Data Collection Survey on Thar Coal Field In Pakistani FINAL REPORT for The Data Collection Survey...

Islamic Republic of Pakistan

Data Collection Survey on

Thar Coal Field In

Pakistan

FINAL REPORT

FEBRUARY 2013

JAPAN INTERNATIONAL COOPERATION AGENCY (JICA)

Nippon Koei Co., Ltd. Coal Resources & Mining Engineering Co., Ltd.

4R JR

13-014

i

FINAL REPORT for

The Data Collection Survey on Thar Coal Field in Pakistan

CONTENTS Executive Summary

Location Map

Chapter 1 Introduction 1.1 Background of the Survey ......................................................................................................... 1 - 1

1.1.1 Present Situation of Power Supply and Demand ................................................................. 1 - 1

1.1.2 Political Measures on Energy Sector and Development Plan .............................................. 1 - 2

1.1.3 Latest Government Decision ................................................................................................ 1 - 3

1.2 Objective of Survey .................................................................................................................... 1 - 3

1.2.1 Objective of the Survey ........................................................................................................ 1 - 3

1.2.2 Survey Area ........................................................................................................................ 1 - 3

1.3 Scope of the Survey .................................................................................................................. 1 - 3

1.4 Survey Schedule ....................................................................................................................... 1 - 4

Chapter 2 Basic Data and Information 2.1 Coalfield Developments in Pakistan .......................................................................................... 2 - 1

2.1.1 Coal Role in Pakistan National Energy Policy .................................................................... 2 - 1

2.1.2 Coal-related Organization .................................................................................................... 2 - 2

2.1.3 Coalfields in Pakistan ........................................................................................................... 2 - 4

2.1.4 Coal Resources, Production, and Quality ............................................................................. 2 - 10

2.1.5 Laws or Regulations Related to Coal Development ............................................................. 2 - 14

2.2 Thar Coalfield ............................................................................................................................ 2 - 16

2.2.1 Exploration History ............................................................................................................... 2 - 16

2.2.2 Geological Setting ................................................................................................................ 2 - 16

2.2.3 Meteorology and Hydrology ................................................................................................. 2 - 23

2.2.4 Coal Recourses and Reserves ............................................................................................. 2 - 26

2.2.5 Quality .................................................................................................................................. 2 - 26

2.3 Other Coalfields in Sindh ........................................................................................................... 2 - 27

2.3.1 Lakhra Coalfield ................................................................................................................... 2 - 27

2.3.2 Sonda – Jherruk Coalfield .................................................................................................... 2 - 31

2.3.3 Badin Coalfield ..................................................................................................................... 2 - 32

2.3.4 Lakhra Thermal Power Plant ................................................................................................ 2 - 33

2.4 Power Development Plan .......................................................................................................... 2 - 38

2.4.1 Basic Policy for Power Development Plan ........................................................................... 2 - 38

2.4.2 Long-Term Power Demand Forecast .................................................................................... 2 - 38

2.4.3 Generation Planning ............................................................................................................. 2 - 39

2.4.4 Power Grid Expansion Plan ................................................................................................. 2 - 41

2.4.5 Policy and Plan for Developing and Conducting the Coal Thermal Generation Plant .......... 2 - 48 2.4.6 Other Relevant Plans and Information ................................................................................. 2 - 49

2.5 Power Generation Applications and Tariff .................................................................................. 2 - 50

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2.5.1 General Procedure of Application ......................................................................................... 2 - 50

2.5.2 Tariff Structure ...................................................................................................................... 2 - 51

2.5.3 Incentives on the Tariff ......................................................................................................... 2 - 52

2.5.4 Referential Tariff Generated by Coal Thermal ...................................................................... 2 - 53

Chapter 3 Thar Coalfield Development 3.1 Current Status of Each Block ................................................................................................... 3 - 1

3.1.1 Block I ................................................................................................................................. 3 - 3

3.1.2 Block II ................................................................................................................................ 3 - 5

3.1.3 Block III ............................................................................................................................... 3 - 11

3.1.4 Block IV .............................................................................................................................. 3 - 11

3.1.5 Block V ............................................................................................................................... 3 - 12

3.1.6 Block VI .............................................................................................................................. 3 - 14

3.2 Geological Assessments ............................................................................................................ 3 - 17

3.2.1 Main Issues and Countermeasures in the Thar Coal Development .................................... 3 - 17

3.2.2 Estimation of ROM ............................................................................................................. 3 - 18

3.2.3 Controlling Spontaneous Combustion ................................................................................ 3 - 19

3.3 Mining Technology for Surface Mining ....................................................................................... 3 - 20

3.3.1 Mining Equipment and System ........................................................................................... 3 - 20

3.3.2 Cost performance ............................................................................................................... 3 - 26

3.3.3 Japanese Coal Mining Technologies .................................................................................. 3 - 28

3.4 Hydrogeology ............................................................................................................................ 3 - 35

