THAR COAL THE GATEWAY TO ENERGY SECURITY OF

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 190 m 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 17897 2020 2025 2030 Source: PEPCO 24, 474 36, 217 54, 359 80, 566 1, 13, 695 Gap (MW) 6, 577 18, 320 36, 462 62, 669 95, 798 3

Pakistan Current Power Generation Mix Usage of Coal is negligible 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 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 2008 www. sindhmines. gov. pk 5 secy@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 Rs 32 billion Rs 42 billion Rs 74 billion 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 Rs 6 billion Rs 77 billion Rs 83 billion Rs 157 billion 9% 7% 300, 000 workers Source: IPP estimates listed in Beacon House National University publication: State of the Economy – Emerging from Crisis 2008 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

Pakistan’s 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 www. sindhmines. gov. pk 8 secy@sindhmines. gov. pk

COMPARISON OF STRIPPING RATIO, HEATING VALUE & GENERATION OF LIGNITE IN OTHER COUNTRIES India Germany Neyvelli lignite 7: 1 Heating value = 5200 Btu/lb Total generation = 2, 740 MW Rhineland lignite 4. 9: 1 (m 3: t) Heating value = 4, 514 to 11054 Btu / lb Total generation = 10, 289 MW Hungary lignite 9: 1 (m 3: 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 www. sindhmines. gov. pk 10 secy@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 As Received Values (%) Heating Values (Btu/lb) Moisture Ash Vol. Matter Fixed Carbon Sulphur 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 - www. sindhmines. gov. pk 12 secy@sindhmines. gov. pk

UNDERGROUND WATER RESOURCES Three water aquifers at an average depth of 50 m, 120 m 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, Thar’s 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) * 81 95 115 138 165 198 221 Differential B/w RFO & Coal Tariff (Usc/k. Wh) 4 5 7 8 13 14 15 Cumulative Savings (Rs B) 14 1, 026 4, 055 10, 403 23, 341 49, 732 77, 372 Source: CERA (Cambridge Energy Research Associates) for oil prices ; RFO and Coal Prices calculated from crude oil prices through historical regression analysis www. sindhmines. gov. pk 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 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. 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 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