LP PG Conversion To Thar Coal

Lalpir Power & Pakgen Power Ltd.
Conversion to Thar Coal

Benefits & Challenges
Benefits
1. Electricity produced from Thar coal is at fraction of price of that produced with fuel oil.
Please see extracts of present Merit Order for an Energy Price comparison between
Engro Thar and LP PG.
Merit Order (June 2022 2nd FN)
Fuel Cost Variable Total Merit
Plant Comp O&M EPP Order
Rs./kWh Pos.
Engro Thar 2.53 1.11 3.63 3
LP & PG 40.10 0.28 40.39 88
Conversion will cause shift in Economic Merit order and the plant is likely to run as Must
Run, as long as available; even if the country shifts to competitive market regime.
2. The lower cost of production results in lower working capital requirement compared to
furnace oil.
3. The payment terms as prevalent mirror those of PPA i.e. invoice after 30 days of
delivery with 30 days for payment. Furthermore, the mine owners are sympathetic to
delays in payments from CPPA. Hence, the burden to finance operations is dramatically
reduced.
4. In the last tariff determination, NEPRA has allowed Part Load Adjustment Charges. This
can be expected again. This will help eliminate fuel losses.
5. New tariff will also be based on actual efficiency which would further help eliminate fuel
losses.
6. Last tariff had allowed an EPC of US$ 206 million. Recent projects have been completed
at an approximate EPC of US$125 million. This enables us to reset tariff for better
profitability.
Critical GoP actions

a) A railway track needs to be laid between Thar Block 2 and 1 to New Chhor Cantt railway
station This would link Thar Coalfields to the existing Khokhrapar-Munabao Rail link
and coal can reach Jamshoro (Hyderabad) and onwards to up or down country via main
National rail link. Estimated cost, per feasibility conducted by PRACS (Pak Railways
Advisory and Consultancy Services) funded by Engro Energy Ltd, is US$ ~283 million.
Without this track, coal supply (by road trucks) will be expensive, unsustainable and
prone to accidents.
b) Each company would need approximately 6000-7000 tons of Thar coal per day in
approx. 250 railway wagons. This would be similar to the existing coal transport
arrangement being managed for the Sahiwal Coal fired Power plant wherein Pak
Railways has undertaken the complete responsibility for coal transport from Khi Port to
Sahiwal. This is a massive transport operations and must run without fail.
c) Prevailing Private Power Policy 2021 does not cover fuel conversion. A new policy or
amendment to present policy is needed.
There is no policy provision available for a premature termination of PPA for
convenience and start of a new one with new tariff
d) In view of GoP plans to implement, Competitive Trading system in the country, they may
not be willing to give long term PPA. Duration of PPA will be critical for financing of
project.
Challenges for LP PG
a. Single source of fuel supply; may even create difficulties in project financing.
b. To ensure reliability of Pakistan Railway supply system
c. Ash disposal is a serious challenge.
d. Politically instigated residents of surrounding areas may strongly or even violently resist
conversion to coal. New ESIA would be needed to obtain EPA NOC.
Ownership of Thar Coal Blocks

Thar Coal Block 1 is part of CPEC project; fully owned and managed by Shanghai Electric and
Sino Sindh Resources Ltd being mine lease holder which is also majority owned by Shanghai
Electric and few private Chinese investors
It will supply 3.8 million tons per annum (MTPA )to 2x660 MW mine mouth IPPs owned by
Shanghai Electric. Although both the power plants and mine are complete however due to
issues with grid connection, plants are not commissioned – expected COD is 1 st QTR 2023.
At the moment there are no other coal off-takers from Block 1 other than its own 1320 MW
units in Block 1.
Thar Coal Block 2 is also part of CPEC Project and is owned by Sindh Engro Coal Mining
Company (SECMC) with following share holders
 Government of Sindh 54%
 Engro Energy Ltd. 12% with management control
 Thal Ltd. (House of Habib) 12%
 Habib Bank Ltd 9.5%
 HUBCO 9.5%
 China Machinery Engineering Corporation 2.5%
 China Power International Mengdong ~0.5%
It supplies 3.8 MTPA coal to 2x330 MW mine-mouth power plants of Engro Powergen Thar Ltd
as part of its Phase-I
In Phase-II, Block-II will supply an additional 3.8 MTPA Coal to 2x330 mine-mouth power plants
namely Thar Energy Ltd (Hubco and FFC) and Thal-Nova Power Thar Ltd (Thal Ltd, Hubco and
FFC), which are xpected to start from Sept 2022 and Jan 2023 respectively
In Phase-III, 3.8 MTPA coal will be provided to Lucky Electric 1x660 MW super-critical coal
power plant at Port Qasim which is currently being run on imported Indonesian coal since
March 2022
Production and Prices

Thar Block 1 will produce 7.8 million tons coal per annum @ USD 48/ton (Tariff notified by Thar
Coal & Energy Board – TCEB, which is the regulator for Thar Coal)
SECMC produces 3.8 million tons coal per annum in Phase-I @ USD 65/ton, however, its Phase-
II tariff would be USD ~47/ton and Phase-III tariff would be USD ~30/ton. At Phase-III, Block-II
mine total output would reach ~12 MTPA
Inherent Characteristics of Thar Coal (Lignite)

Thar Coal is lignite which is considered to be young coal (~55-60 million years old). It has a total
moisture content of 47%. Like all lignite coals, Thar Coal is prone to self-combustion if exposed
to atmosphere and stored over long period of time in open air (30-45 days plus).
The Sulphur contained is pyritic in nature which causes self-combustion causing smouldering.
Storing lignite in open coal piles is not a big issue and usually water sprinkling is done
ntermittently to avoid dust generation and reduce oxidation. Any smouldering can easily be
extinguished by running a bulldoxer over it or by covering it with a layer of sand or earth.
The most dangerous aspect of Thar lignite is ignition / explosion of coal dust in enclosed spaces
(conveyor galleries , coal bunkers, silos, etc). During last 3 years, there have been 4 incidents of
fire at Engro Powergen Thar Ltd Power plant in Thar due to this inherent characteristic of Thar
lignite.
Moisture removal (oxidation) makes it highly combustible. Coal dust if ignited in an enclosed
space may cause explosion. Lignite can be dried in rotary dryers using steam or flue gases but
handling of dried lignite has to be done very carefully and storing it has to be done in inert
environment. Any drying of lignite to reduce its moisture, should therefore only be done just
prior to the boiler to improve combustion efficiency- which is a standard practice on all coal
fired boilers.

LP PG Conversion To Thar Coal

Uploaded by

Copyright:

Available Formats

LP PG Conversion To Thar Coal

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

LP PG Conversion To Thar Coal

Uploaded by

Copyright:

Available Formats

Lalpir Power & Pakgen Power Ltd.

Conversion to Thar Coal

Engro Thar 2.53 1.11 3.63 3

LP & PG 40.10 0.28 40.39 88

Critical GoP actions

Ownership of Thar Coal Blocks

Production and Prices

Inherent Characteristics of Thar Coal (Lignite)

You might also like