THAR COAL

THE GATEWAY TO ENERGY SECURITY OF PAKISTAN

Mr. Ajaz Ali Khan Secretary to Govt. of Sindh Coal & Energy Development Department Managing Director, Thar Coal & Energy Board
www.sindhmines.gov.pk

1
secy@sindhmines.gov.pk

Pakistan Energy Scenario

Pakistan energy requirements potentially huge: Sixth largest country in the world, with its growing population to exceed 190m by 2015. Rising population, incomes, per capita energy use, and industrialization translate to high energy demand growth (total primary energy supply expected to triple or quadruple by 2025). Serious economic and development implications, as energy deficit Pakistan faces increasing energy import cost, with few medium term solutions to supply shortfalls
2
www.sindhmines.gov.pk secy@sindhmines.gov.pk

Alarm Bell
The gravity of situation can only be understood by comparing the projected demand figures with the total current firm supply figures of our country

Current Installed (MW)

Projected Demand (MW) Year

2010 2015

Gap (MW) 6,577 18,320 36,462 62,669 95,798

3

17897

2020

2025
2030
Source: PEPCO

24,474 36,217 54,359 80,566 1,13,695

Pakistan Current Power Generation Mix

Electricity Generation 2007-08 Total 95,860 GWh

Oil 32.16%

Hydel 29.96%

Usage of Coal is negligible

Coal 0.10% Nuclear & Imported 3.41%

Gas 34.37%

Source: Pakistan Energy Outlook 2007 2008 to 2021 2022 Petroleum Institute of Pakistan www.sindhmines.gov.pk

4
secy@sindhmines.gov.pk

National Costs of Load Shedding

Cost to the Industrial Sector Cost to the other sectors of industrial loss of Value Added Total cost of industrial load shedding to the economy Cost as percentage of GDP Loss of employment in the economy Loss of exports
Source: IPP estimates listed in Beacon House National University publication: State of the Economy Emerging from Crisis 2008

Rs 157 billion

Rs 53 billion

Rs 219 billion
2% 400,000 Rs 75 billion
(equivalent to US $ 1 billion)

5
secy@sindhmines.gov.pk

www.sindhmines.gov.pk

ECONOMIC IMPACT DUE TO ENERGY DEFICIT

For firms with self generation Additional cost of Power self Generation Value Added Loss Total Cost For firms without self generation Additional cost of Power self Generation Value Added Loss Total Cost Overall Cost to the Industrial Sector Cost as % of Industrial value added Percentage loss of Production Loss of industrial Employment
Source: IPP estimates listed in Beacon House National University publication: State of the Economy Emerging from Crisis 2008

Rs 32 billion Rs 42 billion Rs 74 billion

Rs 6 billion Rs 77 billion Rs 83 billion Rs 157 billion 9% 7% 300,000 workers

6
www.sindhmines.gov.pk secy@sindhmines.gov.pk

Options
Continue Importing Furnace Oil leading to increasing import bill.

Improve and identify Alternate/Renewable Energy

Develop Hydel Projects Minimize T&D Losses and take efficiency improvement measures. Exploit indigenous resources, such as Thar Coal which has a generation potential of 100,000 MW consuming 536 million tonnes/year (Enough resources for more than three centuries).
Total reserve is equivalent to 50 billion tone of oil (more than Iran and Saudi Arabia combined oil reserves) or over 2000 TCF of Gas (42 times greater than total gas reserves discovered in Pakistan so far) 7
www.sindhmines.gov.pk secy@sindhmines.gov.pk

Pakistans Coal Reserves

Sindh
185,457 million tonnes

Punjab
235 million tonnes

Balochistan
217 million tonnes

NWFP
90 million tonnes
Thar

Azad Kashmir
9 million tonnes 8
www.sindhmines.gov.pk secy@sindhmines.gov.pk

COMPARISON OF STRIPPING RATIO, HEATING VALUE & GENERATION OF LIGNITE IN OTHER COUNTRIES

India
Neyvelli lignite 7:1 Heating value = 5200 Btu/lb Total generation = 2,740 MW

Germany
Rhineland lignite 4.9:1 (m3:t) Heating value = 4,514 to 11054 Btu / lb Total generation = 10,289 MW

