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

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.

Yeah I know what you are referring too...
I was also initially very excited just like many people were, once we heard about this amazing new technology.
However once i started asking questions as to why things were not moving forward, I was lucky to be able to get input from a few veterans of the industry who educated me on the ground realities.

In defense of the scientists, they did produce the gas as promised...;)
Though its pretty much useless for running a power plant at the moment.
 
Yeah I know what you are referring too...
I was also initially very excited just like many people were, once we heard about this amazing new technology.
However once i started asking questions as to why things were not moving forward, I was lucky to be able to get input from a few veterans of the industry who educated me on the ground realities.

In defense of the scientists, they did produce the gas as promised...;)
Though its pretty much useless for running a power plant at the moment.

That is precisely the problem: Thar coal cannot be used for large-scale power generation in an economically viable fashion, given its quality, location and infrastructure needs. The fact that sovereign backing for billions of dollars in loans were needed should alone be proof enough of its non-viability since no sane financial institution would back such a project.
 
That is precisely the problem: Thar coal cannot be used for large-scale power generation in an economically viable fashion, given its quality, location and infrastructure needs. The fact that sovereign backing for billions of dollars in loans were needed should alone be proof enough of its non-viability since no sane financial institution would back such a project.

As someone who has experience in power financing, I would digress and say that Pakistan specifically needs to provide SG when it is going for external funding irrespective of viability. The political and security risks alone warrant it. Once situation improves, decisions can be made on basis of financial viability.

As for quality of coal, I do not understand why are they using it if it is not suitable? This would have have detrimental effect on P&E. International Coal Market is very depressed, it would be much cheaper to import coal from Australia and Indonesia even with the logistics costs involved. I faced a similar situation when a certain project was initiated based on captive mines in India but after due diligence during financial closure, we refused to accept the viability and re-worked the financial based on imported coal. The project even then remained profitable. I think Pakistan should enter into a long term contract for importing coal or atleast hedge with forwards.
 
As someone who has experience in power financing, I would digress and say that Pakistan specifically needs to provide SG when it is going for external funding irrespective of viability. The political and security risks alone warrant it. Once situation improves, decisions can be made on basis of financial viability.

As for quality of coal, I do not understand why are they using it if it is not suitable? This would have have detrimental effect on P&E. International Coal Market is very depressed, it would be much cheaper to import coal from Australia and Indonesia even with the logistics costs involved. I faced a similar situation when a certain project was initiated based on captive mines in India but after due diligence during financial closure, we refused to accept the viability and re-worked the financial based on imported coal. The project even then remained profitable. I think Pakistan should enter into a long term contract for importing coal or atleast hedge with forwards.

Who cares about the technical and economic aspects, when there are many millions to be made and siphoned off from the deals being done behind closed doors?
 
Who cares about the technical and economic aspects, when there are many millions to be made and siphoned off from the deals being done behind closed doors?

U mean that the failed project initiated by benazir bhutto had no corruption in it??
 
whereas the quantity of Brown coal required to produce a Mw compared to good coal is high... but that does not mean that lignite coal can not be used for power generation or that it is uneconomical to do so....
one need not look beyond policies and the developments in Germany, Poland, Czech amongst others to come to a conclusion that Lignite based power plants are still here and will be here for long. Within the last 2 to 3 decades the lignite based power plants have become hard to sell, difficult to construct and are not as profitable as they used to be but that does not mean that they are economically not feasible. within the last 4 to 5 years alone countries including germany have permitted setting up of or renewal/extension of previous functioning lignite based power plants.
The very problem with lignite based power plants is that in order to decrease carbon emissions you need state of the art equipment which is expensive and not many companies are making them. Germany is phasing out older and less efficient power plants. Their second aim is to gradually but consistently phase off nuclear power plants and the lignite power plants will be phased out in the last which will be some where around 2030 at the earliest.

now coming back to Pakistan, if you have coal reserves in Thar and you decide to construct a lignite based power plant in Sahiwal then it would make more sense if you use imported coal as less quantity would be required to produce the same Mws and with less green house gaes.. this scenario may change and we may see sahiwal power plant being operated on a 80/20 or 70/30 ratio of imported and local coal provided the coal prices rebound back which is not happening in the near future. Now with mine based power plants the cost of transportation(loading, shipping, unloading and transportation) of coal is minimized, the cost of handling the coal at ports and at the end usage site is decreased and thus it becomes economically competitive to have a mine mouth based power plant. The very fact that the 2/3 projects under review with Engro project achieving financial closure is a vertically integrated project with the company extracting coal as well as producing electricity makes it even more feasible to proceed with the project.

