Creating Value Through Investment

1
Creating Value Through Investment

• Indigenous Fuel is the Key to Energy Security of
  Pakistan

2
Pakistans Development Challenge
Population Below Poverty Line (income less than
USD 2 / day) _____________________ 60
Population Growth Rate _______________________ 2
GDP per Capita _____________ 980 USD
.and needs energy to meet this challenge
Source World Bank
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Pakistans Power Demand-Supply Forecast
Peak Demand
Average 3 Growth rate based on GDP Population
Growth
Supply
Average 2 Growth rate assumed
Daimer Basha Dam (4500 MW)
Thar Coal (1200 MW)
Only plants that have achieved or are likely to
achieve financial close included in the supply
forecast
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Impact of Energy Crisis

• Electricity shortage of more than 4500 MW and
  frequent power cuts translate to

• Increasing dependence on expensive imported
  energy puts a severe constraint on ability to pay
• Import bill expected to increase to above USD 8
  billion by 2020

Source State of the Economy Emerging from
Crisis 2008, Beacon House National University
publication, Pakistan Economic Survey 2009
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Wrong Fuel Choice

• Due to lack of indigenous natural gas shortages,
  reliance on expensive imported RFO has increased
  and exacerbated Circular Debt problem
• If Coal had been used instead of RFO to make up
  for indigenous natural gas shortage, it would
  have reduced energy import bill by USD 600 M and
  direct saving of USD 280 M to electricity
  consumers
• 50 reduction in use of RFO for power generation
  would reduce Pakistans energy import bill by USD
  900 M and benefit electricity consumers by USD
  400 M

Source 1) State of Industries Report 2010,
NEPRA 2) Integrated Energy Plan
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Thar Coal Potential

• 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
1 25 Thar Coal Reserve
Pakistans Power Generation Capacity in 2010

• Development of Block II alone would bring in
  investment of USD 12 Billion
• Entire Thar Coal Reserves can be used to generate
  100,000 MW of electricity for over 200 years

Location of Thar Coal Field
Source GSP data/report Energy equivalent is
based on Shenhua report/RWE
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Public Private Partnership Alignment of
Incentives

• Sindh Engro Coal Mining Companys Vision
• To develop and execute technically and
  commercially viable Coal Mining Project in Thar
  Block II to generate electric power and bring
  energy security to Pakistan based on indigenous
  resource
• Joint Venture (JV) Company Structure
• 40 Shares owned by the Government of Sindh (GoS)
• 60 Shares owned by Engro PowerGen Limited (EPL)
• Core expertise and responsibilities of each JV
  Partner include
• GoS would assist in timely availability of all
  relevant data (previous and currently ongoing
  studies), requisite approvals from Federal and
  Provincial Governments and timely delivery of
  infrastructure requirement for the Project
  including roads and transmission line
• Engro PowerGen will lead development, financing,
  management and execution of the Project in a
  professional and fast track manner
• This Public Private Partnership reflects new
  strategic focus of Government Engro to develop
  Thar Coal reserves, raising the bar on how mega
  project investment is planned, prioritized,
  financed and delivered

Sindh Engro Coal Mining Company
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Bankable Feasibility Study Consultants
SECMC
RWE-Germany
SINOCOAL Intl. China
Bankable Feasibility Study Consultant
Hydrological Model GW Abstraction Consultant

• Environment and Social Impact Assessment

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Key Highlights Thar Coal Mining Feasibility
Study

• Bankable Feasibility Study (BFS) for Thar Block
  II Coal Mining Project has been completed by
  internationally renowned Consultants within
  budget on August 31, 2010 as per target date
• Technical, environmental and social viability of
  the Project has been confirmed meeting all
  international lenders standards (IFC/World Bank,
  ADB etc.)
• Salient features of the study for 6.5 Mt/a Mine
  are as follows
• Total Lignite reserve in Block II - 2 Billion
  tons Exploitable Reserve - 1.57 Billion tons
  which can support 5,000 MW for 50 years average
  striping ratio is 6.21
• Required Overburden removal 140 Mm3 for initial
  4 years 1277 Mm3 over 30 years
• Total mine depth is 195 m (640 ft) cumulative
  lignite seam thickness is 32 m
• Average lignite quality calculated from 1618
  samples is (Heating Value 11.6 MJ/kg ( 5000
  Btu/lb) , Ash 7.3 , Moisture 47.48 , Sulphur
  1.1 ) better than lignite being used in Greece
  Germany for power generation
• To keep the mine dry for operations, 37 Mm3/a
  ( 41 cusecs) of GW1 will have to be pumped out
  in the initial years, which will reduce to 25
  Mm3/a ( 28 cusecs) in later years
• Shovel Truck (S/T) has been selected for
  Lignite Mining due to its flexibility to achieve
  mine scalability to 13 Mt/a 22.8 Mt/a in a cost
  effective manner. Bucket Wheel Excavator (BWE)
  Spreader system will be utilized for mine
  expansion to 13 Mt/a 22.8Mt/a

