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Thar Coal- A new Horizon for

Investment in Pakistan

Review of Pakistan Coal


By
Industry Now & the Future
Mohammad Younus Dagha
Managing Director Thar Coal & Energy Board/
Secretary Coal & Energy Development Department,
Government of Sindh
secy@sindhcoal.gos.pk
www.sindhcoal.gos.pk
Coals Significance in Global
Energy Scenario
q Global energy consumption will rise by 50% by 2030. In non-
OECD region, it will rise by 85% (International Energy Outlook
Report 2008)
q Coal use is likely to grow from 40% to 44%, as a source for power
generation, by 2030* due to energy security and price volatility.
q Besides use in power generation, various countries have initiated
projects to produce Coal-to-Liquids, that entail producing diesel
and other liquid products and Coal gasification projects in China,
US, India and South Africa.
q World Proven Coal Reserves Over 860 billion tons.

* Source IEA Report 2009 www.sindhcoal.gos.pk 2


Coal Used in Electricity Generation & Lignite Reserves
% age of Electricity Lignite Reserves
Generated from Coal Billion tonnes
South Africa 94 30.15*
Poland 93 1.37
China 81 18.6
Australia 76 37.2
Israel 71 -
Kazakhstan 70 12.1
India 68 4.5
Czech Republic 62 0.98
Morocco 57 -
Greece 55 3.02
USA 49 30.16
Germany 49 40.6
World Average 41 195.38
Pakistan 0.1 186.2**
* Sub bituminous & Anthracite reserves only ( Source,2008, IEA)
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** Thar Coal Resources are 175 billion tonnes Proven Reserve in 9 explored Blocks alone is 20 billion tonnes
A Comparison of Power Generation fuel Mix
World Pakistan
Pakistan Power Generation Fuel Mix 2008-09
World Power Generation fuel Mix 2008-09 Nuclear, 1.8
Others 2% %

Nuclear 15%
Nuclear
Hydel, 30.3
Coal 41% Hydel Gas, 32.4% %
Gas
Hydro 16% Oil

Coal

others
Coal, 0.1%
Gas 20%
Oil, 35.4%
Oil 6%

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Widening Demand & Supply Gap
Projection for Pakistan

Current Installed Project Demand


Gap (MW)
Capacity (MW) Year MW
2010 24,474 6,577
2015 36,217 18,320

19,566 2020 54,359 36,462

2025 80,566 62,669

2030 113,695 95,798


Source: Pakistan Electric Power Company (PEPCO)

Future Energy Demand Supply Gap is Alarming!


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Pakistans Coal Reserves
Sindh
186 billion tons
Punjab
235 million tons

Balochistan
217 million tons

KP
90 million tons

Azad Kashmir
9 million tons Thar

Thar Desert contains the worlds 7th largest coal reserves:


175 Billion Ton = 50 Billion TOE = 2000 TCF
Total Thar Coal Reserve More than Saudi Arabia 68 times higher than
& Iranian Oil Reserves Pakistans total gas reserves
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All Coal Fields of Sindh
Calorific
Reserves Moisture Fixed Volatile Sulphur
Coal Field Ash % Value Rank
Bn tons % Carbon Matter % %
Btu/lb

4622 to Lignite A
Lakhra 1.328 28.9 28.0 25.2 18.0 4.7 to 7.0
7,552 to B

6762 to Lignite A
Sonda 7.112 34.0 27.9 25.2 15.0 1 to 2.8
11029 to B

15.4 to 29.8 to 31 to 8.2 to 6740 to Lignite A


Badin 1.358 3.4 to 7.4
29.8 39.8 36.3 14.6 11100 to B

Thar 175 46.8 23.4 16.7 6.2 0.9-1.2 5,774 Lignite A

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Thar Coalfields Blocks Layout
Thar Coal Reserves
Block Total Cumulative Coal Over Burden Top of Chemical Estimated
Drill Seam first Seam Analysis as reserves
holes Meters Meters Received basis
BTU/Kg

Min Max Min Max

I 41 8.08 36 137.04 189.00 6398 3566.91

II 120 7.52 30.89 123.89 164.70 5780 2000.00

III A 41 7.15 24.58 114.40 203.02 5875 2008.04

IV 42 10.74 33.45 117.80 165.30 5971 2471.51

V 35 7.55 24.60 108.00 165.65 - 1394.00

VI 35 4.25 27.00 127.40 186.65 12360 1655.00

III B 14 3.78 30.78 140.23 171.15 4808 1453.00

VII 52 6.82 24.44 111.36 218.95 5441 2175.95

VIII 58 1.45 42.60 121.31 176.53 5302 3035.86


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CHEMICAL ANALYSIS OF THAR COALFIELDS
Weighted Average chemical Analyses of Thar Coal
As Received Values (%) Heating Values (Btu/lb)
Blocks
Vol. Fixed
Moisture Ash Sulphur As Rcvd Dry
Matter Carbon
I 43.13 6.53 30.11 20.11 0.92 6,398 10,461
II 48.89 5.21 26.55 19.37 1.05 5,780 11,353
III-A 45.41 6.14 28.51 19.56 1.12 5,875 10,880
IV 43.24 6.56 29.04 21.13 1.20 5,971 10,723

