China, Pakistan ink $820m Thar coal agreement!

[Norwegian]

China, Pakistan ink $820m Thar coal agreement
By Our Correspondent
Published: December 22, 2015

Under the finance agreements, a syndicate of local banks will provide Rs52 billion for the mining project, being undertaken by SECMC. PHOTO: FILE

ISLAMABAD:
Pakistan and China on Monday inked a $820-million financing agreement in Beijing, for both the mining and associated power plant project in Thar.

Sindh Engro Coal Mining Company (SECMC) and Engro Powergen Thar Limited (EPTL) signed the local and foreign financing agreements in China.

Negotiations to secure loan financing for the project in Thar Coal Block II have been ongoing since term sheets were signed during Chinese President Xi Jinping’s visit to Pakistan earlier this year.

Under the finance agreements, a syndicate of local banks will provide Rs52 billion for the mining project, being undertaken by SECMC, and Rs22 billion for the associated power plant being established by Engro Powergen Thar Limited.

The syndicate is led by Habib Bank Limited (HBL), United Bank Limited (UBL), Bank Alfalah Limited (BAFL) and Faysal Bank Limited (FBL). The foreign syndicate consists of China Development Bank (CDB), Construction Bank of China (CBC) and Industrial and Commercial Bank of China (ICBC), which are providing loans amounting to $820 million.

Agha Wasif Abbas, Energy Secretary, Khalid Subhani, Engro Corporation President, and Shamsuddin A Shaikh, CEO of SECMC, signed the loan agreement. This project will be implemented under the China-Pakistan Economic Corridor (CPEC).

The drafts of the aforementioned agreements were approved by the Ministry of Finance earlier this year and the government of Pakistan has provided a sovereign guarantee of $700 million to underwrite the loan taken by SECMC. The project’s addition to the CPEC as ‘priority’ paved the way for its financing to be completed.

In addition, sponsor support agreements for both projects were also signed, whereby the sponsors, including the Sindh government, Engro Powergen Limited, Thal Limited, Hub Power Company, Habib Bank Limited and China Machinery Engineering Corporation agreed to inject $490 million into the project to ensure that companies have funds available for the smooth execution of the project. The project is expected to be commissioned by 2018.

In phase 2 of the project, the mine will be expanded to a capacity of 7.6 million tons per year (mtpa) and another 660MW power plant facility will be added. This expansion has also been included into the CPEC.

Earlier this month, the government of Sindh signed an Implementation Agreement with SECMC and a water utilisation agreement with Engro Powergen Thar Limited.

Under the Implementation Agreement with SECMC, the government committed to providing the required infrastructure to facilitate the mining project amounting to $600 million.

Published in The Express Tribune, December 22nd, 2015.
China, Pakistan ink $820m Thar coal agreement - The Express Tribune

 

[WaLeEdK2]

Won't be happy till we see some progress. You can sign all the deals you won't but if there isn't any progress then it's just a big waste of time.

 

[PARIKRAMA]

Good development sir.. Energy self sufficiency needs dedicated chain of the raw material used.. Coal needs is high especially since the economy depends on coal projects. Such a dedicated agreements ensure the energy security for the development and well being of the nation.

If a nation depends on imported coal, the international price mechanisms can wreak havoc with higher input cost and project becomes financially unviable for power plants who may have to either absorb the shock (and become bankrupt) or pass on the shock to consumer and end industry users. Both that is highly undesirable. A mining and dedicated development within the country means this kind of unnecessary shock and fluctuation is negated permanently.

A solid step towards energy security..

 

[Sipahi]

How many coal block are there ??

 

[anant_s]

what kind of coal is that @Norwegian ?
looking at light color it seems like lignite which has relatively lower calorific value and therefore it would be better that the same is used to produce coal gas and then used as fuel.
Recent Paris declaration has put a tremendous burden on developing nations to cut down carbon and GH gases emission and therefore it is prudent that any new fossil fuel mines be built with accompanying facilities to use fuel efficiently as possible.

