Thar coal project achieves $2bn financial close after govt guarantee

[ghazi52]

Thar coal project achieves $2bn financial close after govt guarantee

ISLAMABAD: The government on Monday issued guarantee to Engro Powergen Thar Ltd (EPTL) to formally recognise its $2 billion financial close of the coal mining and power project at Thar.

An announcement by EPTL said a joint venture of Sindh Engro Coal Mining Company (SECMC) and ETPL will undertake the project construction at Thar (Block-II) for power generation beginning by mid-2019. It said the National Transmission and Despatch Company (NTDC) also committed to establishing a 500kV Direct Circuit Transmission Line from Thar to Matiari.

“This significant feat marks a new era for energy security in Pakistan and brings with it the realisation of the Thar dream,” said the company, adding this would be the first power project to rely on indigenous coal reserves of Thar.

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 was also under way, it added.

SECMC is 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 tonnes 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 utilised by a mine-mouth power plant of 2x330 (600MW) being established by Engro Powergen Ltd, a joint venture company of Engro Powergen China Machinery and Engineering Company, Habib Bank Ltd and Liberty Mills Ltd. Commercial operations date (COD) for phase 1 of both projects is expected to take place by mid-2019. Total cost for both projects is estimated to be approximately $2bn.

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 3.8mtpa mine capacity and also approved provision for expansion. National Electricity Power Regulatory Authority (Nepra) had already issued a detailed upfront tariff for Thar coal-based power projects in July 2014.

The both regulatory bodies have championed the cause of Thar for the benefit of people. At peak capacity, power tariff from Thar block-II is currently estimated at about 6 cents per unit, which the company said was amongst the cheapest options available to the country.

On the financing front, shareholders of both companies will inject about $500 million. A syndicate of local banks will provide $500m for the mining and about $240m for power plant.

The local syndicate is led by Habib Bank, United Bank, Bank Alfalah, National Bank and Faysal Bank. In addition, a syndicate of Chinese banks consisting of China Development Bank, Construction Bank of China and Industrial and Commercial Bank of China are providing $820m loans for the project.

 

[VCheng]

Wasn't Dr. Mand's Underground Coal Gasification project the first to generate power from Thar coal, not this?

 

[volatile]

Wasn't Dr. Mand's Underground Coal Gasification project the first to generate power from Thar coal, not this?

That was the pilot project and locally incorporated technology but efficiencies were very poor .With Engro coming in this is one company i can trust with Engineering and Efficiencies .Yes Mr Samar Mand tech worked actually but lets give this to professionals in this line .good job

 

[VCheng]

That was the pilot project and locally incorporated technology but efficiencies were very poor .With Engro coming in this is one company i can trust with Engineering and Efficiencies .Yes Mr Samar Mand tech worked actually but lets give this to professionals in this line .good job

I hope the projects succeeds, otherwise the government will be left holding yet another huge sovereign loan guarantee for the taxpayers to pay off.

 

[shah1398]

I hope the projects succeeds, otherwise the government will be left holding yet another huge sovereign loan guarantee for the taxpayers to pay off.

Sir Engro group is famous for effectively using such resources. They had successfully used the portion of natural gas which was deemed not fit for general usage and produced power out of it. Given the fact, Engro and Fauji Groups are expanding in multi direction, they may soon be dubbed as TATA Industries of Pakistan. Best wishes for timely and successful completion of all their projects.

Abstract from Engro's project profile is below.

"The Engro project consists of the development, construction and operation of a 217 MW combined cycle power plant to be located in Qadirpur, District Ghotki, Pakistan. The power plant is expected to be a base load plant fueled by low btu (permeate) gas, which is currently being flared. "

 

[VCheng]

Sir Engro group is famous for effectively using such resources. They had successfully used the portion of natural gas which was deemed not fit for general usage and produced power out of it. Given the fact, Engro and Fauji Groups are expanding in multi direction, they may soon be dubbed as TATA Industries of Pakistan. Best wishes for timely and successful completion of all their projects.

We will soon find out whether their claims are any more credible in becoming reality.

 

[shah1398]

We will soon find out whether their claims are any more credible in becoming reality.

Yes Sir. Here are the details of their such a project

Engro Energy (Pvt) Limited

 

[VCheng]

Yes Sir. Here are the details of their such a project

Engro Energy (Pvt) Limited

Pretty websites do not mean much. Let's see when and how much power flows into the National Grid to reduce loadshedding from this project.

 

[AsifIjaz]

Engro will get the job done... they have the technical expertise and the history to back their credentials. one need not go beyond the debottlenecking of the main urea plant and /or the commissioning of Enven 1.
over and above Engro... House of Habib, Hubco and the other major groups are also now on board as minor share holders of this project. I personally know quite a few people who are working there.
believe me when i say that this momentum will not stop at 660 Mw (330 x 2). Time will prove this

 

[All-Green]

Wasn't Dr. Mand's Underground Coal Gasification project the first to generate power from Thar coal, not this?

