Govt approves coal supply deal with any Thar developer

Decision comes after Lucky Cement’s plant faces delay due to SECMC’s reluctance to sign agreement

ISLAMABAD: As the coal-based power plant planned by Lucky Cement suffers a delay following reluctance of Sindh Engro Coal Mining Company (SECMC) to sign a supply agreement, the government has allowed all power companies interested in setting up coal-based power plants to enter into a supply deal with any developer of coal mines in Thar Sindh.

Sources said that Lucky Electric Power Company was first asked to convert to local coal as against their original proposal of imported coal as fuel. The project has completed all documentation for financial close except for the coal sales agreement with SECMC.



Officials said that Lucky Electric Power Company had made a lot of efforts to sign the coal supply agreement with SECMC but the latter was reluctant to sign the deal. Following this, the management of Lucky Electric Power Company had approached the government to resolve this issue.

The project sponsor had also faced problems including extension of Letter of Support (LoS), execution of coal sales agreement, signing of power purchase agreement (PPA), Implementation Agreement (IA) and grid interconnection.

After keeping in view the problems faced by Lucky Electric Power Company, the government has decided that all power companies working on coal-based power plants be allowed to enter into coal supply agreement with any of the coal mine developers in Thar instead of binding them to a particular mine, ie SECMC.

Lucky Electric Power Company Limited (LEPCL), a wholly owned subsidiary of Lucky Cement Limited, is all set to install a 660-megawatt coal-power plant at Bin Qasim, Karachi, which will be the first plant to use Thar coal as fuel 350km from the mine’s mouth.

Lucky Electric’s tariff will be marginally lower compared to the mine-mouth project despite the transportation cost because of a lower rate of return, higher plant efficiency and no water cost.

The project would not only set a precedent for the entire power sector by using the coal produced by coal mine developers in Thar Sindh, a hefty distance away from the plant, but will also pave the way for export of Thar coal, as its power plant is located at Port Qasim.

If this coal could be transported to Port Qasim for producing power, it can also be exported from the same port. The project will cost approximately $850 million. The company is targeting to start commercial operation by December 2019.

It has already obtained all the requisite approvals including the letter of support, upfront tariff from Nepra and has leased 250 acres of land close to Port Qasim.

This will facilitate foreign exchange savings besides bringing the electricity cost lower, thus making it affordable for the consumers and help make exports more competitive.

Moreover, the use of Thar lignite, away from mine-mouth, would also help in expansion of mining in Thar, which is in the interest of the country, the province and the people of Thar.



The company was initially intended to run on imported coal. However, upon advice of the government, it was converted to local (Thar) coal in line with the national policy of reducing reliance on imported fuel.

Published in The Express Tribune, July 4^th, 2017.

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