By

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

Thar Coal- A new Horizon for Investment in Pakistan

Review of Pakistan Coal Industry Now & the Future

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Coal’s 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.

* Source IEA Report 2009

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Coal Used in Electricity Generation & Lignite Reserves% age of Electricity

Generated from CoalLignite Reserves

Billion tonnesSouth Africa 94 30.15*

Poland 93 1.37China 81 18.6

Australia 76 37.2Israel 71 -

Kazakhstan 70 12.1India 68 4.5

Czech Republic 62 0.98

Morocco 57 -Greece 55 3.02

USA 49 30.16Germany 49 40.6

World Average 41 195.38Pakistan 0.1 186.2**

* 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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World Power Generation fuel Mix 2008-09

World Pakistan

A Comparison of Power Generation fuel Mix

Hydro 16%

Gas 20%

Oil 6%

Coal 41%

Others 2%

Widening Demand & Supply Gap Projection for Pakistan

Current Installed Capacity (MW)

Project DemandGap (MW)Year MW

19,566

2010 24,474 6,577

2015 36,217 18,320

2020 54,359 36,462

2025 80,566 62,669

2030 113,695 95,798

Future Energy Demand Supply Gap is Alarming!Source: Pakistan Electric Power Company (PEPCO)

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Pakistan’s Coal ReservesSindhSindh

186 billion tons

PunjabPunjab235 million tons

BalochistanBalochistan217 million tons

KPKP90 million tons

Azad KashmirAzad Kashmir9 million tons

TharThar

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Thar Desert contains the world’s 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 Pakistan’s total gas reserves

All Coal Fields of Sindh

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Thar Coalfields Blocks Layout

Thar Coal ReservesBlock Total

Drill holes

Cumulative Coal Seam Meters

Over Burden Top of first Seam

Meters

Chemical Analysis as

Received basis BTU/Kg

Estimated reserves

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 COALFIELDSCHEMICAL ANALYSIS OF THAR COALFIELDS

Blocks

Weighted Average chemical Analyses of Thar Coal

As Received Values (%)Heating Values

(Btu/lb)

Moisture

AshVol.

Matter

Fixed Carbo

nSulphur As Rcvd Dry

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 COALFIELDGENERAL GEOLOGY OF THAR COALFIELD

BASEMENT COMPLEXWeathered GraniteGranite

BARA FORMATION Claystone

Coal Siltstone

Dirty Coal Carby Claystone

SUB-RECENT DEPOSITSSandstone SiltstoneClaystoneKaolin / Granite Wash

RECENT DEPOSITDune 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: Mix lithology, Silty, sandy, and clayey at places. Oxidized, iron concretion,yellow limonitic staining.

Bara Formation: Mainly medium gray to dark blackish grey claystone, coaly, carby, in between coal seams

Granite Basement : Mainly pink granite of Precambrian age.

KGS-12

42.67m

153.74m

TD=249.02 m

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Deposit Stripping Ratio

(m³ : t) Heating Value

(MJ/kg)

Thar 6.6 : 1 11.6

Kosovo 1 : 1 7.8

Rhenish Area, Germany

4.9 : 1 8.9

Hambach, Germany 6.3 : 1 10.5

Hungary 9 : 1 7.1

Greece 10:1 5.02

COMPARISON OF THAR LIGNITE WITH OTHER COUNTRIES

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 reserveswww.sindhcoal.gos.pk 13

Lignite

Coal

Combustion (Steam)

Gasification

AshTarNaphtaPhenolCatecholsCarbon DioxideDephenolized Cresylic Acid

CH4

CO2

H2

H2S

NH3

CO

H2

EthanolJet FuelDieselPetrolParaffinChemicals (Ethylene Polymers

AmmoniaFertilizerExplosives

Fisher Tropsch Synthesis

Crude Oil - Refinery

Electricity (Steam Turbines)

Coal to Liquid

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

Uses of Lignite

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“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”

GoalTo 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

Vision for Thar Coal

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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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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

Fiscal Incentives for Coal Development

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ProtectionsCurrency Exchange Rate Protection        

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

EPC Cost EscalationCost 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 THARROAD 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.

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.

INFRASTRUCTURE PLANNED AT THAR

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Thar Coal Block Status

Block-II Sindh Engro Coal Mining Company(JV: 40% Sindh Government; 60% Engro)

2X600 Power Plant plannedOpen Pit Mining @ 6.5 Mtpa

Bankable Feasibility completed 31st August 2010Project financing activity continued.Chinese Funding through JEWG is being solicited

Block III-ACougar Energy (UK) 400 MW PlannedUnder Ground Coal Gasification ProjectErgo Exergy Technology planned

Pilot Burn planned in 36 MonthsDesktop studies under process.In active negotiation with M/s Fouji Foundation for joint collaboration

Block-VUCG ProjectUnder Ground Coal Gasification Project2X50 MW IGCC Power Plant Planned

Unit gasifier design prepared,Technical team mobilized and desktop studies under process. Drilling Process has been completed, 36 bore holes have been drilled.Test Burn Planned on 19th September 2011

Block-VIOracle Coalfields, PLC (UK)Strip mining; MoU signed with KESC for 300MW

Geotechnical drilling in process through DRDESIA completedBFS completion September 2011Mine development phase to begin mid 2012

Status of Allocated Thar Blocks

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BUSINESS FACILITATIONStrategic 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

Composition of the Board is:

i. Chief Minister Sindh Chairmanii. Federal Minister for Water & Power Vice-Chairmaniii. Federal Minister for Finance Memberiv. Federal Minister for Law and Justice Memberv. Deputy Chairman, Planning Commission Membervi. Provincial Minister (Irrigation) Membervii. Provincial Minister (Revenue) Memberviii. Provincial Minister (Finance) Memberix. Female MNA from Thar Region Memberx. Federal Secretary, Ministry of Water and Power Memberxi. Chief Secretary, Govt. of Sindh Memberxii. Secretary, Coal & Energy Development Dept. Memberxiii. One eminent Person Memberxiv. Managing Director, TCEB

Member/Secretary

Thar Coal & Energy Board

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1. Coal MiningInvestors interested only in mining may apply for a mine

lease for mining the coal.

2. Integrated Coal & Power Generation ProjectInvestors may also opt for investing an integrated coal

mining and power generation projects.

3. Mine Mouth Power ProjectThar coalfields present best opportunity for mine mouth

power projects in view of the great demand for energy in the country.

Investment Options

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Investment Options4. 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