Dr Samar mubarik's project is mystery for me and i am not in a position to comment on that and rely on inputs from other folks with knowledge. For the lignite coal based power plants from open cast mines or mine mouth based power plants please google the energy scenario with lignite coal reserves before bashing me. my 2 cents
 
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I don’t claim to know as much as a hard core Power Engineer, nevertheless having spent a lifetime in the oil & energy sector, this is something thing that I know a little about. After reading the posts in this thread; I would take the liberty of clarifying certain aspects.

Thar Coal is “Lignite” or brown coal, therefore in this post I would refer to it as Lignite.

Lignite as it is dug out from the ground (mostly open pit mines) has up to 45% moisture because geologically it is much younger than bituminous coal. Therefore, unlike bituminous or semi bituminous coal; it cannot be used as it is. It needs to be processed; essentially dried; before it can be used. In fact lignite is only good for large scale power production; burnt after it is dried or after gasification in the IGCC (Integrated gasification combined cycle) & in Carbon Capture technologies. FYI 25% of German power is from lignite.

There are 3 main considerations in the choice of fuel in the power production. These being Technical, Economic & Environmental.

When it comes to large scale power generation “Economics” is everything. Environmental aspects are tied to the economics as well. Since coal has a lot more sulphur & ash; for clean emissions; initial investment in a coal plant is nearly twice as much as a gas based power plant. Only a year ago oil was at $100 per bbl. Everyone was going back to coal, now it is at $40 per bbl. and this makes oil & gas based power plants more economic. However the situation can easily change. New investment in ‘Fracking’ has almost died out and it is inconceivable to think that oil prices will remain so low. Forecast is that we would see $60 bbl. oil within next two years if not sooner.

On the technical side; two processes for external lignite drying are currently being used. The first is a mechanical-thermal drying process that dries raw lignite coal that has been heated to around 140 to 200 °C.

The second process, steam fluidised-bed drying, is already at an advanced stage of development. In this process, raw lignite is fluidised in a steam atmosphere in a stationary fluidised bed and is heated at the same time. The process can be operated at atmospheric pressure or under higher pressure. In the atmospheric variant, the steam released can be used within the process to heat the dryer. I am aware of two technologies using fluidized beds.


Heyl & Patterson custom-engineered a series of Fluid Bed Dryers for the using waste heat from the power plant rather than employing a separate drying plant to gently dry the lignite and cause it to burn cleaner and more efficiently. The drying process also reduces gases such as carbon dioxide (CO2) and removes compounds containing Sulphur and mercury, making the fuel less volatile and of higher quality. Since this is fuel enhancement technology which simultaneously dries and refines lignite, it is called Dryfining.

RWE Germany developed WTA technology to pre-dry lignite at the Niederaussem power station. This is a system that employs fluidized bed drying process with internal waste heat utilization (WTA). The extent to which these processes are suitable for lignite drying first has to be demonstrated in plants of an appropriate size. In addition, issues regarding combustion and pollution behaviour have to be investigated for dried lignite.

In Pakistan’s case it is also a question of foreign dependence. It is always better to have an indigenous source of fuel than depending upon the imports. Power plant has 30 year life cycle and it probable that withing a few years higher oil prices would make Thar coal use as fuel very economical. It is therefore not wise to ‘Pooh pooh’ development of Thar coal. Prudence demands that we should welcome it as mining operation alone would generate hundreds of jobs indirectly helping in economic upliftment of the Thar region.

Finally. the following site has lot of information about Lignite for anyone who wants to know more.


https://www.lignite.com/
 
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When it comes to large scale power generation “Economics” is everything.

Can you give us your thoughts on whether such a project using Thar Lignite could be economically feasible for Pakistan to set up and maintain for large-scale power generation?
 
Can you give us your thoughts on whether such a project using Thar Lignite could be economically feasible for Pakistan to set up and maintain for large-scale power generation?

Thermal Efficiency of the coal fired plants even the Super Critical ones would be around 40%. On the other hand modern Combine Cycle gas turbine plants can reach 60%.

In a study of 2012 ( crude oil was close to $90 per bbl.) carried out in the UK, levelised cost of power genartion from CCGT plant was about £80 per MWh or 8p per KWh. Out of this capital cost was £9 ( 11%) & fuel cost £48 ( 60%). For coal fired IGCC, out of total levelised cost of £102 per MWh, capital costs were £26 (about 26%) & fuel £30 or about 30%.

The levelised cost of electricity generation is defined as the roughly the cost of production averaged over the entire operating life of the plant in present value terms.

If you are comparing power generation from LNG versus Thar coal, at the current low prices of gas, it would be safe to assume that gas being more efficient & requiring less capital, power from gas / LNG would definitely be cheaper when compared to imported coal as fuel.

