Pakistan's Thar Coal Power Project Brings Foreign Investments of More Than $20 Billion

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Pakistan's Thar coal power project has generated great investment interest among international power majors. The project, primarily involving coal exploration and power generation, in the Thar coal reserves is expected to attract foreign investments of more than $20 billion during the next six months, with companies from Australia, the United Kingdom, China, Germany, Poland, South Korea, Singapore and the U.S. vying for an investment opportunity.

The coalfields at Tharparkar are the second largest in the world with 175.5 billion tons of reserves spread over 9,000 square kilometers. The fields have been divided into six blocks to facilitate allotment, administration and exploration. Private companies will be allowed to set up power plants with generation capacity of up to 1000 megawatts (MW) in an equity partnership with the Sindh Government. The reserves contain A-B quality lignite with relatively low sulfur and fly ash content, making the coal ideal for power generation purposes. The low impurity content of the feed is expected to reduce the environmental impact of the associated power projects.

Pakistan presently faces a power deficit of 3,500 MW and its power requirements are expected to rise to 16,000 MW by 2016. With the Thar coal power project expected to become commercially operational in the next three to four years, generating 7,000-8,000 MW of power by 2012. The country also has plans to market the surplus power.

The provincial Sindh Government, which is managing the operations of the power project, has already signed agreements with three companies for power generation.

Oracle Coalfields plc (OFEX:ORCP) (Ely, England), Shenhua Group Corporation Limited (Beijing, China), Bin Daen Group (Dubai, United Arab Emirates) and Pan Energy Development Company (PEDCO) (Seoul, South Korea) have commenced development operations.

State-owned Shenhua Group commenced exploration operations in 2002 in a bid to develop a 600-MW power plant associated with a captive coalmine at Block 2. The venture, however, has been delayed.

Oracle Coalfields will develop a 66.1-kilometer stretch in Block 6 to set up a power plant along with an associated coalmine with a capacity of 2.5 million tons per year. The block is reported to contain about 1.4 billion tons of coal deposits. The company plans to commence the industrial sale of coal and power generation during the first quarter of 2010, with full potential of the mining operations expected to bear fruit by 2012.

In a recent development, the Bin Daen Group and South Korea's PEDCO have been allotted blocks 4 and 8 of the Thar coalfields to set up a 1,000-MW coal-based mine-mouth thermal power plant at a cost of $3 billion. PEDCO will initially work for three years on developing the mines, after which work on power generation is expected to commence. PEDCO is looking to produce 2 million tons per year of coal from 2011 and about 10 million tons per year from 2015. The site has estimated coal reserves of 2.56 billion tons.

As development operations gain momentum, the Sindh government is also speeding up work on developing requisite infrastructure for the Thar coal power project. Transportation networks, power and water supplies, and residential and township facilities are all being developed. An airport and a hotel are also expected to come up in the vicinity of Thar, enabling foreign investors to easily commute to and from the coalfields.

In addition to companies from the power sector, several financial majors such as the Jehangir Siddiqi Group (Karachi, Pakistan) and Al Tuwairqi Group (Dammam, Saudi Arabia) have also evinced interest in funding projects at Thar through joint ventures with the provincial government of Sindh.

Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.