China ready to finance Thar coal project: SECMC chief

Wants govt to make project a priority to secure financing.

ISLAMABAD:

As International Financial Institutions (IFIs) refuse to extend financing to develop Thar coal reserves, China has offered to provide $900 million for mining and setting up power plants, seeking a guarantee from the federal government in order to go ahead with the offer.

This was stated by Shamsuddin A Shaikh, Sindh Engro Coal Mining Company (SECMC) Chief Executive Officer (CEO).

He said that the SECMC required $1.2 billion for the Thar coal mining and power projects, which no IFI was ready to extend due to environmental issues and Pakistan’s credit history.

“China is the only country which is ready to extend financing but it wants a guarantee from the federal government to list Thar coal among the top 3 to 4 priority projects,” said Shaikh, adding that Chinese banks were ready to extend $900 million, out of which local banks would provide $300 million.

He demanded that the federal government list the Thar coal project as a priority to secure financing from China. He further said that the government of Pakistan should include the Thar coal project in the Pak-China Economic Corridor project.

He said that it is important that a conversion policy be made with incentives for use of local coal to encourage the use of indigenous resources and save precious foreign exchange.

“All new conversion projects based on imported coal should be subject to blending with Thar coal at 20% at least to scale up mining at Thar,” he said.

He also asked that the power policy be amended to include Thar-based power projects enabling the Private Power Infrastructure Board (PPIB) to issue the requisite Letter of Intent (LOI) for Thar based plant.

Shaikh said that Pakistan’s power sector suffers from shortages as well as an expensive energy mix.  Pakistan’s effective power generation stands at 16,000 MW, which is currently short by approximately 5,000 MW, and will worsen as power requirements increase to 26,000 MW by 2020.

“Pakistan’s energy mix is neither sustainable nor affordable as approximately 40% of power generation is dependent on imported fuel. It is, therefore, imperative to curb our dependence on expensive imported fuel and develop indigenous resources that can help provide energy security,” said Shaikh. “Import of coal is very risky as its prices cannot be predicted, coupled with our currency devaluation which would again take us back to the current unsustainable position.”

Contrary to general perception, Shaikh said, the quality of Thar lignite compares favourably with other lignite being used around the world for power production.

“Among the four established quality measures of coal which are heating value, sulphur, Ash and moisture content, Thar coal is superior in three quality aspects as compared to lignite currently being used in Germany, India and Bulgaria for power generation,” he added.

He said that the SECMC was a joint venture with the Sindh government, which owns 51% of the share while SECMC owns 49%.

“Now, SECMC wants to keep 26% of the shares and Pakistan State Oil (PSO) will get 23%,” Shaikh said.

Published in The Express Tribune, December 12^th, 2013.

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