Engro Energy – Coal

The Sindh Engro Coal Mining Company Limited (SECMC)

Sindh Engro Coal Mining Company (SECMC) is a joint venture company formed in 2009 between the Government of Sindh (GoS) and Engro PowerGen Limited (EPL) & Affiliates. EPL is a wholly owned subsidiary of Engro Corporation Limited. Sindh Engro Coal Mining Company’s shareholders include Government of Sindh, Engro Powergen Ltd, Thal Limited, and Habib Bank Ltd and Hub Power Company Limited (HUBCO). The Sindh Coal Authority has awarded a 95.5 square kilometer area of the coalfield, known as Block II, to SECMC for exploration and development of coal deposits. Within this block, there is an estimated amount of exploitable lignite coal reserves of 1.57 billion tons.

In 2010, SECMC completed the Bankable Feasibility Study (BFS) for Thar Block II Coal Mining Project by engaging internationally renowned Consultants such as RWE-Germany, Sinocoal-China, SRK-UK and HBP Pakistan, meeting all national / international standards. The first phase of the Project is underway, in which, two 330 MW sub critical plants will be established with majority share of Engro Powergen. The total mining capacity of the project is due to be 20.6 MT/annum and its power generation capacity is projected to be 3,960 MW.

Engro Powergen Thar (Private) Limited

Concrete and landmark progress was achieved during the year for financial close. EPTL obtained Generation License from NEPRA effective on March 18, 2015. Subsequently, EPTL also received Letter of Support from Private Power and Infrastructure Board (PPIB) dated April 17, 2015. On May 4, 2015, EPTL entered into Power Purchase Agreement (PPA) with National Transmission and Dispatch Company and Implementation Agreement (IA) and Supplemental IA with Islamic Republic of Pakistan. EPTL also signed Coal Supply Agreement with SECMC on June 7, 2015. Basic engineering studies were initiated and preliminary geotechnical & topographic surveys were also completed during the year. CMEC has completed Geotechnical & Topographic Surveys. 96 Bore holes (Up to 50m depth) have been done and topographic survey of Power Plant Site has also been completed. Piling test activity has been initiated at Power Plant Site by CMEC and 8 confirmatory bore holes have been completed. During the year, EPTL finalized its envisaged shareholding structure and signed financing agreements with local and foreign lenders. EPTL’s project cost is expected to be ~USD 1,108 Mn of which ~USD 831 Mn is to be arranged through debt while ~USD 277 Mn in the form of equity based on a debt to equity ratio of 75:25. Engro Powergen Limited will be the majority ordinary shareholder in the project with a proposed 51% common equity investment. Rest of the equity is planned from the CMEC Thar Power Investments Limited and other local investors (Habib Bank Limited and Liberty Mills). Major financing agreements were executed on December 21, 2015. Financial close and disbursement of loan is expected after execution of security documents, issuance of guarantee and completion of legal formalities.