KARACHI: The financial close of $ 3 billion Sindh Engro Coal project can be delayed if the government could not resolve circular debt issue or timely complete laying of transmission line.
This was stated by the CEO of Sindh Engro Coal Mining Company (SECMC) and Engro Fertilizer Ltd (EFL), Khalid Mansoor while addressing a press conference here Friday.
The project is a joint venture between Sindh Government and Engro Powergen Pvt Ltd, a subsidiary of Engro Corporation with 40percent and 60percent stake respectively.
He said the government also needs to ensure uninterrupted gas supply to the newly commissioned fertilizer project worth $ 1.1 billion to improve financial position of Engro Corporation, the holding company of EFL and SECMC.
He said that the financiers of the coal project would like to see that all these issues are resolved before they okey the financing for the project.
Mansoor said that circular debt has reached Rs 400 billion in March 2012 and this might create doubts in the minds of the financiers about their forthcoming investment in coal project.
He, however, made it clear that SECMC is technically, environmentally, financially and socially viable project. The lignite quality of Thar coal is one of the best in the world with several other advantages, including a 33 meters cumulative lignite seam thickness and minimum sulphur percentage (1.1 %), he added.
Responding to a question, he said that Central Development Working Party (CDWP) has already accorded approval to the transmission line project two weeks ago and now Executive Committee of the National Economic Council (ECNEC) is to give node to the project.
He said the entire project is to be financed by Chinese investors which are also the executors of SECMC. They are large companies, all in coal mining, construction, power generation, etc.
Mansoor said that the commissioning of this project will reduce Pakistan's energy bill by about $ 1 billion and benefit electricity consumers by about $ 400 million.
"The development of Block II alone would bring an investment of $ 12 billion. This includes mining, power generation and briquetting of coal", he noted.
To a question, he said that the only solution to the current energy crisis, is the use of coal in power generation units of WAPDA which are closed due to non-availability of furnace oil. "We have offered the government of Pakistan to let us convert the Jamshoro power plant to coal. We had been qualified for bidding for the project which will require an investment of $ 400 million", he added.