A key milestone towards ensuring energy security of Pakistan; Thar coal tariff to become cheaper than imported coal
The Sindh Engro Coal Mining Company (SECMC) has achieved a historic milestone by completing the financial close of Phase II of Mining and Power Projects in Thar Block II.
SECMC is a joint venture company with the Government of Sindh, Engro Powergen, Thal Limited (House of Habib), Hub Power Company (HUBCO), Habib Bank Limited (HBL), China Machinery Engineering Corporation (CMEC) and State Power International Mendong (SPIM). The company is responsible for extracting lignite coal form its mining concession of Block II in Tharparkar.
SECMC’s coal mine in Block-II has the potential to produce over 37 million tons of coal per annum translating into 5,280 MW of electricity at less than 6 cents per KWh for over 50 years.
The financial close for Phase II will enable the mine to be expanded from the existing 3.8 mt per annum to 7.6 mt per annum, which will feed coal to two additional 330 MW mine mouth power plants. These plants are being established by Thar Energy Limited (TEL), a JV of HUBCO, Fauji Fertilizer Company and CMEC, and Thal Nova Power Thar Limited (TNPTL), a JV of Hub Power Company Limited, Thal Limited, Novatex Limited and CMEC. They are expected to come online by mid-2021.
The expansion of the mine and the subsequent construction of the power plants will increase power output from Thar Block II to 1320 MW, while the basket coal tariff will also reduce by approximately 30% to USD 44/t (USD 3.99/MMBTU) and become cheaper than imported coal at port (USD 4.2/MMBTU). The power tariff of existing Thar coal-based IPP’s will be lowered by ~PKR 2.07/KWh, resulting in savings of approximately PKR 9.29 billion on an annual basis. With the completion of this phase, Pakistan is expected to record foreign exchange savings of more than USD 100 million every year on account of lower fuel imports.
Speaking about the FC Declaration, Sindh Energy Minister, Mr. Imtiaz Ahmed Sheikh said that, “Financial Close of SECMC’s Thar Block-II Mine Expansion Phase 2 is a key step towards Realization of the Thar Dream, which will enable us to reduce the Thar Coal tariff while taking the total power output from Thar Block-II to 1320 MW. Government of Sindh is fully committed to ensuring that the benefits of this huge indigenous resource are not only passed on to the consumers but more importantly this project can become an engine of prosperity for the people of Thar”.
Chief Executive Officer of SECMC – Syed Abul Fazal Rizvi – said: “The expansion of this mining project is a key step towards ensuring energy security for Pakistan and delivering on our commitment to provide Pakistan with abundant, economical and indigenous energy source. The coal reserves of Thar will pave the way for country’s prosperity, while also ensure employment opportunities and socio-economic development for the local Thari people. We also remain committed to our mission that local people should continue to enjoy the fruits of this project with an improvement in their quality of life through access to better facilities of health, clean water, education, livelihood opportunities and civic infrastructure”.