Nishat Energy finds Chinese partner to set up power plant on imported coal

[Devil Soul]

Nishat Energy finds Chinese partner to set up power plant on imported coal
By Salman Siddiqui
Published: December 11, 2016
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KARACHI: Nishat Energy Limited (NEL) has found a foreign partner to go ahead with its plan of setting up a 660-megawatt power plant on “imported coal” by December 2020.

“TBEA Xinjiang Sun Oasis Company Limited (a Chinese firm) has shown interest in participating in the project as a co-sponsor to provide technical and project financing proficiencies,” NEL Chief Financial Officer Norez Abdullah said in an application seeking power generation licence from the regulator.

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A couple of months ago, the government placed a ban on firms with 100% local ownership to set up power plants to be operated on imported coal. The ban was not applicable on local firms that had arranged financing for their projects till October 14, 2016.

The government gave an option to those local firms that introduced their projects on imported coal, but did not meet financial close by October, to either arrange foreign financing or convert their projects on local (Thar) coal.

Lucky Cement Limited’s 660-megawatt project was among those that opted to convert on local coal.

NEL is setting up the 660-megawatt coal fired power plant at Rahim Yar Khan, Punjab, at a cost of $956 million. The cost is a mix of 25% equity ($239 million) and 75% debt ($717 million), documents said.

“The sheer size of debt financing (greater than $600 million) required to fund the project was not possible to manage from local banking channels. Therefore, there was a need for induction of a capable Chinese partner to drive the financing process forward. It is strongly believed that the current sponsor’s experience and balance sheet strength will make the new consortium more formidable and capable,” Abdullah said.

The application documents said TBEA would hold 70% stakes in the power project. Nishat Power Limited and Nishat Mills Limited would hold remaining 25% and 5% stakes, respectively.

Earlier, Nishat Power Limited, Lalpir Power Limited, Pakgen Power Limited and Nishat Mills Limited; each of them had 25% stakes in the project.

“The change of consortium was necessitated after engaging with multiple large banks that emphasised the need for a Chinese sponsor in order to prioritise and fast track the financial close process with Chinese financial institutes,” the application said.

The project is intended to be financed by Chinese banks under the China-Pakistan Economic Corridor (CPEC) government-to-government agreed framework as provided in the CPEC Agreement.

“The sponsor intends to procure 100% of project debt ($717 million) from Chinese banks with support from a reputable Chinese equity partner as an Overseas Investment Loan or an ECA tied financing package or any other financing program which the sponsor deem fit,” it said.

After having secured the approval from Punjab Power Development Board on the induction of the Chinese equity partner, significant progress has been made in completing the feasibility study, securing Letter of Intent from Chinese Development Bank and finalisation of a detailed Joint Venture Agreement between Nishat Group companies and TBEA, it said.

TBEA, as per the consortium agreement, has taken a lead role in procuring Chinese financing, which will also ease the burden on Nishat from seeking project financing from local banking channel with visible foreign exchange liquidity constraints imposed by the State Bank of Pakistan, stated the application.

“The sponsor has undertaken to provide foreign non-existent man power and expertise in coal plant operation, which is lacked by Nishat for large coal-fired operations,” it said.

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The main sponsor has entered into agreement with ENERGEN Infra (Mauritius) Limited for the latter to act as an advisor in negotiating the EPC contract with potential EPC contractor from China.

A preliminary EPC proposal was also gathered by Nishat from SEPCO to set up 600-megawatt project to assess the interests of EPC players and budgeted EPC costs, timelines and financing support from the Chinese banks before entering into a consortium agreement with TBEA.

Published in The Express Tribune, December 11th, 2016.

 

[marbella]

shouldn't it be obligatory to use local coal?
after having 25000 million$ worth of coal,why one should import coal and spend foreign exchange?

 

[janu.bravo]

shouldn't it be obligatory to use local coal?
after having 25000 million$ worth of coal,why one should import coal and spend foreign exchange?

Thinking same.

 

[Clutch]

shouldn't it be obligatory to use local coal?
after having 25000 million$ worth of coal,why one should import coal and spend foreign exchange?

