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Thar coal perfectly suited to produce cheap electricity and can meet most stringent global environmental standards

Published on 3rd Oct, Edition 40, 2016

 

Interview with Mr Shamsuddin Ahmed Shaikh – CEO, Engro Powergen Limited

Profile

Mr Shamsuddin Ahmed Shaikh is a mechanical engineer by profession. He has done MBA from Colorado and worked for Exxon/Engro for almost three decades. Currently, he is the Chief Executive Officer (CEO) of Engro Powergen Ltd, Sindh Engro Coal Mining Company, Engro Powergen Thar (Pvt) Ltd & Thar Power Company Ltd.

Prior to his current position, Mr. Shamsuddin was a Senior Vice President at Engro Foods. He is also a member of the Board of Directors of Sindh Engro Coal Mining Company, Thar Power Company, Engro Powergen Ltd; Engro Eximp Ltd & Engro Eximp Agri Products (Pvt) Ltd. He has an extensive career of 25 plus years in manufacturing, sales, commercial and supply chain at different levels and subsidiaries of Engro Corporation.

 

PAGE: Your views on the potential of coal in Pakistan:

Shamsuddin Ahmed Shaikh: Coal holds the key to ensuring Pakistan’s long term energy security. At present, power shortfall in the country exceeds 6000MW during the summers and with energy demand forecasted to grow six times the current installed capacity by 2035, Pakistan needs an energy source that is sustainable, cheap and most importantly indigenous. Coal is used to produce approximately 40 percent of the world’s energy. Its share in Pakistan’s generation mix is negligible despite the fact that the country is blessed with the world’s 7th largest coal reserves. China-Pakistan Economic Corridor (CPEC) report on energy planning highlights the importance of coal as the long term solution to Pakistan’s energy crisis.

The report mentions that even if 100 million tons are mined from Thar, these will be able to meet Pakistan’s energy needs for several decades. Utilizing indigenous coal to produce electricity offers Pakistan several benefits. It reduces Pakistan’s reliance on imported fuel directly impacting reducing Pakistan’s trade deficit. Furthermore, as the mines scale up, coal prices will decrease due to economies of scale and therefore reduce the power tariff for the consumer as well.

PAGE: How would you comment on the progress of thar block II?

Shamsuddin Ahmed Shaikh: Alhamdulillah, the progress both in mining and power projects at Thar Block II remains ahead of plan. Both projects achieved Financial Close on 4th April 2016. Since then, the Chinese contractor has been mobilized and full scale construction activity is in progress.

To date approximately 8.5 million Cubic Meters (BCM) out of a total of 112 million BCM of overburden has been removed while the mine depth is currently 35 million. Furthermore, drilling for dewatering wells is already under way. Similarly, at the power plant, purchase orders for all long lead items have been placed and foundation work is almost complete.

Based on the current progress, we are confident that the first unit will be commissioned in December 2018 and commercial operations for the 2x330MW power plant will be achieved in June 2019. However, this is just the tip of the iceberg as far as development in Block II is concerned. SECMC aims to embark on an aggressive expansion of the mine with the goal of generating 3960MW from Block II by 2023. Feasibility study for the expansion has already been completed and Coal Off-takers have been issued LoI by the PPIB. Work on Phase II is set to begin early next year with a target commercial operations date in November 2019. Furthermore, SECMC has engaged Chinese and German consultants to develop a detailed feasibility for mine expansion up to 22 mtpa as well.

 

PAGE: Your views on training being given to the locals in Thar:

Shamsuddin Ahmed Shaikh: Thar is the most underdeveloped area in Pakistan and the true potential of Thar Coal Project can only be realized if it benefits the local people of the region. Cognizant of this fact, SECMC and EPTL developed a policy to ensure that at least 50 percent of the workforce is Thari locals at CoD.

We are pleased to have achieved this target within 6 months after Financial Close. A comprehensive plan for technical trainings has been developed to train locals for getting skilled jobs in mining and power plant projects. Currently, Dump Truck Driving, Masonry and Scaffolding Training programs are being conducted and 250 locals have already been trained. The Dump Truck Driving program in particular has been a great success. Over 230 young men from Thar were sent to NLC Institute in Dina for HTV driving training. Successful candidates will be hired by the Chinese Contractor for Mine construction. At 25,000-35,000/ month, these drivers will secure the highest specialized trade salary in the region.

PAGE: What is your take on the support of Sindh and federal government for block-II?

Shamsuddin Ahmed Shaikh: Development of Thar Coal is a project of national and strategic importance with the federal and provincial governments fully backing the project. It would not be unjust to say that the project has gone into execution due to the whole hearted support from the federal and provincial governments.

The federal government ensured that the project was included in the early harvest projects in the CPEC, paving the way for ensuring Financial Close of the project.

This was further facilitated by Sindh government who provided a back up to the US$700 million Sovereign Guarantee issued to the mining project and injected US$ 110 million of equity into the project. Both governments are investing in construction of infrastructure required for the development of Thar.

The federal government is putting up a US$270 million transmission line for evacuation of the power from Thar. The Sindh government is constructing an effluent disposal scheme to disposal of the water from the mine along with the LBOD scheme to supply water for power generation at cost of US$750 million.

PAGE: Your views on the quality of Thar coal:

Shamsuddin Ahmed Shaikh: Coal type present in Thar Coal field is called lignite. Thar lignite is perfectly suited for power generation and compares favorably with other lignite being used all over the world for power generation. Similar or inferior quality coal from mines in India, Germany, Turkey, Greece and Bulgaria produce aggregate power of more than 20,000MW from lignite being produced in these countries. By using properly designed de-sulphurizers and ash removal units, Thar coal can produce cheap electricity while meeting the most stringent international environmental standards.

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