Transcript Slide 1

Sindh Engro Coal Mining
Company
Thar Block II Coal Mining Project
Indigenous Fuel is the Key to Energy Security of Pakistan
Khalid Mansoor,
Oct 22, 2011
Pakistan’s Power Demand-Supply Forecast
Peak Demand
Average 3% Growth rate
based on GDP & Population
Growth
Supply
Average 2% Growth
rate assumed
Daimer – Basha Dam
(4500 MW)
Thar Coal (1200 MW)
Only plants that have achieved or are likely to achieve financial close included in the supply forecast
Impact of Energy Crisis
Electrification Rate
:
56%
Supply Shortfall
:
1100 – 5000 MW
Power Outage per day :
8 – 16 hours / day
Impact / Year
Total cost of load shedding to the economy
2.5 Billion USD
Cost as percentage of GDP
2 % decrease
Loss of employment in the economy
400,000 jobs
Loss of exports
1 Billion USD
Source: State of the Economy – Emerging from Crisis 2008, Beacon House National University publication
Wrong Fuel Choice
Nuclear
2%
Hydel
30%
Coal
0%
HSD
1%
Nuclear
3%
2008-09
Gas
42%
RFO
25%
2009-10
Gas
29%
Hydel
30%
Coal
0%
HSD
1%
RFO
37%
Country
Power Generated from
Coal (%)
Australia
80
China
78
India
53
USA
50
Germany
47
UK
30
World Average
42
Pakistan
0.1
•
Due to lack of indigenous natural gas shortages, reliance on expensive imported RFO has increased and
exacerbated Circular Debt problem
•
If Coal had been used instead of RFO to make up for indigenous natural gas shortage, it would have
reduced energy import bill by USD 600 M and direct saving of USD 280 M to electricity consumers
•
50% reduction in use of RFO for power generation would reduce Pakistan’s energy import bill by USD 900
M and benefit electricity consumers by USD 400 M
•
Existing RFO based power plants can be retrofitted to operate on local coal thereby reducing the fuel cost &
eventual power tariff significantly
Source: 1) State of Industries Report 2010, NEPRA 2) Integrated Energy Plan
Thar Dream Promises Better Life Tomorrow for all Pakistanis!
Salient Features of Thar Coal Mining & Power Project
•
Sindh Engro Coal Mining Company (SECMC) is a joint venture company between Engro Powergen Ltd. (60%) and
the Government of Sindh (GoS) (40%) with a vision to:
“Develop a technically and commercially viable Coal Mining Project in Thar Block II to generate electric power
using indigenous lignite and bring energy security to Pakistan”
•
GoS is responsible for coordination with Federal & Provincial Governments for obtaining relevant approvals and
timely delivery of infrastructure including water supply, roads, transmission line and effluent disposal etc
•
•
•
Engro Powergen is responsible for development, financing, execution management & operations of the Projects
Total Lignite reserve in Block II is 2 Bt, which can support 5,000 MW for ~50 years
SECMC plans to develop integrated Mining & Power Projects of 6.5 Mt/a and 1,200 MW capacity respectively
which will eventually be scaled up to a 22.8 Mt/a Mine and 4,000 MW Power Plant
PROJECT STATUS :
•
Technical, environmental and social viability of the Project has been confirmed in Detailed Feasibility Study
meeting all international standards (IFC/World Bank, ADB, etc.)
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Average lignite quality : (Heating Value ~ 5000 Btu/lb , Ash 7.3 %, Moisture 47.48 %, Sulphur 1.1 %), Seam Thickness 32 m
•
Firm cost effective Engineering Procurement & Construction (EPC) proposals have been finalized with leading
Chinese company for Mining & Power generation projects on turnkey basis
•
•
Mine construction is targeted to start by 2013 & lignite production/Power generation by 2016
SECMC in coordination with Chinese EPC firm, held meetings with Chinese Financial Institutions/Minister of Energy
under the platform of Joint Energy Working Group, to explore the financing options for Thar Block II Projects
•
Chinese Financial Institutions/Energy Ministry showed interest in Financing the Projects owing to its significance for energy
security of Pakistan and readiness of EPC Proposals
Benefits of Thar Coal Development
•
•
To overcome the current energy crisis, Pakistan has no other alternative except development of
indigenous energy resources
Investment in Thar Mining & Power projects will provide the following benefits :
• Strategic energy resource that will guarantee energy security to Pakistan in the decades to
come
• Import substitution of expensive RFO or Natural Gas – Due to import substitution benefits, Thar
mining will act as a direct “foreign exchange earning sector“ and help lower the adverse impact
of imported fuel on Pakistan’s Trade Balance
• Lower power tariff for Coal fired Power Plants as compared to RFO based power tariff
• Socio-Economic Development of Thar region
• Presently Thar District ranks lowest on all socio-economic development indicators in Sindh
• Development of indigenous coal mining industry will lead to skilled job creation and transfer of
technology
• Potential for future downstream industries in Petro-chemical and Fertilizer products
Thar Coal is a fortune turning opportunity for Pakistan
THANKYOU
Engro Corp at a Glance
Engro was founded in 1964 as Joint Venture between Esso and Government of Pakistan to
setup a first Urea plant in Pakistan
Engro’s
Subsidiaries/Affiliates
Year of
Establishment
Engro’s Stake
Key Equity
Partners
Business Areas
Engro Fertilizer Limited
2010
100%
None
Fertilizer
Engro Vopak Terminal
Limited
1997
50 %
Royal Vopak
(Netherlands)
Bulk Chemical Handling
Jetty
Engro Polymer &
Chemicals Limited
1999
56 %
Mitsubishi
Corp/IFC
PVC & Caustic
Manufacturing
Avanceon
2003
63 %
Wain Family
Industrial Automation
Engro Foods Limited
2005
100%
None
Food Processing &
Marketing
Engro Eximp
2006
100%
None
Commodity Trade
Business
Engro PowerGen (Pvt.)
Limited
2008
100%
None
Power Project
Development
Engro Group Snapshot
Consolidated Financial Performance
Total Assets (USD M)
All amounts in USD M
2,000
1,500
Period
Total Assets
Turnover
Profit After
Tax
1,000
500
0
2009*
1,560
690
00 01 02 03 04 05 06 07 08 09 10
44
Turnover (USD M)
2010
1,940
940
80
1,000
800
600
* Including eliminations due to intra company usage of assets etc
400
200
0
00 01 02 03 04 05 06 07 08 09 10
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


Double digit earning growth since 1995
Currently has long term credit rating of AA from Pakistan Credit Rating Agency
Recently completed World Biggest Single train Urea Plant
Investments from 2007 to 2010 amounted to over USD 1.6 Billion
 Fertilizer(USD 1.1B), PVC (USD 260M), Foods (USD 200M), Chemical handling (USD 35M),
Industrial Automation (USD 10M), Power (USD 200 M)
Profit After Tax (USD M)
80
60
40
20
0
00 01 02 03 04 05 06 07 08 09 10
Bankable Feasibility Study Consultants
SECMC
RWE-Germany
Owner‘s Consultant
RWE-Germany
SINOCOAL Intl.
China
North East Coal Bureau
(NECB) China
SGS Pakistan
SRK-UK /
Hagler Bailly Pakistan
Hydrological Model
& GW Abstraction
Consultant
Bankable Feasibility
Study Consultant
Hydrological Field Work
Contractor
Sampling/Coal
Analysis Contractor
ESIA* Consultants
DRD-Pakistan
Drilling Work
Sub-contractor
* Environment and Social Impact Assessment