 

[PARIKRAMA]

what kind of coal is that @Norwegian ?
looking at light color it seems like lignite which has relatively lower calorific value and therefore it would be better that the same is used to produce coal gas and then used as fuel.
Recent Paris declaration has put a tremendous burden on developing nations to cut down carbon and GH gases emission and therefore it is prudent that any new fossil fuel mines be built with accompanying facilities to use fuel efficiently as possible.

i was infact typing those words anant sir..

@Norwegian : Is any tax holiday also planned for such a capital intensive project. The rate of interest of bank loans may be high due to risk in coal mining projects or mining as a whole sector (as per risk weights within diversification of advances in a bank's portfolio) . That would lead to serious pressure on project delivery timelines as any dealy would hurt a lot financially.

Secondly with the new paris accord, will the plants or users able to maintain the limits of emission..

 

[pak-marine]

Sweet news .. hope people of the thar and interior sindh benefits from it ..

 

[Skull and Bones]

Congratulations, better sell all those coals before renewables becomes mainstream.

 

[Pulsar]

China is discarding all its coal fired plants for cleaner nuclear and solar energy as the world is too, as mentioned in the recently concluded climate change conf in Paris. Coal is one of the biggest polluters of the environment. Thus, China is palming off 11 of its polluting coal plants to Pakistan as part of the CPEC!

Instead of investing billions in the production of nukes at an alarming rate, Pakistan should instead invest in more nuclear power plants for power generation, as well as solar power.

Coal plants will be passe soon as the world moves towards cleaner fuel. But it seems Pakistan has become the dumping ground for dated and cheap fossil fuel plants for its energy requirements.

 

[Pandora]

Congratulations, better sell all those coals before renewables becomes mainstream.

Thar coal cant be mined but only used on the spot. Thar coal plant will use coal gasification which a relatively new concept. There have been local efforts but obviously it need massive investment to reap a reasonable amount of electricity.

 

[Rasengan]

Instead of investing billions in the production of nukes at an alarming rate, Pakistan should instead invest in more nuclear power plants for power generation, as well as solar power.

Jinnah Solar Park will generate 1000 MW and in the province of KPK the Provincial Government has done many smaller projects across the region. Already China outside the umbrella of CPEC is going to invest in $15 billion of new nuclear power plants which will be completed between 2025-2030. Most of the projects in CPEC will revolve around hydroelectricity projects.

 

[VCheng]

Pakistan and China on Monday inked a $820-million financing agreement in Beijing, for both the mining and associated power plant project in Thar.

Yawn. Another day, another claim for exploiting Thar coal effectively.

Oh look, here is another BS claim about Thar coal:

Cheap, Abundant Electricity From Thar Coal to End Load Shedding

 

[Pakistani till death]

China is discarding all its coal fired plants for cleaner nuclear and solar energy as the world is too, as mentioned in the recently concluded climate change conf in Paris. Coal is one of the biggest polluters of the environment. Thus, China is palming off 11 of its polluting coal plants to Pakistan as part of the CPEC!

Instead of investing billions in the production of nukes at an alarming rate, Pakistan should instead invest in more nuclear power plants for power generation, as well as solar power.

Coal plants will be passe soon as the world moves towards cleaner fuel. But it seems Pakistan has become the dumping ground for dated and cheap fossil fuel plants for its energy requirements.

Pakistan needs energy desperately. I dont care where we get it from as long as we get it. We are not that rich yet that we start shifting to clean sources as of yet. We cant afford that!

 

[Viper0011.]

Yawn. Another day, another claim for exploiting Thar coal effectively.

Oh look, here is another BS claim about Thar coal:
Cheap, Abundant Electricity From Thar Coal to End Load Shedding

Why do you say that? Why so much negativity?

 

[VCheng]

Why do you say that? Why so much negativity?

Thar coal remains a mirage. There is no tangible evidence that Pakistan will be able to harness it in a cost-effective way. This is not negativity, but reality.