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ISLAMABAD: Private Power & Infrastructure Board (PPIB) has asked Sindh Engro Coal Mining Company (SECMC) to provide complete schedule of phase-3 of Thar coal project along with milestones like financial close and Commercial Operation Date (COD), etc.; and supply of local coal to Lucky Electric Power Co. Ltd (LEPCL)’s 660-MW coal power project, well informed sources told Business Recorder.

According to the PPIB, LEPCL’s 6600-MW coal power project at Port Qasim was commissioned in March 2022 and is supplying reliable electricity to the national grid. The project was conceived on imported coal in 2015; however, to reduce dependence on imported fuels and burden on the national exchequer, the project was converted by PPIB to operate on local/ Thar coal.

In a letter to Chief Executive Officer, Sindh Engro Coal Mining Company Karachi, Managing Director PPIB Shah Jahan Mirza argued that the conversion was based on commitment from Sindh Engro Coal Mining Company (SECMC) for supply of 3.8 MPTA of lignite coal from Phase 3 of the Block-II mine, which was originally planned/ committed to commence coal supply to LEPCL by 2020.

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However, SECMC’s commitment for uninterrupted supply of Thar coal to LEPCL kept on changing and Financial Close of Phase-3 is yet to be achieved. Consequently, LEPCL was commissioned on imported coal and is still constrained to operate on imported Indonesian coal to meet its contractual despatch obligations under the PPA.

Furthermore, due to delay in coal availability from Phase- 3 of Block-II and use of imported coal, LEPCL project stands at No. 17 (Fuel Cost Component - FCC of Rs 14.06 /kWh) in NPCC merit order list compared to Thar coal projects which stand amongst top 6 (FCC of around Rs 4.3 /kWh). Moreover, due to delay in commissioning of SECMC’s Phase-3 coal mine, almost 4.7 million tons of Indonesian coal has been imported since COD of LEPCL, amounting to approximately $ 350 million of foreign exchange, which is burdening the national exchequer, he continued.

Notwithstanding the current situation, PPIB has highlighted that due to system constraints in power evacuation, three committed IPPs (660-MW Engro, 330-MW Thar Energy, 330-MW ThalNova) operating on Thar Coal Block-II, are not operating on full capacity. Therefore, coal dedicated for three committed PPs (7.6 MPTA) is not fully utilised.

Managing Director PPIB is of the view that since COD of Phase 2, sufficient quantities of coal are available, which can be utilised for LEPCL and testing of imported coal IPPs with 10% Thar Coal blending.

After explaining the background, PPIB has requested SECMC to provide timelines for supply of coal to LEPCL and imported coal IPPs for testing from existing available reserves of Phase-2, so that this may be communicated to the concerned IPPs. In addition to that, SECMC has also been requested to provide completion schedule of Phase-3 along with milestones i.e. financial closing, COD, etc.

Copyright Business Recorder, 2024

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