What it would be compared to generation from indigenous Thar Coal? Since I have no data about cost of the fuel grade Thar coal (after drying) per ton or per million BTU; it would be foolish to come up with a number out of thin air. Additionally, I am sure there would also be incentives such as long tax holiday, thrown in to induce the investors in Thar coal power generation which makes a real comparison difficult.

Sorry to disappoint but I am not that good!.
 
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That is precisely the problem: Thar coal cannot be used for large-scale power generation in an economically viable fashion, given its quality, location and infrastructure needs. The fact that sovereign backing for billions of dollars in loans were needed should alone be proof enough of its non-viability since no sane financial institution would back such a project.

Mughal sab app ek ajeeb namoona hoo. Pakistan is not exactly ideal place for investment even if project is viable. Anyone will think twice before investing billions of dollars in Thar coal for the first time. Once this project is up and running successfully then investors will not demand federal guarantee for future projects.

Thar coal mean less dependence on imports, more work for Pakistani people. Thar is poorest district in Pakistan and it's getting roads, airports, schools etc All thanks to Thar coal power plants.
 
Thermal Efficiency of the coal fired plants even the Super Critical ones would be around 40%. On the other hand modern Combine Cycle gas turbine plants can reach 60%.

In a study of 2012 ( crude oil was close to $90 per bbl.) carried out in the UK, levelised cost of power genartion from CCGT plant was about £80 per MWh or 8p per KWh. Out of this capital cost was £9 ( 11%) & fuel cost £48 ( 60%). For coal fired IGCC, out of total levelised cost of £102 per MWh, capital costs were £26 (about 26%) & fuel £30 or about 30%.

The levelised cost of electricity generation is defined as the roughly the cost of production averaged over the entire operating life of the plant in present value terms.

If you are comparing power generation from LNG versus Thar coal, at the current low prices of gas, it would be safe to assume that gas being more efficient & requiring less capital, power from gas / LNG would be would definitely be cheaper when compared to imported coal as fuel.

What it would be compared to generation from indigenous Thar Coal? Since I have no data about cost of the fuel grade Thar coal (after drying) per ton or per million BTU; it would be foolish to come up with a number out of thin air. Additionally, I am sure there would also be incentives such as long tax holiday, thrown in to induce the investors in Thar coal power generation which makes a real comparison difficult.

Sorry to disappoint but I am not that good!.

Thank you for being honest, and for supporting my stance that the economic feasibility of Thar Coal has never been shown by its staunchest proponents. Given Pakistan's history, the potential for creating yet another white elephant remains high.
 
Thermal Efficiency of the coal fired plants even the Super Critical ones would be around 40%. On the other hand modern Combine Cycle gas turbine plants can reach 60%.

In a study of 2012 ( crude oil was close to $90 per bbl.) carried out in the UK, levelised cost of power genartion from CCGT plant was about £80 per MWh or 8p per KWh. Out of this capital cost was £9 ( 11%) & fuel cost £48 ( 60%). For coal fired IGCC, out of total levelised cost of £102 per MWh, capital costs were £26 (about 26%) & fuel £30 or about 30%.

The levelised cost of electricity generation is defined as the roughly the cost of production averaged over the entire operating life of the plant in present value terms.

If you are comparing power generation from LNG versus Thar coal, at the current low prices of gas, it would be safe to assume that gas being more efficient & requiring less capital, power from gas / LNG would be would definitely be cheaper when compared to imported coal as fuel.

What it would be compared to generation from indigenous Thar Coal? Since I have no data about cost of the fuel grade Thar coal (after drying) per ton or per million BTU; it would be foolish to come up with a number out of thin air. Additionally, I am sure there would also be incentives such as long tax holiday, thrown in to induce the investors in Thar coal power generation which makes a real comparison difficult.

Sorry to disappoint but I am not that good!.

Thar coal cost per unit

“This will be the best use of coal; it will eliminate transportation cost, which could increase coal price up to $27 per ton. For mine-mouth power plants, a 2-2.5km conveyor belt will be required to transport coal from the mine to the power plants,” he said.

As the mine achieves economies of scale and debt is paid off, the unit cost of coal will continue to decline, stabilising at $3.73 per million British thermal units from the 11th year. The levelised cost for block-I is $5.71 per mmbtu.

The cost of electricity for the initial 10 years will be 8.5 cents per unit and when the loan period ends, the cost will come down to 6 cents per unit."

http://tribune.com.pk/story/856019/chinese-bank-promises-1b-for-thar-coal-mining/
 
engro.. house of habib, liberty etc are not small names in pakistan.. they would not invest in this project if there was nothing in there for them. you can coax one group into this project but close to 6 big names is impossible...
 

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