The government has notified of the financial closing of the 330MW Thar Energy Limited (TEL), a subsidiary of Hub Power Company Limited (Hubco).
The financial closing documents for mine-mouth lignite coal power project at Thar Block-II were signed by Shah Jahan Mirza, managing director Pakistan Power Infrastructure Board, and Saleemullah Memon, chief executive officer of Thar Energy Limited (TEL).
TEL is under construction at Thar Coal Block II and is scheduled to achieve commercial operation in 2021. As a result, about 40% of work has already been completed so far. The project will be connected with the Matiari-Lahore Transmission Line for the transmission of electricity.
Omar Ayub Khan, minister for power, with other senior officials of the energy ministry, witnessed the signing ceremony.
The minister said that the addition of 330 MW would further energize the national grid and contribute to achieving sustainability and reliability in the power sector. He continued:
In the quest of harnessing indigenous and renewable potential, every single megawatt is crucial for redefining Pakistan’s energy landscape and securing its energy future on an indigenous, native footing which will eventually relinquish Pakistan’s dependence on imported fuels.
The project is jointly sponsored by Hub Power Company Limited, which owns the majority at 60%. Along with Fauji Fertilizer Limited, which owns 30%, and China Machinery and Engineering Corporation, that holds the remainder at 10% of the equity in the project.
The Implementation Agreement (IA) of the project was signed on Nov 10, 2017.
China Development Bank and Habib Bank Limited are the lead lenders in the project.
The project will utilize Thar coal supplied by Sindh Engro Coal Mining Company (SECMC) from its second phase mine. After the implementation of this project, the overall coal price will sink to $44/ton from $64/ton, which will significantly reduce the power tariff by 1.6 Cents/KWh (Rs 2/KWh).
Khalid Mansoor, Hubco chief executive officer, said that Thar Energy Limited would be a game-changer for Pakistan, as it would indigenize the energy source for the country.
The project being set up by TEL will be amongst the first of the series of power plants based on Thar coal and would bring about substantial savings in foreign exchange of the country.
After the commercial operation of this project, around Rs. 18 billion/year will be saved on account of foreign exchange, while Rs. 260 billion per year will be saved by the year 2022 when all Thar coal-based projects of 5,000 MW will be operational. As a result, the electricity tariff would be reduced to around 5 Cents/KWhr.