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Key Highlights Thar Coal Mining Feasibility
Study

• Environment Social Viability Assessment
• No significant or unmanageable environmental
  threats and social implications indicated
• GW impact assessment and mitigation measures
  finalized drawdown in 1st aquifer will be
  monitored, re-infiltration may be done after 20
  years if required
• Only 2 villages will need to be relocated 1st
  in 2025 and 2nd in 2035
• Mine power plant to be developed in parallel
• Phase 1 of the project will be development of a
  6.5 million tons/annum coal mine in parallel with
  development of 1200 MW Coal fired Power Plant.
  Total Mining and Power Generation Projects Cost
  is estimated to be 3 4 Billion USD
• Subsequently, the coal mine will be scaled up to
  22.5 Mt/a capacity and power plant capacity will
  be increased to 4000 MW expeditiously. This will
  require investment of over USD 12 Billion
• 1st Phase of Coal Mine Power Plant construction
  is targeted to start in 2012 and both Coal Mine
  Power Plant will start operations by 2016
• GoS GoP to ensure timely provision of
  infrastructure requirements including roads
  network and transmission line

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Project Financing from Chinese Financial
Institutions

• Subsequent to Chinese Prime Ministers visit to
  Pakistan in Dec, 2010, a Joint Energy Working
  Group (JEWG) between Government of Pakistan
  (GoP) Govt. of China has been formed to
  shortlist the energy projects for technical and
  financial assistance from Govt. of China
• SECMC team presented details of Thar Block II
  Coal Mining, Power Plant Infrasturucture
  Projects to Sub-Energy Working Group (SEWG)
  comprising Joint Secretary MoPNR1, Secretary
  CEDD and DG Mines on 7-8 Jan, 2011. SEWG
  unanimously agreed to forward the comprehensive
  proposal for the Projects with their
  recommendations to Energy Working Group (EWG) of
  GoP
• EWG has included these Projects in the list of
  energy projects to be presented in JEWG meeting
  scheduled to be held in March, 2011 in Beijing to
  seek Govt. of China support for financing
• SECMC has communicated to GoS / GoP financing
  requirement and proposed structure for discussion
  and approval at JEWG meeting
• GoS to pursue EWG to ensure JEWG recommends to
  Govt. of China to instruct Chinese Financial
  Institutions for financing of Thar Projects as
  per structure proposed by SECMC

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Benefits of Thar Coal Development

• To overcome the current energy crisis, Pakistan
  has no other alternative except development of
  indigenous energy resources
• Thar investment will provide the following
  benefits
• Strategic energy resource that will guarantee
  energy security to Pakistan in the decades to
  come
• Import substitution of expensive RFO or Natural
  Gas Due to import substitution benefits, Thar
  mining will act as a direct foreign exchange
  earning sector and help lower the adverse impact
  of imported fuel on Pakistans Trade Balance
• Lower power tariff for Coal fired Power Plants as
  compared to RFO based power tariff
• Socio-Economic Development of Thar region
• Presently Thar District ranks lowest on all
  socio-economic development indicators in Sindh
• Development of indigenous coal mining industry
  will lead to skilled job creation and transfer of
  technology
• Potential for future downstream industries in
  Petro-chemical and Fertilizer products

Thar Coal is a fortune turning opportunity for
Pakistan
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Thank YOu
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Mine Equipment Shovel Truck
Dump Truck
Shovel
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Bucket Wheel Excavator Spreader
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Mine Power Plant Layout
Township
Power Plant
Stock Yard
MSF
Layout - 6.5 Mt/a Mine with Expansion to 22.8
Mt/a Mine
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Location of Aquifers in Block II