Mining, power projects: SECMC says financial close to be achieved in two months

Sindh Engro Coal Mining Company (SECMC) has announced that financial close of mining and power projects would be achieved within two months. Talking to journalists, Chief Executive Officer (CEO) SECMC Shamsuddin Ahmad Shaikh said that entire financing for Thar coal mining and power project was available from China and local banks, adding that first coal-fired project of 660 MW will be available in 2018 followed by another project of an identical capacity in 2019. The cost of project is $2.1 billion of which cost of mining is $900 million.
"Scene is now set. With so much progress already made on the site, SECMC is all set to achieve financial close in the fourth quarter of 2015," he said "We are hopeful of achieving financial close of Thar coal mining project in October this year," he said adding that Thar coal based power plant would be 2 percent less efficient due to moisture content.
Shaikh appreciated the role of Minister for Planning, Development and Reforms, Ahsan Iqbal, Minister for Water and Power, Khawaja Asif, Secretary Water and Power, Younas Dagha and Additional Secretary to Prime Minister, Fawad Hasan Fawad. He admitted that National Electric Power Regulatory Authority (Nepra) had allowed 20 percent rate of return compared to 17 percent allowed for imported coal based power plant being set up at Karachi Port Qasim adding that the latter had zero risk due to imported coal use.
"We have been given incentives due to risk factor," he said adding that Port Qasim power plant was 39 percent efficient whereas efficiency of Thar coal based plant was 37 percent due to moisture content. He said establishment of a project in Thar is risky as compared to Port Qasim due to which the government allowed better ROR to Thar coal.
He also denied that Karachi had suffered from environmental degradation due to coal -based power plants in India. "Coal based power plants in India are 250 to 300 kilometers from Pakistan borders and Karachi was around 700 kilometers away from Indian coal based power plants," he said.
He further maintained that the population of Rajesthan (India) where the coal based plants have been established should have been massively affected but this is not the case. He revealed that a study was conducted to set up 4000 Megawatt (MW) power plants in Thar.
"We have one percent coal mining area out of total Thar coal area and we can generate 5000 MW power for the next fifty years," he said adding that 660 MW power plants will be set up in first year and 660 MW next year based on Thar based coal. "1320MW of power from Thar coal can be made available in 50 months which is the biggest advantage to consumers and nation," he said.
He said that two studies had been conducted regarding environmental impacts and a final study was yet to be conducted. He said standards of the World Bank would be met to counter environmental hazards. He said that government of Pakistan had missed an opportunity during Musharraf regime when Chinese company was ready to work at 5.5 cents per unit tariff. Now, the levelled tariff is 11 cents per unit which would be gradually reduced to 5.5 cents per unit," he added.
He said that Power Purchase Agreement (PPA) had been signed with National Transmission and Despatch Company (NTDC)."Construction period of power project under Engro Powergen Thar Limited (ETPL) is 38-42 months and total cost of this power project is US $1.1 billion," he said.
Shamsuddin Ahmad Shaikh further stated that efficiency of Thar coal power projects will be 37 percent because of lignite in the coal whereas plant availability factor will be 85 percent. Rate of Return (RoR) has been fixed at 20 percent for Thar coal project whereas Port Qasim's ROR is 17 percent. In reply to a question, he said, Nepra had allowed Thar coal project to import European boilers as the Chinese do not have expertise in lignite. Nepra has mentioned two or three names of European companies to purchase boilers, Shaikh stated.