Www.sindhmines.gov.pk [email protected] 1 THAR COAL THE GATEWAY TO ENERGY SECURITY OF PAKISTAN Mr. Ajaz Ali Khan Secretary to Govt. of Sindh Coal

www.sindhmines.gov.pkwww.sindhmines.gov.pk [email protected]@sindhmines.gov.pk

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THAR COAL

THE GATEWAY TO ENERGY SECURITY OF PAKISTAN

Mr. Ajaz Ali KhanMr. Ajaz Ali KhanSecretary to Govt. of SindhSecretary to Govt. of SindhCoal & Energy Development DepartmentCoal & Energy Development DepartmentManaging Director, Thar Coal & Energy BoardManaging Director, Thar Coal & Energy Board


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Pakistan Energy ScenarioPakistan 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

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Alarm Bell

Current Installed (MW)

Projected Demand Gap (MW)(MW) Year

17897

2010 24,474 6,5772015 36,217 18,3202020 54,359 36,4622025 80,566 62,6692030 1,13,695 95,798

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

Source: PEPCOSource: PEPCO


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Pakistan Current Power Generation MixPakistan Current Power Generation Mix

Source: Pakistan Energy Outlook 2007 – 2008 to 2021 – 2022 – Petroleum Institute of Pakistan

Usage of Coal Usage of Coal is negligibleis negligible

Usage of Coal Usage of Coal is negligibleis negligible


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National Costs of Load SheddingNational Costs of Load Shedding

Cost to the Industrial Sector Rs 157 billion

Cost to the other sectors of industrial

loss of Value Added Rs 53 billion

Total cost of industrial load shedding

to the economy Rs 219 billion

Cost as percentage of GDP 2 %

Loss of employment in the economy 400,000

Loss of exports Rs 75 billion(equivalent to US $ 1 billion)

Source: IPP estimates listed in Beacon House National University publication: State of the Economy – Emerging from Crisis 2008Source: IPP estimates listed in Beacon House National University publication: State of the Economy – Emerging from Crisis 2008


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ECONOMIC IMPACT DUE TO ENERGY DEFICITECONOMIC IMPACT DUE TO ENERGY DEFICIT

For firms with self generation

Additional cost of Power self Generation Rs 32 billion

Value Added Loss Rs 42 billion

Total Cost Rs 74 billion

For firms without self generation

Additional cost of Power self Generation Rs 6 billion

Value Added Loss Rs 77 billion

Total Cost Rs 83 billion

Overall Cost to the Industrial Sector Rs 157 billion

Cost as % of Industrial value added 9%

Percentage loss of Production 7%

Loss of industrial Employment 300,000 workers

Source: IPP estimates listed in Beacon House National University publication: State of the Economy – Emerging from Crisis 2008


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OptionsOptions

• 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)


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Pakistan’s Coal ReservesPakistan’s Coal Reserves

SindhSindh185,457 million tonnes

PunjabPunjab235 million tonnes

BalochistanBalochistan217 million tonnes

NWFPNWFP90 million tonnes

Azad KashmirAzad Kashmir9 million tonnes

TharThar


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

Lignite 6:1Heating Value: 6200 ~ 11,000 Btu/lbTotal generation = 0 MW

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

IndiaRhineland lignite 4.9:1 (m3:t)Heating value = 4,514 to 11054 Btu / lbTotal generation = 10,289 MW

Germany

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

Hungary

THAR COAL


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Comparison Of Coal QualityComparison Of Coal Quality

Thar Block VI


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CREDIBILITY OF RESERVESCREDIBILITY OF RESERVES

Studies Conducted By:

USGS John T. Boyd RWE Shenhua GSP SCA

► All studies confirm presence of huge coal reserves


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CHEMICAL ANALYSISCHEMICAL ANALYSIS

Blocks

Weighted Average chemical Analyses of Thar Coal

As Received Values (%)Heating Values

(Btu/lb)

Moisture

AshVol.

MatterFixed

CarbonSulphur As Rcvd Dry

I 43.13 6.53 30.11 20.11 0.92 6,398 10,461

II 48.89 5.21 26.55 19.37 1.05 5,780 11,353

III 45.41 6.14 28.51 19.56 1.12 5,875 10,880

III-B 47.72 9.30 25.49 16.79 1.15 4,808 -

IV 43.24 6.56 29.04 21.13 1.20 5,971 10,723

V 36.82 8.92 38.24 28.22 1.20 4,748

VI 38.32 7.62 36.22 30.13 1.52 10,514

VII 48.27 8.03 25.30 19.56 1.16 5,441 -

VIII 49.57 7.78 24.32 18.10 1.44 5,302 -


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UNDERGROUND WATER RESOURCESUNDERGROUND 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


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Why Thar Coal?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, Thar’s rich coal reserves not only promise energy independence for Pakistan but also offer lots of opportunities for prospective investors


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Annual Savings in Foreign Exchange from Thar Block II 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%


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Benefit to Economy – Reduction in Power Generation CostBenefit 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) * 81 95 115 138 165 198 221

Differential B/w RFO & Coal Tariff (Usc/kWh)

4 5 7 8 13 14 15

Cumulative Savings (Rs B) 14 1,026 4,055 10,403 23,341 49,732 77,372Source: CERA (Cambridge Energy Research Associates) for oil prices ; RFO and Coal Prices calculated from crude oil prices through historical regression analysis


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KEY REQUIREMENTS FOR DEVELOPMENT OF KEY REQUIREMENTS FOR DEVELOPMENT OF THAR COALTHAR COAL

• To make available robust infrastructure.

• Developing the coal sector policy and regulatory framework.

• Setting up operational environmental and social management framework for coal to power sector

• 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.


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Challenges for all BlocksChallenges for all Blocks

ChallengesChallenges– Infrastructure must be completed

» Water supply Short Term » Roads Short Term » Railways Mid term» Transmission lines Mid term

– Power line for waste mining and pumping required

– Human Resource development


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THANK YOU

Documents

Www.sindhmines.gov.pk [email protected] 1 THAR COAL THE GATEWAY TO ENERGY SECURITY OF PAKISTAN Mr. Ajaz Ali Khan Secretary to Govt. of Sindh Coal