for Law and Justice Member
    • Deputy Chairman, Planning Commission Member
    • Provincial Minister (Irrigation & Power) Member
    • Provincial Minister (Revenue & Relief) Member
    • Female MNA from Thar Region Member
    • Federal Secretary, Ministry of Water and Power Member
    • Chief Secretary, Govt. of Sindh Member
    • Secretary, Coal & Energy Development Dept. Member
    • One eminent Person Member
    • Managing Director, TCEB Member/Secretary

www.sindhcoal.gos.pk 23

slide24

Investment Options

1. Coal Mining

Investors interested only in mining may apply for a mine lease for mining the coal.

2. Integrated Coal & Power Generation Project

Investors may also opt for investing an integrated coal mining and power generation projects.

3. Mine Mouth Power Project

Thar coalfields present best opportunity for mine mouth power projects in view of the great demand for energy in the country.

www.sindhcoal.gos.pk 24

investment options
Investment Options

4. Coal Gasification

Investors may propose to convert coal into gas and market the syngas and bye products in open market, or may develop a forward integrated project on any one or more bye products from gasification project

5. Coal to Liquid Projects

Investors may propose to convert coal into Liquid and market the byproducts in open market, or may develop a forward integrated project on any one or more bye products from CTL project

www.sindhcoal.gos.pk 25

slide26
Thar today

www.sindhcoal.gos.pk 26

slide27

Thar Tomorrow

Thank You

www.sindhcoal.gos.pk