Generating Affordable & Reliable

Energy

Presented at

Pakistan

ENERGY Forum 2016

ENERGY DEPARTMENT 25th February, 2016

SEQUENCE

• SINDH-THE ENERGY HUB

• CURRENT ISSUES

• POTENTIAL

• POLICY INCENTIVES

• ALTERNATIVE ENERGY

Wind

Solar

Hydro (Run of River)

Waste to Energy

Oil &Gas

THAR COAL

THAR INFRASTRUCTURE

SINDH –THE ENERGY HUB

The reason for slow economic growth in recent years is mainly

attributed towards shortages of energy

SINDH is the ENERGY HUB OF PAKISTAN

Around 70% of the Country’s gas

42% of the Pakistan’s oil

CURRENT ENERGY ISSUES

• Demand-Supply gap

• Electrical Power – Shortages up to 5000 MW

(varying degree of shortages since 2004 & likely to continue)

• Gas – 1000 – 2000 MMCFD Shortage in winter

• UN-AFFORDABLE Energy prices

Thermal based energy mix mostly dependent upon imported furnace oil/diesel

increases the cost of energy

• NO ACCESS

• 30% of the population in rural areas has no access to grid electricity

• 75% population has no access to gas

• Inadequate financial resources

• Energy projects require huge investments • Public as well as private investments are essential for sector development

MISSION

To make Sindh self sufficient in

power generation and export

surplus to other provinces by

2020

POTENTIAL

Sindh has large economically viable energy resources

Coal 175 Billion MT proven reserves

Wind 55,000 MW

Solar 10,000 MW

Hydro (Small) 130 MW (Run of River)

Bagasse Cogeneration 1,000 MW (32 sugar mills & agro

Waste to Energy 500 MW (Karachi 11,000 MTPD)

Huge oil & gas reserves On shore & Off shore

RE POLICY

ATTRACTIVE RENEWABLE ENERGY POLICY

i. Return on Equity 17% (USD based) ii. Priority dispatch iii. Power Purchaser is responsible for providing interconnection iv. Wheeling is allowed

v. Allows net metering

vi. Facilitates the projects to obtain carbon credits

vii. Standardized Security Package - Energy Purchase Agreement and

Implementation Agreement

viii. IA is appended with GoP guarantee underwriting the performance of

power purchaser, change in law and political force majeure

INDEPENDENT REGULATOR - NEPRA

UPFRONT TARIFF

WIND - A SUCCESS STORY

310 MW electricity is being supplied through by five companies

9 projects - 477 MW are under construction - to supply electricity

by September 2016

Tower manufacturing facility by “China Three Gorges” is already

operational

More than 49 projects - 3110 MW capacity are at various stages of

approvals and studies

GoS allocated the required land for development of wind farms

Average wind speed ranges from 7-8 m/sec square

JIWANI ORMARA

PANJGUR

NOKUNDI

DALBANDIN

KHUZDAR

QUETTA

SIBI

LORALAI

ZHOB

BARKHAN

KALAT

KARACHI

BADIN

HYDERABAD

SUKKUR

CHOR

NAWABSHAH

JACOBABAD

PADIDAN

BAHAWALPUR

BAHAWALNAGAR

FAISALABAD

LAHORE

ISLAMABAD

KHANPUR

MULTAN

SIALKOT

BALAKOT

CHITRAL

D. I. KHAN

DIR

DROSH

KAKUL PARACHINAR

PESHAWAR

ASTOR

BUNJI

CHILAS

GILGIT

GUPIS

KOTLI

MUZAFFARABAD

SKARDU

8.3

9.1

4.5

3.0

5.9

4.2

2.3

2.1

3.5

2.1

5.0

2.0

3.5

5.1

3.3

3.4

2.5

1.8

2.1

3.2

1.6

1.9

1.2

1.9

3.3

2.7

0.9

JHELUM

1.7

3.8

2.4

0.9

3.0

0.9

3.0

1.9

2.3

2.5

2.6

1.5

3.3

3.9

1.3

3.0

WIND MAP

STUDY REPORT BY

PAKISTAN COUNCIL FOR RENEWABLE TECHNOLOGY

10.8

1 M/S

2 M/S

3 M/S

4 M/S

WIND SPEED

COLOUR CODE

5 M/S

6 M/S

7 M/S

8 M/S

9 M/S

10 M/S

DATA SOURCE: METEOROLOGICAL DEPARTMENT OF PAKISTAN

SOLAR

25 “on-grid” projects-1400 MW initiated through private

investments

5 “on –grid” projects of 20 MW each initiated under PPP mode

Solar Insolation (5.3 kWh/m²/day )

