In order to market Thar coal projects, a comprehensive incentives package has been developed in consultation with all stakeholders, to be put before the Economic Co-ordination Committee (ECC) of the Cabinet for approval. Sources in the Planning Commission said that in this comprehensive package a 30-year exemption on corporate tax and minimum turnover tax to mine & power plant operators from the date of first sale as available to IPPs has been suggested.
Other incentives include customs duties on import of coal mining projects would be allowed at zero percent to reduce the initial capital investment. Exemption on withholding tax to shareholders on dividend for initial has been suggested to improve risk return profile for the initial projects.
On procurement of goods and services during project construction and operations to reduce the initial capital investment an exemption for 30 years on withholding tax is proposed. Exemption for 30 years on other levies is proposed, including special excise duty, federal excise duty, WPPF and WWF to reduce initial capital investment.
Thar coalfield will be declared as Special Economic Zone (SEZ), and as 'Projects of National Security'. The coal based power projects and coal mining projects in Sindh shall have the same incentives, concessions, protections and security package as available to IPPs developed pursuant to Power Generation Policy 2002 (as amended from time to time).
Another incentive is 20 percent Internal Rate of Return (IRR) to firms which achieve Financial Close before December 31, 2015 for power plants based on indigenous coal and an additional half a percentage IRR ie 20.5 percent for firms which achieve financial close by 2014 has been proposed.
"These incentives have been approved by the high powered Thar Coal Energy Board (TCEB) and are placed before the Economic Co-ordination Committee (ECC) for final approval after which it will become part of the policy", sources said. Investors, interested only in mining, may apply for a mine lease for coalfields, or they may also opt for investing in integrated coal mining and power generation projects. "Investors may propose to convert coal into gas and market the syngas and by-products in open market, or may develop a forward integrated project on any one or more bye products from gasification project" sources said.
The TCEB is established as one stop organisation with Federal and Provincial agencies to facilitate investors and take quick decisions. To determine and install lignite drying systems appropriate for inclusion in future pulverised coal (PC) or integrated gasification combined cycle (IGCC) power generation systems will be developed at the Thar coalfield.
Task for preparing feasibility of water conduit 300 cusecs for Thar coalfields has been assigned to I&P Dept (GoS). Pakistan Railway is preparing PC II for shortest rail link from Port Qasim Karachi to Thar coalfield. Similarly, W&S Dept of Sindh has prepared PC-I for heavy duty road from Port Qasim to Thar coalfields.
Sources said that MD, NTDC, had intimated in last meeting of TCEB that ADB would be funding a feasibility costing $3.5 million for upgradation of the entire transmission network to cater for evacuation of 10,000MW to be produced from Thar coal. At present, the country has 186.560 billion tons of coal deposit. Punjab has 235 million tons, Balochistan, 217 million tons, KP 90 million tons and Azad Kashmir has 9 million tons.