V 36.82 8.92 38.24 28.22 1.20 4,748 -

VI 38.32 7.62 36.22 30.13 1.52 10,514 -

III-B 47.72 9.30 25.49 16.79 1.15 4,808 -

VII 48.27 8.03 25.30 19.56 1.16 5,441 -

VIII 49.57 7.78 24.32 18.10 1.44 5,302 -

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GENERAL GEOLOGY OF THAR COALFIELD
KGS-12
RECENT DEPOSIT
Dune Sand: Light grey, loose and friable,
very fine to fine grained, sub angular to
sub rounded, well sorted to moderately sorted,
few Fe, Mg grains observed.
SUB-RECENT DEPOSITS
42.67m
Sandstone
Siltstone
Claystone
Kaolin / Granite Wash
Sub Recent: Mix lithology, Silty, sandy,
and clayey at places. Oxidized, iron concretion,
yellow limonitic staining.

BARA FORMATION
153.74m
Claystone
Bara Formation: Mainly medium gray to dark Coal
blackish grey claystone, coaly, carby, in between Siltstone
coal seams Dirty Coal
Carby Claystone

BASEMENT COMPLEX
Granite Basement : Mainly pink granite of Precambrian Weathered Granite
TD=249.02 m age. Granite
COMPARISON OF THAR LIGNITE WITH OTHER COUNTRIES

Stripping Ratio Heating Value


Deposit
(m : t) (MJ/kg)
Thar 6.6 : 1 11.6
Kosovo 1:1 7.8
Rhenish Area, 4.9 : 1 8.9
Germany

Hambach, Germany 6.3 : 1 10.5

Hungary 9:1 7.1


Greece 10:1 5.02

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CREDIBILITY OF RESERVES

Studies Conducted By:

United States Geological Survey


John T. Boyd
RWE of Germany
M/s Shenhua of China
Sindh Engro Coal Mining Company(SECMC)
Geological Survey of Pakistan
Sindh Coal Authority

All studies confirm presence of huge coal reserves


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Uses of Lignite

Combustion (Steam) Electricity (Steam Turbines) Ethanol


Lignite Jet Fuel
Coal Crude Diesel
Gasification CH4 CO
Oil - Petrol
H2
CO2 Refinery Paraffin
Coal to Liquid Chemicals (Ethylene
Ash H2 Fisher Tropsch Polymers
Tar H2S Synthesis
Naphta
Phenol NH3
Catechols
Carbon Dioxide
Dephenolized Cresylic Acid Ammonia
Fertilizer
Explosives

Source: Syngas and Coal Technology, R & D, SASOL Mr Johannes Van Heerdeen

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Vision for Thar Coal
To develop Thar Coal as a major source of power
generation for Energy & Economic Security of the
country and as a Hub of Petro Chemical Industry

Goal
To generate at least 10,000 MW by 2020

offer
Huge proven reserves with attractive incentives
Higher returns for investors
Business friendly policies & environment
Excellent incentives, concessions & protections
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Strategy to attract Private Investment

Attractive incentives Concessions


& protections for Investors

Power Purchase guarantee


Scheme

Provision of Robust Infrastructure

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Fiscal Incentives for Coal Development
Thar Coalfield is declared as Special Economic Zone, and projects of development of Thar declared
as Projects of National Security

20% ($ Based) IRR to firms which achieve Financial Close before Dec 2015 for Mine & Power Plants
based on indigenous coal and 20.5% IRR for firms which Financial Close by or before Dec 2014.

Zero percent customs duties on import of coal mining equipment and machinery including vehicles
for site use.

Exemption on withholding tax on dividend for initial 30 years.

Exemption on withholding tax on procurement of goods and services during project construction
and operations.

Exemption for 30 years on other levies including special excise duty, federal excise duty, WPPF and
WWF.

Coal based Power and Mining Projects in Sindh shall have the same
incentives, concessions, protections etc. as that available to IPPs developed under Power
Generation Policy 2002

TCEB to function as the Coal Pricing Agency www.sindhcoal.gos.pk


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Protections
Currency Exchange Rate Protection
Mining & Power Producers are protected from
the impact of exchange rate variation up to
Commercial Operation Date (COD).