Completed two pilot projects for solarization of 350 schools in

Nangarparker and 140 households in Khipro

Upscaling this project to 5000 schools & 300 villages during the

current financial year

SOLAR IRRADIATION MAP

RUN OF THE RIVER

Hydropower potential identified at Guddu , Sukkur and Kotri

barrages and on different locations of Nara and Rohri canals with

a potential of 130 MW

Two projects of 24 MW on Rohri Canal and Nara Canal have

been awarded through private sector investments

Upfront tariff of US cents 9.9/ Kwh announced by NEPRA

GOS SUPPORT INITIATIVES

Dedicated Land Grants Policy 2015 for the purpose of developing RE

projects in the province

35 Letter of Intents (LOI) issued to investors for development of solar,

wind and hydropower projects

53000 acres already leased out to Renewable Energy projects

42000 acres reserved for Renewable Energy Parks in the province

One-window desk at Energy department

OIL & GAS

Exploration Licences Off shore (UEP, OGDCL, NIKO, PEL)

On shore (UEP, OGDC, PPL, ENI, OMV)

Development & Production Leases

Established “Sindh Energy Holding Company” - to acquire interests in other energy ventures

Established “Sindh Petroleum Limited” SEHCL to acquire interests in energy ventures

SINDH TRANSMISSION & DISPATCH COMPANY

Safe power evacuation and dispatch is one of the major

issues of the national grid

Sindh is the only province which established a power

transmission company “STDC”

1st project of 85 KM 132KV line from Nooriabad to Karachi

is under construction. Will be completed by February 2016

VISION - 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 5,000 MW by 2020

Policy Priorities • Develop Thar coal as ‘core resource’ to achieve

affordable and reliable energy security

• Development of coal mining sector leading to

poverty alleviation

PAKISTAN COAL RESERVES

Sindh 186 billion tons

Punjab 235 million tons

Balochistan 217 million tons

KP 90 million tons

Thar coal can be compared with several open pit mines of the World

Stripping ratio & heating Value is feasible for successful Mine Operation (Hambach mine-Germany, producing 40 Mt/inferior lignite)

Can be used in mine mouth Power Plants as well as other locations- lignite can be transported (being practised in India, China & Germany)

Thar Lignite–A Comparison

Comparison of Thar Block II : International Mines

Deposit Heating Value (Net) (KCal/kg)

Sulfur (%) Ash Moisture

Thar Block II 2770 1.07 7.8 47.46

Gujarat, India 2600-3000 3.4- 5.9 9-12 38-40

Central Germany 2150-2750 1.5 – 2.1 6.5-8.5 48-52

Maritza East - Bulgaria 1550 4.5 19-35 54

18

Thar Power Projects

Block Firm Total Potential of

Block (Bn Tons)

Power Projects

Initiated/Planned

MW

Expected

COD

I SSRL (China-Pak) 3.657 4X330 2018-19

II SECMC Pakistan 1.584 Phase-I 2X330 2018

Phase-II 2X330 2019

Phase-III 4X660 2021

III Asia Power UK 2.007 2X660 2019-20

IV Harbin Electric 2.572 2X660 2019-20

V UCG Project 1.394 2X50 (phase-I 10 MW) 2016

VI Oracle Coalfields 1.423 2X330 2019

19

Thar Block II Ground-Breaking Construction started even before financial close

Following activities are being carried out:

Initial overburden removal

Detailed Engineering/Design works

20

PM Nawaz Sharif along with former President Asif Zardari performed ground on 31st Jan 2014

Political leadership of Pakistan has reached consensus to jointly support this Project and has declared it a “Project of National Importance”

