KARACHI: It has been suggested to the China Investment Corporation (CIC) to create energy investment fund.
The idea was mooted by the Secretary of the Coal and Energy Development Department, Ajaz Ali Khan, while briefing a high powered delegation of the CIC at the Chief Minister House here on Sunday.
Chief Minister Sindh, Syed Qaim Ali Shah, and other officials were also present on the occasion.
The seven-member CIC delegation led by its President, Gao Xiqing, had arrived here earlier in the day from Islamabad on two-day visit to the metropolis.
Ajaz Ali Khan, who is also the Managing Director of the Thar Coal and Energy Board, opined that the CIC may create an energy investment fund for financing the energy projects.
Besides equity, the CIC can also finance in bonds, he said adding that `We have sovereign guarantee for some projects'.
Ajaz said that the energy fund can be created in collaboration with the Government of Pakistan, Government of Sindh and the project developers and acquiring new blocks in Thar Coalfield.
He was of the view that the CIC can also invest in the ongoing projects where expansion is required.
The Managing Director of Thar Coal and Energy Board further stated that we also have blocks available at the Thar Coalfield.
He was of the view that the CIC may also invest in the `shovel ready projects through equity partnership and project financing'.
Ajaz also spoke of the Thar Block II Coal Mining and power project of sindh Engro Coal Mining Company- a joint venture between the Government of Sindh and Engro Group Pakistan and the Thar Block I Coal Mining and Power Project of Global Mining Company of China.
Referring to the key energy issues faced by Pakistan, Ajaz said that there was a rising energy demand and a significant energy shortage.
The energy mix was out of step with the world norms.
He also pointed towards the continuing long term trend of rising oil prices and that the natural gas demand was exceeding the supply.
He said that there was a very large untapped potential source of power generation fuel in Thar lignite deposit.
Thar desert is one of the largest coal reserves estimated at 175 billion tons.
About the fiscal incentives for the coal development, Ajaz informed that the Thar Coalfield has been declared as the Special Economic Zone.
There is 20pc (Dollar based) IRR to firms which achieve financial close before December 2015 for mine and power plants based on indigenous coal and 20.5pc IRR for firms which financial close by or before December 2014.
He also spoke of zero percent customs duties on import of machinery, exemption on withholding tax on dividends for initial 30 years, exemption on withholding tax on procurement of goods and services and exemption for 30 years on other levies including special excise duty, federal excise duty, WPPF and WWF.
About infrastructure available at Thar, he said that 70-tonnes load carrying capacity road is available up to coalfield area, reverse osmosis plants in Thar are available for provision of potable water to the inhabitants of Thar as well as project staff free of cost.
Ajaz also pointed towards infrastructure being developed by the Government of Sindh and the government of Pakistan including provision of water for Thar, construction of drainage channel, laying of transmission line and construction of Thar airport at Islamkot.
He was of the view that this is the right time to come and invest in these projects.
Ajaz further suggested that the CIC may create and energy investment fund.
In his briefing, the president of Engro Corp Pakistan, Ali Ansari, said that his firm has a very strong relationship with China and the Chinese companies.
He said that every large project carried out by his company has been done with the Chinese friends.
The Engro chief said that there was a huge need for power in Pakistan.
The Thar coal is an abundant resource of energy.
He said that the Sindh Engro Coalmining Company was formed in partnership with the Government of Sindh.
Ali Ansari said that the project that we have designed is of 6.5 million tons per annum mine combined with 1200 MW of power.
He also suggested that an energy fund for Pakistan may be created by CIC for investment in energy projects and infrastructure.
The Chief Executive of the Global Mining China, Mr. Liu, said that in May this year we got the mining lease for block I at Thar.
He said that one of the top five power producers in China are using lignite coal and that they are of the opinion that this coal can be utilized directly without any problem.
Ajaz informed on the occasion that out of 12 blocks of Thar Coal, four have been allocated while eight are available.
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