What's new

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

For cheaper coal, I would say it would be better to import from Indonesia, South Africa, and Australia. in that order. (I am presuming other sources of coal than energy, coal is by far the cheapest today), and I had made the last comment without reading the data on Thar coal, from whatever is available online, It made me scream, ( Moisture 48.57 percent, Volatile matter 29% , fixed carbon content is less than 22%, and heating value (GCV) is 1523.8 Kcal/kg, and 2,000 million tons recoverable reserves, USAID study of 1994 and other news resources) I would strictly advise to run the numbers again. At 48% moisture (half of it is essentially water!)

In the odd 8 or 10 power plants I have been in India any thing above 30% makes the pant so inefficient that its better not to run it at all, and even at the worst possible scenario you need coal above with heating value (GCV) 2000-1800 kCal/Kg @ 12-14% moisture.

The mining is unattractive too the heat content is too low, water availability in Thar is a big issue, etc. If you ask me, of my odd decade of experience in power sector, India and abroad. Import that damned coal, it not worth the mining.

Another perplexing part of this saga is that they are planning a mouth-of-the-mine powerplant to avoid shipping Thar coal any distance, which also means that any coal from other sources must be transported to the same plant in the middle of nowhere if the local source does not work out. Or the plant shuts down due to being non-competitive, just like the IPP story. Pakistanis just do not learn from their past mistakes, perhaps intentionally.
 
.
Another perplexing part of this saga is that they are planning a mouth-of-the-mine powerplant to avoid shipping Thar coal any distance, which also means that any coal from other sources must be transported to the same plant in the middle of nowhere if the local source does not work out. Or the plant shuts down due to being non-competitive, just like the IPP story. Pakistanis just do not learn from their past mistakes, perhaps intentionally.

Plants near mine's mouth is fine, but Fuel is not the only thing that the plant needs. It needs water, it needs skilled manpower, land. and you plan out a strategy to deliver for 25 odd years. Power plants are not built for an odd decade but quarter of a century. and it has to remain financially viable throughout. I agree to your point that this is a mistake,

Makes more viability sense to make a coal terminal at Karachi Port and build a big plant nearby, for water you can have a desalination plant, and there is a perennial snowed river too (dig a canal to the plant) , and you would get qualified manpower from Karachi a commercial hub, even the plant can be imported and you don' have to transport it to Thar desert from Karachi, and No need to set up new transmission lines which are costly (INR 5 Crore a Kilometre).
 
.
Plants near mine's mouth is fine, but Fuel is not the only thing that the plant needs. It needs water, it needs skilled manpower, land. and you plan out a strategy to deliver for 25 odd years. Power plants are not built for an odd decade but quarter of a century. and it has to remain financially viable throughout. I agree to your point that this is a mistake,

Makes more viability sense to make a coal terminal at Karachi Port and build a big plant nearby, for water you can have a desalination plant, and there is a perennial snowed river too (dig a canal to the plant) , and you would get qualified manpower from Karachi a commercial hub, even the plant can be imported and you don' have to transport it to Thar desert from Karachi, and No need to set up new transmission lines which are costly (INR 5 Crore a Kilometre).

There are plans to build a coal/oil terminal and power plants close to the port of Gawadar for this very reason. Why not take advantage of them first?
 
.
There are plans to build a coal/oil terminal and power plants close to the port of Gawadar for this very reason. Why not take advantage of them first?

Long distance transmission losses, you need the plant to be close to market areas, build the industry first and give it commercially stability (robustness) and proof of biz concept.

Why add risks to a biz endeavor ? Go for advanced technologies in 5-6 years in transmission tech. Till the time Gawader becomes a big load center itself, would be better if the city has a captive unit of about 300MW. Keep adding power Generation Units as the load grows and new transmission lines are built to cater to nearby population centers.
 
.
Long distance transmission losses, you need the plant to be close to market areas, build the industry first and give it commercially stability (robustness) and proof of biz concept.

Why add risks to a biz endeavor ? Go for advanced technologies in 5-6 years in transmission tech. Till the time Gawader becomes a big load center itself, would be better if the city has a captive unit of about 300MW. Keep adding power Generation Units as the load grows and new transmission lines are built to cater to nearby population centers.