PRIME MINISTER HAS DECLARED THAR AS PROJECT OF NATIONAL IMPORTANCE & ASSURED GOP’s WHOLE HEARTED SUPPORT FOR THIS PROJECT

Mining Activity at Block-II Work for 113Mn BCM overburden removal in Thar Block II was started with

local contractor on April 30 2014

21

COMPARATIVE TARIFF AT DIFFERENT PLANT SIZES

- 80% Load Factor for all plants - RFO & HSD are considered modular; hence Tariff remains same irrespective of plant size - For LNG, modular units of 600MW assumed and USD 200Mn for terminal considered - For Imported Coal, modular units of 600MW (super critical) assumed and USD 700Mn for

jetty at Gaddani considered - For Thar, all infrastructure cost is included in the coal price Source : Revised BFS SECMC Block-II

INSTITUTIONAL DEVELOPMENT INITIATIVES

Development of GIS for the coalfield

Study completed for development of water master plan including

hydro geological, water supply and wastewater studies

Internationally bankable Thar Coal pricing regulatory regime

Environmental & social studies, land use plan and resettlement

framework for Thar Coalfields by Mott MacDonalds Intl

FISCAL INCENTIVES

• Coalfield declared as SEZ and ‘Projects of National Security’

• 20 % ($ Based) IRR

• Zero duty on import of coal mining equipment and machinery

• Exemption on withholding tax on dividend for 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

THAR - INFRASTRUCTURE

COMMUNICATION

• 70 tonnes load carrying roads up to

coalfield

• Air-strip

• Telephone & Internet

DRINKING WATER

• R.O Plants for potable water to the

inhabitants as well as project staff

free of cost

THAR LODGE 30-beds

RESCUE STATION

LIBRARY SCA

Runway work in progress

Thar Lodge Islamkot

RO Plants in Thar

WATER SUPPLY FOR POWER PLANTS

Karachi

Islamkot

50km

Badin Mithi

Umarkot

Moro

Matiari

Hala

Jamshoro

INDI

A

PAKISTAN

I

II

III

IV

V VII VI

VIII

IX X

Naukot

Wango

Thar Coal Field

Indus River

Mirpurkhas

ARABIAN SEA

RANN OF

KUTCH

Hyderabad

LEGEND

: 500kV Transmission Line

Navisar

Dadu

Tatta

LEGEND : Existing : Planned

500/220 kV MORO S/S (ADB)

500kV MATIARI S/S (ADB)

500/220kV JAMSHORO S/S

500/220kV DADU NEW S/S

GUDDU

N.K.I

HUBCO

THAR Coal P/S

1200MW

R.Y.KHAN

ADB

ADB

ADB

Request for JP Loan

ADB

Route Map of 500kV Transmission Line 500kV Grid Map surrounding of Sindh up to 2016-17

500kV (250km:Rs. 23 billion) transmission line between Thar coal

and Matiari being constructed by NTDC

Line Bays & Shunt

Reactors .

2cct Araucaria .

28

TRANSMISSION LINE

THANK YOU

Back up Slides

WASTE- TO -ENERGY

The province of Sindh produces Municipal Waste & Agricultural

Waste in the form of Bagasse, Cotton sticks and rice husk.

MUNICIPAL WASTE IN KARACHI:

Produces 15,000 Metric tonnes per day

The Govt of Sindh offers incentives for development of power

projects under the Renewable Energy policy

Including ensured IRR of 17% . Govt Guarantees for power

purchase and Grid interconnection.

SINDH COAL -CHEMISTRY

Field Reserve

Bn tons

Moistur

e %

Fixed

Carbon

Volatile

Matter

%

Ash % Sulphur

%

Calorific

Value

Btu/lb

Rank

Lakhra 1.328 28.9 28.0 25.2 18.0 4.7 to 7.0 4622 to

7,552

Lignite A

to B

Sonda 7.112 34.0 27.9 25.2 15.0 1 to 2.8 6762 to

11029

Lignite A

to B

Badin 1.358 15.4 to

29.8

29.8 to

39.8

31 to

36.3

8.2 to

14.6 3.4 to 7.4

6740 to

11100

Lignite A

to B

Thar 175 46.8 23.4 16.7 6.2 0.9-1.2 5,774 Lignite A

COAL : COAL FIELDS OF PAKISTAN & THAR

Thar coalfield located between Latitudes 24o15’N 25o45’N

Longitudes

69o 45’E

70o 45’E

Thar Desert contains the world’s 7th largest coal reserves:

