Islamabad, April 11, 2016 (PPI-OT): The Government of Pakistan has issued its guarantee in favour of the Engro Powergen Thar Limited (EPTL), there by recognizing the achievement of Financial Close of the Mining and Power Projects being undertaken by Sindh Engro Coal Mining Company (SECMC) and EPTL in Thar Block II. In addition commemorating this important milestone, a 500 KV D/Circuit Transmission Line from Thar to Matiari by the National Transmission and Despatch Company will also be established.This significant feat marks a new era for energy security in Pakistan and the realization of Thar dream.
For the first time ever, we will now rely on our indigenous coal reserves in Tharparkar – for future energy security – an endeavour which after decades of relentless pursuit has finally been brought to fruition. This significant feat marks a new era for energy security in Pakistan and brings with it the realization of the Thar dream. For the first time ever, the nation will rely on indigenous coal reserves in Tharparkar for future energy security; an endeavour which after decades of relentless pursuit has finally been brought to fruition. With all necessary formalities for Phase 1 for both Projects completed, initiation for Phase 2 for Mine and Power Plant expansion by HUB Power Company and Thal – Nova Power Limited is also underway.
SECMC, a joint venture company with the Government of Sindh, Engro Powergen and Affiliates namely, Thal Ltd. (House of Habib), Hub Power Company, Habib Bank Limited, , China Machinery Engineering Corporation (CMEC) and State Power International Mendong (SPIM). This Company will be responsible for extracting 1.57 billion tons of lignite coal available in its allocated area of Block II in Tharparkar. During the first phase of the Project, a mine of 3.8 million tonnes per annum capacity will be developed by SECMC.
This coal will be utilized by a mine-mouth power plant of 2×330 MW, a Project which is being established by Engro Powergen Limited, a Joint Venture Company of Engro Powergen China Machinery and Engineering Company, Habib Bank Limited and Liberty Mills Limited. COD for Phase 1 of both Projects is expected to take place by mid – 2019.
SECMC is a joint venture between Government of Sindh, Engro Powergen, Thal Limited, Hub Power Company, Habib Bank Limited, and China Machinery Engineering Corporation. During the first phase of the Project, a mine of 3.8 million tons per annum capacity will be developed by SECMC. This coal will be utilized by a mine-mouth power plant of 2×330 MW, a Project being established by EPTL, a Joint Venture Company of Engro Powergen, China Machinery and Engineering Company, Habib Bank Limited and Liberty Mills Limited. COD for Phase 1 of both Projects is expected to take place by mid – 2019. Total project cost for both projects is estimated to be approximately USD 2 billion.
The Federal Government’s role has been instrumental to the success of the project to date. The provision of USD 700 m Sovereign Guarantee fully backed by the provincial government and the Project’s addition to the China Pak Economic Corridor (CPEC) earlier last year paved the way for the Financial Close to be achieved in a timely fashion. The USD 250 m transmission line being constructed by NTDC to evacuate power generated from Thar block 2 to Matiari. A landmark PPA and IA were signed by EPTL last year with excellent support provided by PPIB. Other GoP departments including Prime Minister Secretariat, Ministry of Finance, and Ministry of Water and Power have played a pivotal role.
The Provincial Government being a majority shareholder in SECMC (51%) has extended immense support and has been instrumental in steering the Project to a successful start. As the JV partner and developer of the Mining Project in Thar Block II, GoS has been working diligently on all necessary infrastructural development and facilitation.
Operations in the area require critical infrastructure, which includes a fresh water supply scheme and an effluent disposal line for the disposal of groundwater. The GoS entered into an Implementation Agreement with SECMC whereby Provincial Government committed to providing all required infrastructure to facilitate the Thar Project at a cost of USD 600 million. Infrastructure development is already underway with widening and rehabilitation of the road network progressing at a rapid pace, including the expansion of bridges, culverts and bypasses of small cities. An airport facility is under construction in Islamkot in time for the Project. In December 2015, another important milestone was achieved as the GoS entered into a Water Utilization Agreement with EPTL which will secure water source for the functioning of the power plant.
The mandate to regulate Coal pricing has been vested with Thar Coal and Energy Board (TCEB). Last year, in response to tariff petition by SECMC, the board determined tariff for initial 3.8 mtpa mine capacity and also approved provision for expansion. NEPRA had already issued a detailed upfront tariff for Thar coal-based power projects in July 2014.Both regulatory bodies have championed the cause of Thar for the benefit of people of Pakistan. At peak capacity, power tariff from Thar block 2 would be around USD 6c/Kwh, cheapest amongst the options available to the country.
On the financing front, shareholders of both companies will inject ~USD 500 million to ensure the smooth execution of the project. In 2015 landmark local and foreign Financing Agreements were signed in Beijing for both the projects. Under these Agreements, a syndicate of local banks committed to provide ~USD 500 million for the mining and ~USD 240 million for power plant. The local syndicate is led by Habib Bank Limited, United Bank Limited, Bank Alfalah Limited, National Bank Pakistan and Faysal Bank Limited. In addition, a syndicate of Chinese Banks consisting of China Development Bank, Construction Bank of China and ICBC are providing loans amounting to ~USD 820 million for both projects.
Both companies are fully cognizant of the duty they have to the people of Thar and the environment. Several renowned local and international organizations, including Hagler Bailly, and SRK UK, were engaged to conduct feasibility and socio-economic impact assessments of its projects. These studies together with NOC issued by Sindh Environmental Protection Agency will ensure compliance with all National Environmental Quality Standards and the best industry practices available as per World Bank guidelines.
During the project, two villages are expected to be relocated within the Block. All community consultations, census and socio-economic baseline have been conducted while some of the leading town planner sin the country have been engaged to design state of the art model villages with modern amenities. SECMC has developed a Resettlement Action Plan approved by GoS based on international policies, namely, World Bank Guidelines for Involuntary Resettlement and relevant legislature. Development in the region will bring with it the creation of employment opportunities, entrepreneurship activity, educational institutions, medical facilities and infrastructural development. It will always be the Company’s foremost priority to safeguard and improve the quality of life of its local communities so they are able to benefit from development rather than be hindered by it.
In short, the wait is finally over and the Thar dream is on the verge of fruition. The realization of this dream has been made possible through the Federal and Provincial Governments’ unwavering commitment to the Project and support by the largest local and international corporations and banks. This project will be a game changer for our country. It will not only address the severe power shortage crisis but also bring with it energy security to the country for its future generations.
For more information, contact:
Sindh Engro Coal Mining Company (SECMC)
8th Floor, Harbor Front Building,
Marine Drive, Block 4, Clifton,