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Business

July 13, 2018

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SECMC eyes coal supply deal with Shanghai Electric

KARACHI: Sindh Engro Coal Mining Company (SECMC) planned a coal supply agreement with Shanghai Electric Corporation to undertake expeditious expansion of Thar Block-II -- a move likely to further trim the coal tariff, an official said on Thursday.

“Shanghai Electric --the developer of 1,320MW lignite (coal) fired plant in Thar Block-I– had already been issued the letter of intent (LoI) for the $900 million power plant in Thar, and it would be cheaper and convenient for them to source coal from our mine to run the plants,” Abul Fazal Rizvi, Chief Operating Officer at SECMC, said.

“We have already recovered the coal and it takes around 33 months in expanding the mine, as much time it takes in developing the power plant. So by the time Shanghai’s plant is ready, the mine will be good to manage the required demand.”

The company is upbeat on securing a deal as Sino Sindh Resources Limited, the mining leaseholder of Thar Block-I, has not made any notable progress on the project and even their mining contractor had left the project, while the SECMC has already developed the mine in Thar Block-II.

It may be mentioned here that in the Phase-I of the mine, the SECMC would supply coal to Thar Powergen Limited, which is likely to be commissioned by 2018 end.

Expansion in Phase-II will fuel power plants being set up by Thar Energy Limited and ThalNova Power Thar Limited.

Rizvi said Lucky Electric Power

Company Limited and Siddiqsons Energy Limited are in line for the next expansion of the mine, aiming to expand it from 7.6 million tons per annum (mtpa) to 13.3mtpa.

“However, Lucky and Siddiqsons have not been issued the LoI, and without any of these two achieving commercial operations, we will not declare commercial operation date of the expansion project,” the Sindh Engro Coal Mining Company official added.

Since Lucky and Siddiqsons do not have the LoI yet, the Sindh Engro Coal Mining Company will be able to accommodate Shanghai’s demand in the third phase of expansion.

It may be mentioned here that Arif Habib Corp and Liberty Power have also contacted the SECMC for supply of coal in the later phase of expansion.

“The larger the mine, the lower the tariff,” Rizvi said adding the Block-II had the capacity to generate 5,280 MW, and the Sindh Engro Coal Mining Company was committed to ensure that the lowest Thar coal tariff that too as soon as possible.

The SECMC has revised its expansion plant and proposed contract stage coal tariff of $46.84/ton at 7.6mtpa of mining capacity. Earlier in June 2015, Thar Coal and Energy Board (TCEB) had awarded a levelised composite tariff (for Phase-I) of $46.126/ton for the mine having a capacity of 3.8mtpa leading to 6.5mtpa.

Rizvi said although $46.84/ton for a larger mine compared to $46.126/ton for a comparatively smaller mine seemed higher, but in real terms the proposed tariff for 7.6mtpa mine was lower than the tariff awarded for 6.5mtpa mine.

“If we adjust the macroeconomic variables in the original determination to the values prevailing at the time of filing of the revision petition, the tariff for a 3.8mtpa mine leading to 6.5mtpa mine would have been $47.20/ton versus the petitioned tariff of $46.84/ton for the 7.6mtpa mine,

which is substantially lower than the levelised tariff of $58.02 determined for the 3.8mtpa mine determined as part of the financial close stage tariff determination,” the Sindh Engro Coal Mining Company official said.

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