Location of Thar Coal Field

Source:: GSP data/report – Energy equivalent is based on Shenhua report/RWE

• Thar Block II has been allocated to SECMC

• According to Competent Person Report (CPR) by RWE - Germany, Thar Block-II contains 2 Billion tons of Lignite reserves, out of which 1.57 Billion tons are exploitable. Thar Block-II alone can produce 5,000 MW for 50 years!

• Mine Lease for 30 years (extendable to 60 years) has been issued to SECMC for Block II

1% = 25% Pakistan’s Power

Generation Capacity in 2010 – 5000MW

Thar Coal Reserves

Thar

PAKISTAN

175 Billion

Ton

Total Thar Coal Reserve

50 Billion TOE

More than Saudi Arabia & Iranian

Oil Reserves

2000 TCF

68 Times higher than Pakistan’s

total gas reserves

34

Thar Lignite

35

Ground Elevation varies from 80 to 100 m Above Mean Sea Level (AMSL)

Overburden thickness varies from 130 to 150 m

Cumulative Lignite thickness varies from 22 to 32 m

Main Lignite seam (2-7) has the thickness of 18 m

03 Aquifers are present in the area

Dune Sand Aquifer

(50 m)

Coal Seam Roof Aquifer

(120 m)

Coal Seam Floor Aquifer

(180 m)

80AMSL

0 AMSL

-50

AMSL

-115

AMSL

Thar Block Geology

Lignite

Coal

Combustion (Steam)

Gasification

Ash

Tar

Naphta

Phenol

Catechols

Carbon Dioxide

Dephenolized Cresylic Acid

CH4

CO2

H2

H2S

NH3

CO

H2

Ethanol

Jet Fuel

Diesel

Petrol

Paraffin

Chemicals (Ethylene

Polymers

Ammonia

Fertilizer

Explosives

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

36

Blocks Status/ Timelines

Block-I: Sino-Sindh -Global Mining

Open-pit Coal Mining of 6.5 MTPA

up and 2 x 660 MW Power Plant

Project Cost (Mine): US$ 0.980 bn

Project Cost (Power): US$ 1.9 bn

Bankable Feasibility completed March, 2012

MoU between SSRL & Shanghai Electric Power signed

Coal Supply Agreement in place. LoI approved by PPIB

Financial Close expected by October, 2015

Block-II: SECMC

(JV: 51% GoS; 49% Engro+

affiliates)

Project: Open-pit Coal Mining of 3.8

MTPA up to 6.5 MTPA (Phase-I) and

2 x 330 MW Power Plant.

Project Cost (Mine): US$ 0.85 bn

Project Cost (Power): US$ 1.1 bn

Bankable Feasibility completed August 2010

Land acquired for 8 years of Mining. EPC Contract

signed

Coal Supply Agreement with Engro Power Thar Ltd.

signed.

Coal Tariff Approved by TCEB

Rs. 50 bn Agreements for Local Financing signed

Mining & Power EIA issued

Overburden removal has begun – 3 years to reach Coal

seam

Financial Close expected by October, 2015

Block-V: UCG Pilot Project

Under Ground Coal Gasification

Project

& Power Plant

38 bore holes drilled

Test Burn in Dec. 2011-Syngas being produced

Procurement of Purification Plant done

Power Plant 8-10 MW being installed

Block-VI: Oracle Coalfields, PLC

(UK)

Open-pit Coal Mining of 4 MTPA up

and 2 x 300 MW Power

Plant

Project Cost (Mine): US$ 0.878 bn

Detailed Feasibility Completed

Start of Mine development to begin by end 2015

JDA signed with KESC for 300 MW in July, 2012

JDA Signed with SEPCO China for Mining & Power Plant

of 300 MW on mine mouth.

Power Company be in place by Oct. 2015

37

Status of Mining & Power Projects at Thar Coalfield