Thar Block VI power station

From Global Energy Monitor
This article is part of the CoalSwarm coverage of Pakistan and coal.
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Thar Block VI power station is a proposed 1,320- to 1,400- megawatt (MW) coal plant in Pakistan.

Location

The map below shows the location of Thar Block-VI, the mining area where the plant will be built in Sindh province.

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Background

Blocks in Thar coal field. Photo: Oracle Coalfields

In November 2013, Oracle Coalfields signed a Memo of Understanding (MOU) with Chinese construction company SEPCO to develop a 600 MW coal plant at Thar coalfield Block VI. Under the agreement, SEPCO was set to conduct a technical feasibility study and an environmental impact study (EIS) over a six month period. SEPCO was to finance up to 70 percent of the debt for the power plant and was to provide enough equity funding to make it the majority shareholder in a special purpose entity formed to own the plant.[1]

In September 2014, Oracle and SEPCO signed an Engineering, Procurement, and Construction (EPC) agreement, following receipt from SEPCO of outline bids for the construction of the integrated mine and power plant. SEPCO proposed securitizing up to 85% of the cost of the two EPC contracts with support from Sinosure, the China Export & Credit Insurance Corporation, and certain Chinese banks.[2]

In March 2015, Oracle Coalfields extended its EPC framework agreement with SEPCO. The exclusive agreement ran until the end of 2015. According to World Coal, discussions were started with Chinese finance house Sinosure on proposals to securitize up to 85 percent of the cost of the two EPC contracts.[3]

In March 2015, it was reported that the project would be included in the China-Pakistan Economic Corridor (CPEC), projected to finance around US$33.8 billion in energy projects.[4][5] However, the project was not included among the projects included in the China-Pakistan Economic Corridor.

In June 2015, Oracle and SEPCO formed Thar Electricity (Private) Ltd, with a 90-10 equity split; the two companies signed a consortium agreement in October 2015. In November 2015, a "letter of no objection" was issued for the project by the Central Power Purchasing Authority. As of March 2016, Thar Electricity (Private) Ltd had registered the project with the PPIB, and was working towards financial close of the project, as well as negotiating the EPC contract with SEPCO.[6][7] The plant was planned for completion in the second quarter 2021.[8]

In June 2016, Oracle reached an agreement on coal pricing with the government of Sindh.[9]

In July 2016, Pakistan's water and power ministry, frustrated with the slow pace of this and other projects, warned Oracle that if it didn't have the project "completed" (presumably meaning construction being underway) by December 2018, it would be dropped from the CPEC.[10]

In June 2017, the project was elevated to the priority list of projects under the China-Pakistan Economic Corridor (CPEC) and was listed as 1,320 MW, with the first phase being 660 MW.[11] Oracle was continuing to work on completing the project's environmental impact assessment, as well as lining up financing and pursuing land acquisition and resettlement. The company stated that "progress with potential Chinese partners is taking longer than we hoped, but detailed discussions are under way with several State-owned Enterprises, as financing partners and as EPC contractors."[12][13]

In November 2017, Oracle signed a Memorandum of Understanding (MoU) with Sichuan Provincial Investment Group Co. Ltd (SCIG) and PowerChina International Group Ltd (PowerChina) for investing in, setting up, constructing, owning, and operating the coal plant. The MoU specified that the project would be funded in cash by the parties from Chinese banks, and it was proposed that SCIG, PowerChina, and Oracle would have equity holdings in the project of 78%, 10%, and 12% respectively. Oracle hoped to reach financial close in the first half of 2018.[14]

In February 2018, the companies secured the approval of the Pakistani Private Power and Infrastructure Board (PPIB) to develop a 700 MW coal based power plant at Thar Block-VI. The application was submitted in November 2017 and PPIB approved the Notice to Proceed and the Letter of Intent of Oracle's subsidiary Thar Electricity (TEPL). The power plant size, originally submitted as two 660 MW phases – for a total plant size of 1,320 MW – was increased to two 700 MW phases to "comply with new requirements in Pakistan."[15][16][17]

In November 2018, the National Electric Power Regulatory Authority’s proposal to reduce the guaranteed 14 to 17% rate of return for different technologies to 12 to 16% was criticized by Oracle Power, which wanted the higher rates grandfathered in for companies with existing agreements. Oracle Power argued that any change would discourage investments in independent power projects. President Imran Khan’s new government vowed to review what it argued were overly generous concessions for power projects as public opposition to Chinese-backed infrastructure projects and associated debts grew.[18]

A December 17, 2018 updated list of "Upcoming IPPs" by the Ministry of Water & Power stated the plant would be commissioned in June 2023. The issuance of the notice to proceed (NTP) and letter of intent (LoI) was "in process".[19]

In January 2019, the project's change to supercritical technology was confirmed and the project was re-affirmed as a priority for the Pakistani government.[20]

As of December 2019, completion was still scheduled for 2023.[21] A December 4, 2020 updated list of "Upcoming IPPs" by the Ministry of Water & Power stated the plant would be commissioned in June 2026, three years later than previously noted. The project proposal was described as "under evaluation/consideration".[22] (From 2019 to 2021, the government's website still listed the project as 1,320 MW instead of 1,400 MW.)