Sir, you are talking sense here. That does not always fly with the way things are typically done in Pakistan, the present project being a good case in point.
 
.
Sir, you are talking sense here. That does not always fly with the way things are typically done in Pakistan, the present project being a good case in point.

Well, only seems this is a fiasco to fill some pockets. Nothing else.
 
. .
What some posters seems to suggest that we should abandon thar coal all together...

These posters have similar feelings about pakistan as well....
 
.
What some posters seems to suggest that we should abandon thar coal all together...

These posters have similar feelings about pakistan as well....

The argument is not a one off but it also gives suggestion what is likely to work. Thar coal project can work but will rake up too much resources and drive the costs high. Unless it purely on patriotism of using domestic coal and not on Technical feasibility. Please sir go right ahead. Your country, Your money, do whatever you feel like.
 
.
The argument is not a one off but it also gives suggestion what is likely to work. Thar coal project can work but will rake up too much resources and drive the costs high. Unless it purely on patriotism of using domestic coal and not on Technical feasibility. Please sir go right ahead. Your country, Your money, do whatever you feel like.

Of course. It is the right of Pakistanis to create yet another project that does not make financial sense just like the greatly successful Pakistan Steel Mills. Patriotism can never trump economics, sadly.
 
.
May be it does make sense to some who actually have knowlege of matter....

2 billion project declared null and void by people who have no minning or engineering experience...just by reading wikipedia.despite the fact one of the most reputed firm agreed on it and an international donor agrees with feasibility....

Thar is dead....magar phir bhi bhutto zinda hay

( sharm say bhi nahin marta)

The argument is not a one off but it also gives suggestion what is likely to work. Thar coal project can work but will rake up too much resources and drive the costs high. Unless it purely on patriotism of using domestic coal and not on Technical feasibility. Please sir go right ahead. Your country, Your money, do whatever you feel like.

Actually we are going ahead.... please do your calculations again....
 
.
May be it does make sense to some who actually have knowlege of matter....

2 billion project declared null and void by people who have no minning or engineering experience...just by reading wikipedia.despite the fact one of the most reputed firm agreed on it and an international donor agrees with feasibility....

Thar is dead....magar phir bhi bhutto zinda hay

( sharm say bhi nahin marta)

Actually we are going ahead.... please do your calculations again....

Brother, I have experience of working for and setting up of power projects to the cumulative tune of roughly 3000 MW (Coal and renewables), local and abroad for decade or so. I have done pre-feasibility study, Detailed Project reports, market analysis, Fuel supply agreements, Power purchase agreement negotiations, Project Management etc. So, yeah I am a keyboard Wikipedia warrior. Whatever suits you.

That $ 2 billion project, doesn't make sense to me, according whatever the data suggests. Just to give you an Idea, Nowhere in the world I have seen a government give capital return guarantee to an external entity for a commercial power project that is financially sound. A government usually taxes em to generate revenue, not the other way round.

Of course. It is the right of Pakistanis to create yet another project that does not make financial sense just like the greatly successful Pakistan Steel Mills. Patriotism can never trump economics, sadly.

What to say, from business to wars, everything has economics (incentives, and there are many types of it) at the core. I remember a Chinese member saying that attacking Taiwan makes no sense as why kill a Horse to ride it? Even today China gains from a stable Taiwan, than a war ravaged one. e.g. Foxconn is Taiwanese :)

An ill-advised project would cause more harm to the country than the perceived gain in 'pride' or 'Patriotism'. Well nations, can and should go for pride, but it should have a sustainable and inspirational outcome. Projects like the steel mills program, as you have said, hurts the pocket first, then some time later also the pride. Bad investment.
 
.
Hi guys this lignite project will be successful if properly implemented. Pls google nlc tamilnadu india for simlar successful project

Neyveli Lignite has some advantages that make the project feasible,

1. Water availability (there is a huge Aquifer below ground, for mining one tonne of lignite, about 13 tonnes of water has to be pumped out, plus 1200 mm of annual rainfall average over the last 30 years).

2. Nearness of load centers, good rail road connectivity.

3. The heating value of Wet coal of Neyveli mines is almost equal to the heating value of dry thar coal. So more bang per kg of coal.
 
