Thar Coal- A new Horizon for Investment in Pakistan

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Thar Coal- A new Horizon for Investment in
Pakistan
Review of Pakistan Coal Industry Now the Future
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Coals Significance in Global Energy Scenario

• Global energy consumption will rise by 50 by
  2030. In non-OECD region, it will rise by 85
  (International Energy Outlook Report 2008)
• 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.
• 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.
• World Proven Coal Reserves Over 860 billion
  tons.

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Source IEA Report 2009
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Coal Used in Electricity Generation Lignite
Reserves
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Sub bituminous Anthracite reserves only
Thar Coal Resources are 175 billion tonnes Proven
Reserve in 9 explored Blocks alone is 20 billion
tonnes
( Source,2008, IEA)
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A Comparison of Power Generation fuel Mix
World
Pakistan
World Power Generation fuel Mix 2008-09
Others 2
Coal 41
Hydro 16
Gas 20
Oil 6
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Widening Demand Supply Gap Projection for
Pakistan
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

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All Coal Fields of Sindh
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Thar Coalfields Blocks Layout
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Thar Coal Reserves
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CHEMICAL ANALYSIS OF THAR COALFIELDS
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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 Sandstone
Siltstone Claystone Kaolin / Granite Wash
42.67m
Sub Recent Mix lithology, Silty, sandy, and
clayey at places. Oxidized, iron
concretion, yellow limonitic staining.
BARA FORMATION Claystone Coal
Siltstone Dirty Coal
Carby Claystone
153.74m
Bara Formation Mainly medium gray to dark
blackish grey claystone, coaly, carby, in
between coal seams
BASEMENT COMPLEX Weathered Granite Granite
Granite Basement Mainly pink granite of
Precambrian age.
TD249.02 m
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COMPARISON OF THAR LIGNITE WITH OTHER COUNTRIES
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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
Ethanol Jet Fuel Diesel Petrol Paraffin Chemicals
(Ethylene ? Polymers
Combustion (Steam)
Electricity (Steam Turbines)
Lignite Coal
Crude Oil - Refinery
Gasification
CH4 CO2 H2 H2S NH3
CO H2
Coal to Liquid
Ash Tar Naphta Phenol Catechols Carbon
Dioxide Dephenolized Cresylic Acid
Fisher Tropsch Synthesis
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
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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 WS 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

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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
• Chief Minister Sindh Chairman
• Federal Minister for Water Power Vice-Chairman
• Federal Minister for Finance Member
• Federal Minister for Law and Justice Member
• Deputy Chairman, Planning Commission Member
• Provincial Minister (Irrigation) Member
• Provincial Minister (Revenue) Member
• Provincial Minister (Finance) Member
• Female MNA from Thar Region Member
• Federal Secretary, Ministry of Water and
  Power Member
• Chief Secretary, Govt. of Sindh Member
• Secretary, Coal Energy Development Dept. Member
• One eminent Person Member
• 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

• 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