EPC Cost Escalation


Cost escalation between the date of application
and the Financial Close permissible as per Power
Policy 2002

Return on Equity
US Dollar based Return on Equity
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Power Purchase Guarantee Scheme
GoP guarantees obligations of power purchaser
GOP provides protection against political force
majeure, change in law and change in duties &
taxes
Payment of compensation in case of
termination due to GOP default
Tariff adjustments for variation in currency
exchange rates, fuel prices and inflation
Government ensures conversion of Pak Rupee
& remittance of foreign exchange for project-
related payments
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INFRASTRUCTURE AVAILABLE AT THAR
ROAD NETWORK
70 tonnes load carrying capacity metalled road is
available up to Coal field area.
ELECTRICITY
11 KV feeder emanating from Islamkot to Thar Coal
Project areas with 200 watts transformer is available.
COMMUNICATION
Telephone & Internet communication through Optic fiber
cable is available up to Thar Coalfield area.
DRINKING WATER
29 Reverse Osmosis Plants in Thar are available for
provision of portable water to residents as well as project
staff free of cost.
RESCUE STATION
Rescue Station in coal mining area at Thar coalfield
covering an area of 8,200 sq. ft. is completed
LIBRARY
A Coal library is situated at office of Sindh Coal Authority,
Karachi.
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INFRASTRUCTURE PLANNED AT THAR
TRANSMISSION LINE
NTDC has conducted feasibility study for lying of Transmission Line for
evacuation of 10,000 MW from Thar. In the first Phase they are
planning to evacuate 1200 MW.
AIRPORT
The GoS has approved a scheme at the cost of Rs.972.070 million for
the construction of Airport at Thar for Coal Fields of Sindh by the Civil
Aviation Authority. Ground Breaking is due in current month.
PROVISION OF HEAVY DUTY ROAD
The W&S Deptt. is upgrading the road from Karachi to Islamkot
through Hyderabad- Mirpurkhas- Naukot for facilitating transportation
of heavy machinery by Dec. 2012.
RAILWAY LINK
PRACS has prepared feasibility for broad gauge rail link from Port
Qasim to Islamkot.
LODGE AT THAR
Lodge at Thar with 20-bedded accommodation to facilitate foreign and
local investors is being constructed at Islamkot.
PROVISION OF WATER:
The GoS has planned to construct a water carrier to provide 300 Cusecs water
to Thar. Alternately, the option of provision of water from LBOD is also
being evaluated.
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Status of Allocated Thar Blocks
Thar Coal Block Status

Block-II
Sindh Engro Coal Mining Company Bankable Feasibility completed 31st August 2010
(JV: 40% Sindh Government; 60% Engro) Project financing activity continued.
2X600 Power Plant planned Chinese Funding through JEWG is being solicited
Open Pit Mining @ 6.5 Mtpa
Block III-A
Cougar Energy (UK) Pilot Burn planned in 36 Months
400 MW Planned Desktop studies under process.
Under Ground Coal Gasification Project In active negotiation with M/s Fouji Foundation for
Ergo Exergy Technology planned joint collaboration

Block-V Unit gasifier design prepared,


UCG Project Technical team mobilized and desktop studies under
Under Ground Coal Gasification Project process.
2X50 MW IGCC Power Plant Planned Drilling Process has been completed, 36 bore holes
have been drilled.
Test Burn Planned on 19th September 2011
Block-VI Geotechnical drilling in process through DRD
Oracle Coalfields, PLC (UK) ESIA completed
Strip mining; BFS completion September 2011
MoU signed with KESC for 300MW Mine development phase to begin mid 2012 22
www.sindhcoal.gos.pk
BUSINESS FACILITATION
Strategic alliance between Coal & Power sector

High powered Thar Coal Energy Board (TCEB)


established as one stop org. with Federal and Provincial
agencies to facilitate investors.

TCEB is a decision making body on Thar Coal Mining


and Power Generation Projects.

TCEB facilitates and coordinates with all the projects


related to Thar Coal.

Causing concerned agencies to improve infrastructure

To act as coal Pricing agency


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Thar Coal & Energy Board
Composition of the Board is:
i. Chief Minister Sindh Chairman
ii. Federal Minister for Water & Power Vice-Chairman
iii. Federal Minister for Finance Member
iv. Federal Minister for Law and Justice Member
v. Deputy Chairman, Planning Commission Member
vi. Provincial Minister (Irrigation) Member
vii. Provincial Minister (Revenue) Member
viii. Provincial Minister (Finance) Member
ix. Female MNA from Thar Region Member
x. Federal Secretary, Ministry of Water and Power Member
xi. Chief Secretary, Govt. of Sindh Member
xii. Secretary, Coal & Energy Development Dept. Member
xiii. One eminent Person Member
xiv. Managing Director, TCEB Member/Secretary

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Investment Options
1. Coal Mining
Investors interested only in mining may apply for a mine
lease for mining the coal.

2. Integrated Coal & Power Generation Project


Investors may also opt for investing an integrated coal
mining and power generation projects.

3. Mine Mouth Power Project


Thar coalfields present best opportunity for mine mouth
power projects in view of the great demand for energy in
the country.

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Investment Options
4. Briquetting

Investors may plan Briquetting to support existing Power generation


and meeting coal demands of local industry

5. Coal Gasification

Investors may propose to convert coal into gas and market the
syngas and bye products in open market, or may develop a forward
integrated project on any one or more bye products from
gasification project

6. Coal to Liquid Projects


Investors may propose to convert coal into Liquid and market the
byproducts in open market, or may develop a forward
integrated project on any one or more bye products from CTL project
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Thar today

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Thar Tomorrow

Thank You
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