In April 2021, Oracle noted the company was still "awaiting clearance from the Ministry of Energy for construction of new power plants."[23]

Coal-to-gas & Coal-to-liquid strategy

In 2019, the project was also floated as a coal gasification to fertilizer project under the CPEC.[24]

In April 2021, Oracle said "we have made meaningful progress with our Thar Block VI Project, specifically with the commercialisation framework for our coal-to-gas and coal-to-liquid strategy." For example, in February of that year, Oracle, in conjunction with China National Coal Development Company (CNCDC), jointly submitted a policy proposal for coal-to-gas and coal-to-liquid development in Pakistan to the Ministry of Energy. The policy proposal outlined the commercial framework through which the development of coal to gas and liquid at Thar Block VI could be fast-tracked "in order to address Pakistan's critical gas shortage and continued reliance on imported liquid fuels."[23][25]

Ownership

In June 2015, Oracle and SEPCO formed Thar Electricity (Private) Ltd, with a 90-10 equity split; the two companies signed a consortium agreement in October 2015.[6][7]

In November 2017, Oracle signed a Memorandum of Understanding (MoU) with Sichuan Provincial Investment Group Co. Ltd (SCIG) and PowerChina International Group Ltd (PowerChina) for investing in, setting up, constructing, owning and operating the coal plant.[14]

In December 2018, Beijing Jingneng Power Company replaced Sichuan Provincial Investment Group as the project's majority owner.[26]

In April 2019, the project's sponsors adjusted their shares of the project, with Beijing Jingneng Power Company shifting 5% out of its ownership share to PowerChina.[27]

Opposition

As noted in other Thar project pages such as the Thar Block II power station's, proposals in the region have been met with strong objections and demands.

Project Details

  • Sponsor: Thar Electricity (Private) Ltd
  • Parent company: Beijing Jingneng Power Company (73%), PowerChina (15%), Oracle Coalfields (12%)
  • Location: Thar Block-VI near Singhara village, Thatta district, Sindh province
  • Coordinates: 24.8408017, 70.3150749 (approximate)
  • Status: Pre-permit development
  • Gross Capacity: 1,400 MW (Units 1 & 2: 700 MW)
  • Type: Supercritical
  • Projected in service: 2026
  • Coal Type: Lignite
  • Coal Source: Integrated 4.2 mtpa coal mine[2]
  • Source of financing:

Articles and resources

References

  1. "Oracle signs MOU with Chinese power group SEPCO," London Stock Exchange Market News, November 21, 2013
  2. 2.0 2.1 "Oracle makes progress on Thar coalfield potential," World Coal, September 25, 2014
  3. "Oracle Coalfields extends agreement with SEPCO," World Coal, March 17, 2015
  4. Philip Whiterow, "Oracle Coalfields' Thar project included in new Pakistan/China development zone," Proactive Investors, March 11, 2015
  5. "Oracle Coalfields PLC: China Pakistan Economic Corridor," London Stock Exchange, March 11, 2015
  6. 6.0 6.1 "Oracle Coalfields makes progress with Thar Coalfields Block VI in 2015," World Coal, March 18, 2016
  7. 7.0 7.1 "2015 Annual Review," Oracle Coalfields PLC, accessed July 2016
  8. "Upcoming IPPs," Pakistan Private Power and Infrastructure Board, accessed November 2016
  9. "Oracle Coalfields told coal price for Thar power station," Proactive Investors, June 17, 2017
  10. "Five CPEC projects face the axe," Express Tribune, July 20, 2016
  11. "Sindh's Oracle Coalfields speeds through, placed on CPEC priority list," CPEC, June 9, 2017
  12. "Oracle encouraged by nearby power plant," Asia Miner, May 11, 2017
  13. "Oracle Coalfields reports solid progress at Thar project," Digital Look, June 8, 2017
  14. 14.0 14.1 "Oracle signs MoU with major Chinese firms to advance the Thar project," World Coal, November 21, 2017
  15. "Pakistan approves Oracle Power`s 700 MW Sindh coal-fired project," Energy Central, February 15, 2018
  16. "Oracle Power receives approval for 700MW power plant in Pakistan," Stock Market Wire, February 12, 2018
  17. "Issue of Letter of Intent And Notice to Proceed," Financial Times, February 12, 2018
  18. "Investors oppose proposed cut in returns to power projects," Pakistan News, November 24, 2018
  19. "Upcoming IPPs," Private Power & Infrastructure Board, Ministry of Power, updated December 17, 2018
  20. "Oracle Power gets approval for larger power station at Thar in Pakistan," Proactive Investors, January 17, 2019
  21. "Upcoming IPPs," Private Power & Infrastructure Board, Ministry of Power, updated December 12, 2019
  22. "Upcoming IPPs," Private Power & Infrastructure Board, Ministry of Power, updated December 4, 2020
  23. 23.0 23.1 "Q1 Update and Shareholder Q&A Session," Oracle Power PLC, April 14, 2021
  24. "Thar Coal Block-VI to produce 1320MW power, gas, diesel, urea," Daily Times, December 11, 2019
  25. "IN BRIEF: Oracle Submits Coal-To-Gas, Liquid Proposal In Pakistan," Morningstar, February 2, 2021
  26. "Oracle Power shares jump on teaming up with Chinese coal power player," S&P Global, December 20, 2018
  27. "Oracle Power’s Chinese partners revise stake in Thar project," The News, April 30, 2019

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