1. www.sindhmines.gov.pk secy@sindhmines.gov.pk 1 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

2. www.sindhmines.gov.pk secy@sindhmines.gov.pk 2 Pakistan Energy Scenario Pakistan energy requirements potentially huge: Sixth largest country in the world, with its growing population to exceed 190m 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

3. 3 Alarm Bell Current Installed (MW) Projected Demand Gap (MW) (MW)Year 17897 2010 24,4746,577 2015 36,21718,320 2020 54,35936,462 2025 80,56662,669 2030 1,13,69595,798 The gravity of situation can only be understood by comparing the projected demand figures with the total current firm supply figures of our country Source: PEPCO

4. www.sindhmines.gov.pk secy@sindhmines.gov.pk 4 Pakistan Current Power Generation Mix Source: Pakistan Energy Outlook 2007 – 2008 to 2021 – 2022 – Petroleum Institute of Pakistan Usage of Coal is negligible

5. www.sindhmines.gov.pk secy@sindhmines.gov.pk 5 National Costs of Load Shedding Cost to the Industrial SectorRs 157 billion Cost to the other sectors of industrial loss of Value AddedRs 53 billion Total cost of industrial load shedding to the economyRs 219 billion Cost as percentage of GDP2 % Loss of employment in the economy400,000 Loss of exportsRs 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

6. www.sindhmines.gov.pk secy@sindhmines.gov.pk 6 ECONOMIC IMPACT DUE TO ENERGY DEFICIT For firms with self generation Additional cost of Power self GenerationRs 32 billion Value Added LossRs 42 billion Total CostRs 74 billion For firms without self generation Additional cost of Power self GenerationRs 6 billion Value Added LossRs 77 billion Total CostRs 83 billion Overall Cost to the Industrial Sector Rs 157 billion Cost as % of Industrial value added9% Percentage loss of Production7% Loss of industrial Employment300,000 workers Source: IPP estimates listed in Beacon House National University publication: State of the Economy – Emerging from Crisis 2008

7. www.sindhmines.gov.pk secy@sindhmines.gov.pk 7 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)

8. www.sindhmines.gov.pk secy@sindhmines.gov.pk 8 Pakistan’s Coal Reserves Sindh 185,457 million tonnesPunjab 235 million tonnesBalochistan 217 million tonnesNWFP 90 million tonnes Azad Kashmir 9 million tonnes Thar

9. www.sindhmines.gov.pk secy@sindhmines.gov.pk 99 Neyvelli lignite 7:1 Heating value = 5200 Btu/lb Total generation = 2,740 MW Lignite 6:1 Heating Value: 6200 ~ 11,000 Btu/lb Total generation = 0 MW COMPARISON OF STRIPPING RATIO, HEATING VALUE & GENERATION OF LIGNITE IN OTHER COUNTRIES India Rhineland lignite 4.9:1 (m3:t) Heating value = 4,514 to 11054 Btu / lb Total generation = 10,289 MW Germany Hungary lignite 9:1 (m3:t) Heating value = 3,035 Btu / lb Total generation = 1,852 MW Hungary THAR COAL

10. www.sindhmines.gov.pk secy@sindhmines.gov.pk 10 Comparison Of Coal Quality Thar Block VI

11. www.sindhmines.gov.pk secy@sindhmines.gov.pk 11 CREDIBILITY OF RESERVES Studies Conducted By:  USGS  John T. Boyd  RWE  Shenhua  GSP  SCA ► All studies confirm presence of huge coal reserves

12. www.sindhmines.gov.pk secy@sindhmines.gov.pk 12 CHEMICAL ANALYSIS Bloc ks Weighted Average chemical Analyses of Thar Coal As Received Values (%)Heating Values (Btu/lb) MoistureAsh Vol. Matter Fixed Carbon SulphurAs RcvdDry I43.136.5330.1120.110.926,39810,461 II48.895.2126.5519.371.055,78011,353 III45.416.1428.5119.561.125,87510,880 III-B47.729.3025.4916.791.154,808- IV43.246.5629.0421.131.205,97110,723 V36.828.9238.2428.221.204,748 VI38.327.6236.2230.131.5210,514 VII48.278.0325.3019.561.165,441- VIII49.577.7824.3218.101.445,302-

13. www.sindhmines.gov.pk secy@sindhmines.gov.pk 13 UNDERGROUND WATER RESOURCES Three water aquifers at an average depth of 50m, 120m 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

14. www.sindhmines.gov.pk secy@sindhmines.gov.pk 14 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

15. www.sindhmines.gov.pk secy@sindhmines.gov.pk 15 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%

16. www.sindhmines.gov.pk secy@sindhmines.gov.pk 16 Benefit to Economy – Reduction in Power Generation Cost Net Present Value of Savings is Rs. 3.2 Trillion from Block II alone Year2016202520352045205520652071 Price of Oil (USD/bbl) *8195115138165198221 Differential B/w RFO & Coal Tariff (Usc/kWh) 4578131415 Cumulative Savings (Rs B) 141,0264,05510,40323,34149,73277,372 Source: CERA (Cambridge Energy Research Associates) for oil prices ; RFO and Coal Prices calculated from crude oil prices through historical regression analysis

17. www.sindhmines.gov.pk secy@sindhmines.gov.pk 17 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.

18. www.sindhmines.gov.pk secy@sindhmines.gov.pk 18 Challenges for all Blocks Challenges –Infrastructure must be completed »Water supply Short Term »Roads Short Term »Railways Mid term »Transmission lines Mid term –Power line for waste mining and pumping required –Human Resource development

19. www.sindhmines.gov.pk secy@sindhmines.gov.pk 19 THANK YOU