.
Plants near mine's mouth is fine, but Fuel is not the only thing that the plant needs. It needs water, it needs skilled manpower, land. and you plan out a strategy to deliver for 25 odd years. Power plants are not built for an odd decade but quarter of a century. and it has to remain financially viable throughout. I agree to your point that this is a mistake,

Makes more viability sense to make a coal terminal at Karachi Port and build a big plant nearby, for water you can have a desalination plant, and there is a perennial snowed river too (dig a canal to the plant) , and you would get qualified manpower from Karachi a commercial hub, even the plant can be imported and you don' have to transport it to Thar desert from Karachi, and No need to set up new transmission lines which are costly (INR 5 Crore a Kilometre).


Hon Sir,

I am in total agreement with you on the economic side of the things. I have been making my ends meet as a Petroleum / Energy consultant for the last 5 years and must have looked at more than 100 feasibility studies of various refinery, exploration & power projects, but did not come across guaranteed minimum Rate of Return except in Pakistan. I also agree that power plants have 25 to 30 year life cycle and cost of clean-up & dismantling the plant are often included when working out the levelized cost of production.

This trend actually started during the Benazir Bhutto’s term of office. GOP had no funds to invest in power projects and guaranteed Returns were offered as inducements. The fact that Mr 10% was making his fortune by getting extra ordinarily profitable IPP’s approve by his wife to earn large commissions may also have something to do with it. I am aware of some projects in Punjab which are shut due to lack of natural gas but GOP is still paying the agreed Return on original investment!!

I am aware of the case of HUBCO plant. One of the Gulf based oil companies were negotiating sole rights for fuel oil supplies to 1290 MW HUBCO power plant when the plant was under construction and offered to invest in the fuel pipeline from Port Qasim to Hub.

I was surprised to learn that they were being guaranteed 15% return on investment The project was dropped because of exorbitant cost of risk insurance on the investment. HUB plant is now being expanded. I had come across the following last year.

Quote

He said the National Electric Power Regulatory Authority (Nepra) had capped upfront fee for Sinosure (insurance cost) at seven per cent, but because of the presence of circular debt, the company asked for a fee of 9pc for credit risk insurance.

“Now, China has agreed to cap fee at 7pc and therefore this issue has been resolved,” he added.

He said that tariff for coal based power plants had been estimated to reduce by 10 cents per unit from existing 22 cents per unit.

http://www.dawn.com/news/1158111

UnQuote

You can see the problems foreign investors face in Pakistan. 7% credit risk insurance! Hence very generous inducements are needed to attract investment.

As far as setting up the plant at Karachi or at the mine head; it all depends upon conditions of the agreement. I am sure you are aware that economic viability is largely dependent upon the assumptions used in the feasibility analysis. For example should GOP desire that plant should be set up at Thar for the economic upliftment of the area; they would offer higher guaranteed return than for the one in Karachi.

Additionally, Karachi is already highly polluted and coal based plants especially in the third world countries are notorious pollutants; discharging lot of poisonous gasses in the desert many be preferable, therefore extra economic inducements to make the plant viable at Thar.

By the way, water is scare in Karachi as well. I am sure that underground water would probably be available at Thar. However, most of the underground water in that area is saline and a water treatment facility would be required to make it usable increasing the capital investment.

I am glad of one thing however, Thar Lignite deposits are finally being exploited. I for one would not pass judgement on whether it is a good or bad investment unless I have seen all the facts.
 
.
Brother, I have experience of working for and setting up of power projects to the cumulative tune of roughly 3000 MW (Coal and renewables), local and abroad for decade or so. I have done pre-feasibility study, Detailed Project reports, market analysis, Fuel supply agreements, Power purchase agreement negotiations, Project Management etc. So, yeah I am a keyboard Wikipedia warrior. Whatever suits yo

Bro ... thanks for introduction...

I m also a professional but in different scientific field...

Can you please tell me have u actually seen the feasibility of this particular project? Can u please share it ?? I understand your general concerns....
But i dont think we can declare a 2 billiin USD project non viable based on data given in a news paper report....

If u are a scientist u would know what i am sayin
 
.

Pakistan Defence Latest Posts

Pakistan Affairs Latest Posts

Back
Top Bottom