Local coal is of verb poor quality. The power plant will have very high inefficiencies.

 

[Mrc]

There are projects already in work for local coal

 

[marbella]

Local coal is of verb poor quality. The power plant will have very high inefficiencies.

Lucky Cement Limited’s 660-megawatt project was among those that opted to convert on local coal.

Some people deliberately don't want to use local coal.

 

[somebozo]

shouldn't it be obligatory to use local coal?
after having 25000 million$ worth of coal,why one should import coal and spend foreign exchange?

Thinking same.

Local coal is of verb poor quality. The power plant will have very high inefficiencies.

Local Pakistani coal is lignite....and far as I understand..the process of conversion to energy is different..Lignite is better gassified or steam cracked and then fed into power plant as a mix of methane, CO and H2 gas...

 

[marbella]

Local Pakistani coal is lignite....and far as I understand..the process of conversion to energy is different..Lignite is better gassified or steam cracked and then fed into power plant as a mix of methane, CO and H2 gas...

Since I don't understand much on subject, I'm going to google more on it.
so far I know that it can be fired directly also .
Most of the power plants are close to mines.
Some of them are Australia's Latrobe Valley, Luminant's Monticello plant-Texas, Hazelwood Power Station, Victoria.

 

[somebozo]

Since I don't understand much on subject, I'm going to google more on it.
so far I know that it can be fired directly also .
Most of the power plants are close to mines.
Some of them are Australia's Latrobe Valley, Luminant's Monticello plant-Texas, Hazelwood Power Station, Victoria.

Coal power plants are very dirty...to meet modren era emission requirements of clean energy..it is preferred to gassify the coal..it also protects from ecological fall out as deep mining is not required..underground coal gassification makes it possible..

 

[Indus Pakistan]

Pile of Pakistani coal -

equals >



handful of high quality imported coal

This is the reason they prefer to import coal. You have to dig 100 of tons and transports 100 of tons of Pakistani coal to produce the same power that few tons of foreign coal generates. It is all about the amount of colorific value. Pakistani coal is 99 portions dust and water.

I may have over emphasised to make the point but I hope people understand why despite these so called coal deposits Pakistan has to import. If Pakistan coal was international quality and say matched premium Australian coal then Chinese would rush to mine that coal themselves.

This is a Australian coal mine - most of it goes to China. Look at the scale oof this. You think Chinese would be buying the coal from Australia if Pakistani coal could match in quality?

 

[Cherokee]

There are 3 broad category of coal Grade wise :

1. Lignite : Lowest quality
2. Bituminous : Medium quality
3. Anthracite : Highest quality .

Most of the Pakistani coal is Lignite with some Bituminous and sub bituminous . Here's an detailed analysis. That being said it can still be used for power generation .

SINDH: The Sindh province has total coal resources of 184 billion tonnes. The quality of coal is mostly lignite-B to sub-bituminous A-C. Brief description of two major deposits is given as under:


THAR: A large coal-field, having a resource potential of about 175 billion tonnes, has been discovered at Thar in the eastern part of the province, about 400 km South East of Karachi.
The coal-field extends over 9,000 sq km area out of which 356 sq km area has been studied in detail by the Geological Survey of Pakistan proving nine billion tonnes coal in four blocks.

The main coal bed thickness ranges from 12 to 21 meters at an average depth of 170 meters, upper 50 meters being loose sand. The quality of coal has been determined on the basis of chemical analyses of more than 2,000 samples. The rank of the coal ranges from lignite-B to sub-bituminous-A.


LAKHRA: The Lakhra coal-field in Dadu District, lies 16 km to the west of Khanot railway station on the Kotri-Dadu section of the Pakistan Railways. It covers approximately an area of about 200 sq km. It is well connected with Karachi and Hyderabad through roads and railways. Mining in the area is done underground.

Three coal seams are established in the field but generally only the middle seam is known, as Lailian bed possesses the necessary persistence and thickness for consideration in large-scale mining. It shows a variation in thickness from 0.75 meter to 2.5 meters.