Despite the respected Doctor's claims of a successful trial, there is a lot more than meets the eye.
The trial was successful as far as production of gas was concerned but nothing practical was gained in terms of ensuring the parameters required to run a power plan.
Somehow our scientists do not share the complete picture on TV...

I can share further if you are interested.

 

[VCheng]

Despite the respected Doctor's claims of a successful trial, there is a lot more than meets the eye.
The trial was successful as far as production of gas was concerned but nothing practical was gained in terms of ensuring the parameters required to run a power plan.
Somehow our scientists do not share the complete picture on TV...

I can share further if you are interested.

Of course, let us hear the details. The basic problem with Thar coal remains its poor quality for large-scale energy generation, no matter what technology is employed.

 

[AsifIjaz]

Despite the respected Doctor's claims of a successful trial, there is a lot more than meets the eye.
The trial was successful as far as production of gas was concerned but nothing practical was gained in terms of ensuring the parameters required to run a power plan.
Somehow our scientists do not share the complete picture on TV...

I can share further if you are interested.

Lignite can be a nightmare to transport.... the only way to use this is at mine mouth and that too in large quantities as almost 3 times the quantity is required to produce the same amount of energy when compared to the good quality coal to be imported from indonesia / australia.
Coal gasification is a novel project... successful and economically feasible or not is a different thing. i would request and love to read any information that you may have.

 

[VCheng]

3 times the quantity is required to produce the same amount of energy when compared to the good quality coal

Exactly. Therefore the cost per MWhr produced is higher compared to other sources. Have we forgotten the lessons of the IPP fiasco foisted on Pakistan by Benazir Bhutto already?

 

[All-Green]

Of course, let us hear the details. The basic problem with Thar coal remains its poor quality for large-scale energy generation, no matter what technology is employed.

Definitely it is a very poor grade coal.
It shall barely make a decent business case in any scenario, however coal mining shall at least deliver you some assured results as it shall be part of a controlled process.
Since you know the quality of the coal so an effective power plant can be designed once coal extraction/supply capacity is calculated. This is why companies are able to offer a solution and come up with the cost of electricity.

This is not the case in underground coal gasification!

Simply put, you cannot design a power plant without knowing the sustained volume and quality of generated gas.
There is no solution provided here by the scientists as it currently does not exist.
The gas pressure and quality is highly variable so it is really not something that simple engineering can resolve.
The oxygen which shall be pumped to sustain the fire can also be blocked due to water seepage, underground soil collapse and many other reasons once the lignite is burning, this can result in a halt in the supply altogether.

It is a very uncontrolled process and highly unfeasible for energy generation due to this reason; same has been communicated to the scientists by the relevant engineers who are experts in oil/gas extraction and power generation.

As per the scientific team, they refer to the gas as being available and do not discuss the core issue which has made it impossible to design a high yield power plant based on what they can deliver.
From their POV, they generated gas and consider it as a scientific achievement.
Whereas it is indeed a scientific achievement, we can practically do nothing with it to resolve our energy crisis.

Also note that this gas is highly impure unlike the natural gas and the metallurgy required to store and transport this impure gas elsewhere is also not something cost effective.

Unfortunately the impact of underground gasification of coal on the aquifers can be extremely toxic and dangerous.
As the lignite shall burn away it shall free up sulfur and countless other toxins which shall eventually end up in the water table after rain seeps through the crevices where lignite used to exist.
Water pollution is a major risk and keeping in mind acute shortage of water in Thar, it is a big gamble.

Water is a challenge even in mining of coal, though more from a supply perspective and not intoxication of aquifers.
Sindh Government assured water supply for this project but with what we have seen in the way of human casualties in Thar due to water shortage, it is a major risk once again.
The Sindh Government is perhaps the worst administration in all our provinces and that is like the Oscar award for worst administration!
However if water is made available then mining is the way to go.

The lack of control, lack of quality assurance, lack of means to assure a steady volume/pressure, environmental hazards etc. do not make this doable at this stage.

P.S. I have been a big supporter of Dr. Samar and was really excited about this pilot project; however after discussion with a few veterans of the industry who are highly respectable in Pakistan and abroad, I have to say that all is not what it seemed to me earlier.

 

[VCheng]

. I have been a big supporter of Dr. Samar and was really excited about this pilot project; however after discussion with a few veterans of the industry who are highly respectable in Pakistan and abroad, I have to say that all is not what it seemed to me earlier.

You should go back to old threads and see all the flag-waving in all its chest-thumping glory when the project was launched. The same doofus brigade is at work with this new approach. Thar coal remains a mirage that only fools will chase. At least I have the courage to speak out the truth.