Hungary
Hungary lignite 9:1 (m3:t) Heating value = 3,035 Btu / lb Total generation = 1,852 MW

THAR COAL
Lignite 6:1 Heating Value: 6200 ~ 11,000 Btu/lb Total generation = 0 MW

9
www.sindhmines.gov.pk secy@sindhmines.gov.pk

Comparison Of Coal Quality

Thar Block VI

10
secy@sindhmines.gov.pk

www.sindhmines.gov.pk

CREDIBILITY OF RESERVES
Studies Conducted By: USGS John T. Boyd RWE Shenhua GSP SCA

All studies confirm presence of huge coal reserves

11
www.sindhmines.gov.pk secy@sindhmines.gov.pk

CHEMICAL ANALYSIS
Weighted Average chemical Analyses of Thar Coal Bloc ks
I II III

As Received Values (%) Moisture

43.13 48.89 45.41

Heating Values (Btu/lb) Sulphur

0.92 1.05 1.12

Ash
6.53 5.21 6.14

Vol. Matter
30.11 26.55 28.51

Fixed Carbon
20.11 19.37 19.56

As Rcvd
6,398 5,780 5,875

Dry
10,461 11,353 10,880

III-B
IV V

47.72
43.24 36.82

9.30
6.56 8.92

25.49
29.04 38.24

16.79
21.13 28.22

1.15
1.20 1.20

4,808
5,971 4,748

10,723

VI
VII VIII

38.32
48.27 49.57

7.62
8.03 7.78

36.22
25.30 24.32

30.13
19.56 18.10

1.52
1.16 1.44

10,514
5,441 5,302 -

12

www.sindhmines.gov.pk

secy@sindhmines.gov.pk

UNDERGROUND WATER RESOURCES

Three water aquifers at an average depth of 50m, 120m and more than 200 meters: First aquifer above the coal zone

Second aquifer within the coal zone at 120 meters depth: Varying thickness upto 68.74 meters
Third aquifer below the coal zone at 200 meters depth: Varying thickness upto 47 meters

13
www.sindhmines.gov.pk secy@sindhmines.gov.pk

Why Thar Coal?

Current dependable power supply hovers around 14000 MW in summer whereas it drops down in winter. On the other hand power demand in year 2030 would reach more than 100,000 MW In view of the power generation and energy demand, Thars rich coal reserves not only promise energy independence for Pakistan but also offer lots of opportunities for prospective investors
14
www.sindhmines.gov.pk secy@sindhmines.gov.pk

Annual Savings in Foreign Exchange from Thar Block II

Cumulative savings of over USD 87 Billion from Block II alone due to PKR devaluation and oil price increase. (fuel replacement savings)

4000 MW

600 MW

NPV of USD 31 billion Discounted @ US CPI 3%

www.sindhmines.gov.pk

15
secy@sindhmines.gov.pk

Benefit to Economy Reduction in Power Generation Cost

Net Present Value of Savings is Rs. 3.2 Trillion from Block II alone

Year

2016

2025

2035

2045

2055

2065

2071

Price of Oil (USD/bbl) *

Differential B/w RFO & Coal Tariff (Usc/kWh) Cumulative Savings (Rs B)
www.sindhmines.gov.pk

81
4 14

95
5 1,026

115
7 4,055

138
8 10,403

165
13 23,341

198
14 49,732

221
15 77,372

Source: CERA (Cambridge Energy Research Associates) for oil prices ; RFO and Coal Prices calculated from crude oil prices through historical regression analysis

16
secy@sindhmines.gov.pk

KEY REQUIREMENTS FOR DEVELOPMENT OF THAR COAL

To make available robust infrastructure. Developing the coal sector policy and regulatory framework. Setting up operational environmental and management framework for coal to power sector social

Updating/developing key technical, financial, market and local impact analysis and other information relevant to the investor Preparation of Policy documents for conducting ICB for Thar blocks.
17
www.sindhmines.gov.pk secy@sindhmines.gov.pk

Challenges for all Blocks

Challenges
Infrastructure must be completed
Water supply Roads Railways Transmission lines Short Term Short Term Mid term Mid term

Power line for waste mining and pumping required Human Resource development
18
www.sindhmines.gov.pk secy@sindhmines.gov.pk

THANK YOU

19
www.sindhmines.gov.pk secy@sindhmines.gov.pk