Average thickness is 1.5 meter. Coal from Lakhra has an apparent rank of lignite A to sub-bituminous C. The coal is dull black and contains amber resin flakes and about 30 per cent moisture. Although it can be extracted in large lumps, it dries to a moisture content of about 8 per cent when brought to surface.
It tends to crumble on longer exposure to atmosphere and is often susceptible to spontaneous combustion. Based essentially on the results of the initial exploratory work done by the GSP, more detailed exploration has been subsequently undertaken by PMDC, JICA, Wapda and the USAID.


The total reserves of the deposit have been estimated to be 1328 million tonnes with 244 million tonnes measured, 629 indicated and 455 tonnes inferred. Average annual production of coal from Lakhra is over one million tonnes. Most of this production is used in the WAPDA power plant at Khanote, Sindh and in brick kiln industry.



SONDA-JHERRUCK: Over one billion tonnes reserves of lignite quality coal have been assessed in Sonda- Jherruck coal-field. Owing to favourable location and developed infrastructure, two Chinese companies have expressed interest to conduct feasibility study for commissioning of 500 mw power generation units.

In case the feasibility study justifies commissioning of project, an investment of $500 million would be made by the Chinese consortium for establishment of coal fired power project of 500 mw. A quantity of two million tonnes coal annually would be mined to cater for the requirements of power generation units.

Balochistan: The coal seams in Balochistan are found in Ghazig formation of Eocene age. The quality of the coal is sub-bituminous A to high volatile B bituminous. The coal-fields mostly lie around Quetta in Balochistan however the following are significant:

SOR-RANGE; DEGARI; SINJIDI: Sor-Range-Degari coal-field lies 13 to 25 km south east of Quetta covering an area of about 50 sq km and is easily accessible through metalled road from Quetta.

The northern half of the field is known as Sor Range, Degari is situated at the southern end of the field. The thickness of the coal seam varies from 1.0 meter to 2.0 meters but in Sor-Range seam sections up to 5.0 meters have been encountered. The coal is of better quality with low ash and sulphur content. The quality of the coal is high sub-bituminous A to high volatile B bituminous.


CHAMALANG: These are the newly discovered coal-fields which need development. Preliminary work done by GSP in these areas has indicated that it has a good potential.

The quality of coal is also better as compared to the rest of Balochistan. The rank of the coal ranges from high volatile C bituminous to high Volatile A-bituminous with a total resource of 6 million tonne. Its heating value is +12000 BTU/lb.


PUNJAB: The Punjab's coal fields comprise the eastern, central and western Salt Range between Khushab, Dandot and Khewra while Makerwal coal-field lies in Trans-Indus Range (Sanghar Range). The rank of the coal is sub-bituminous A to high volatile bituminous.

SALT RANGE: The Salt Range coal-field covers an area of about 260 sq km, between Khushab, Dandot and Khewra. The entire coal producing area is well connected with roads and railways.
The top seam varies in thickness from 0.22 meter to 0.30 meter while the middle seam is up to 0.60 meter thick. The lower seam is up to one meter thick and is relatively of better quality.
It is being mined in Dandot, Choa-Saiden Shah and adjoining areas. The Punjab Mineral Development Corporation and several private companies are operating the mines in the area. Reserve of the deposit is 235 million tonnes.


MAKERWAL/GULLAKHEL: Makerwal/Gullakhel coal-field is situated in Sarghar Range (Trans-Indus Range). The coal-field extends from about 3.2 km west of Makerwal to about 13 km West of Kalabagh covering an area of about 75 sq km, in Mianwali district. The quality of Makerwal/Gullakhel coal is better than that of Salt Range coal and is preferred by the consumers. Total reserves of the deposit are 22 million tonnes.

Source: http://tribune.com.pk/story/325560/...reasons-why-thar-coal-will-not-save-pakistan/

 

[marbella]

Coal power plants are very dirty...to meet modren era emission requirements of clean energy..it is preferred to gassify the coal..it also protects from ecological fall out as deep mining is not required..underground coal gassification makes it possible..

As per Dr.Samar Mubarakmand , its very easy and he ran a project and produced electricity on trial base. But he said govt didn't want to finance the project as they are importing coal and gas from other countries.