3.4.1 Groundwater Situation .......................................................................................................... 3 - 35

3.4.2 Dewatering ........................................................................................................................... 3 - 37

3.5 Development Information for Other Similar Coalfields .............................................................. 3 - 40

3.5.1 Comparison with Other Coalfield of South Asia .................................................................... 3 - 40

Chapter 4 Power Generation 4.1 Feasibility of Generation by Utilizing Thar Coal ......................................................................... 4 - 1

4.1.1 Development Plan for the Power Plants ............................................................................... 4 - 1

4.1.2 Constrained Condition in the Thar Coalfield ......................................................................... 4 - 2

4.1.3 Applicable Power Generation Plant in the Thar Coalfield ..................................................... 4 - 2

4.2 Feasibility of Generation by Utilizing Gas Produced from Underground Gasification ............... 4 - 11

4.2.1 General Information .............................................................................................................. 4 - 11

4.2.2 UCG in the Thar Coalfield .................................................................................................... 4 - 11

4.3 Coal Thermal Generation Technology in Japan utilizing the Lignite Coal .................................. 4 - 13

4.3.1 Gasification Technology ....................................................................................................... 4 - 13

4.3.2 Coal Liquefaction Technology............................................................................................... 4 - 15

4.3.3 Other New Technology ......................................................................................................... 4 - 17

4.3.4 Superiority of Japanese Technology ..................................................................................... 4 - 20

Chapter 5 Infrastructures 5.1 Transmission Line .................................................................................................................... 5 - 1

5.1.1 Present Situation .................................................................................................................. 5 - 1

5.1.2 Expansion Plan of 500kV Transmission Line ....................................................................... 5 - 2

5.1.3 Proposed Plan of 500kV Transmission Line ......................................................................... 5 - 7

5.2 Water Supply ............................................................................................................................. 5 - 10

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5.2.1 Present Status ...................................................................................................................... 5 - 10

5.2.2 Outline of the Plan ................................................................................................................ 5 - 12

5.2.3 Construction Schedule ......................................................................................................... 5 - 14

5.2.4 Cost ...................................................................................................................................... 5 - 14

5.3 Mine Water Disposal .................................................................................................................. 5 - 16

5.3.1 Present Status ...................................................................................................................... 5 - 16

5.3.2 Outline of the Plan ................................................................................................................ 5 - 16

5.3.3 Cost ...................................................................................................................................... 5 - 17

5.3.4 Construction Schedule ......................................................................................................... 5 - 17

5.4 Road .......................................................................................................................................... 5 - 18

5.4.1 Present Situation .................................................................................................................. 5 - 19

5.4.2 Outline of the Road Improvement Plan ................................................................................ 5 - 22

5.4.3 Cost of the Improvement Plan .............................................................................................. 5 - 26

5.4.4 Schedule of the Improvement Plan ...................................................................................... 5 - 27

5.4.5 Consideration ....................................................................................................................... 5 - 28

5.5 Other Relevant Infrastructure .................................................................................................... 5 - 29

5.5.1 Thar Airport .......................................................................................................................... 5 - 29

5.5.2 Thar Lodge ........................................................................................................................... 5 - 29

Chapter 6 Candidate Project for the Japanese Yen Loan 6.1 Candidate Project for the Japanese yen Loan ........................................................................... 6 - 1

6.2 Thar – Matiari 500kV Transmission Line Project ....................................................................... 6 - 2

6.2.1 Summary of the Project ........................................................................................................ 6 - 2

6.2.2 Applicability of Japan’s Technique ........................................................................................ 6 - 3

6.2.3 Implementation Schedule ..................................................................................................... 6 - 4

6.2.4 Project Cost .......................................................................................................................... 6 - 5

6.2.5 Support to Construction of Power Plants .............................................................................. 6 - 6

Chapter 7 Environmental and Social Consideration 7.1 Introduction ................................................................................................................................ 7 - 1

7.2 Current Natural and Social Situation........................................................................................... 7 - 1

7.2.1 General ................................................................................................................................ 7 - 1

7.2.2 Current Status of Environmental Pollution ............................................................................ 7 - 2

7.2.3 Current Status of Natural Environment ................................................................................. 7 - 5

7.2.4 Current Status of Social Environment ................................................................................... 7 - 8

7.3 Environmental and Social Regulatory Framework of Pakistan .................................................. 7 -10

7.3.1 Legal Framework for EIA ...................................................................................................... 7 -10

7.3.2 National Environmental Quality Standards ........................................................................... 7 -11

7.3.3 Environmental Impact Assessment (EIA) System ................................................................ 7 -14

7.3.4 Social Environment .............................................................................................................. 7 -16

7.4 Screening and Categorization of the Project ............................................................................. 7 -18

7.4.1 Transmission Line Project .................................................................................................... 7 -18

7.4.2 Other Indivisible Projects ...................................................................................................... 7 -19

7.5 Scoping of the Environmental Impacts ...................................................................................... 7 -20

7.5.1 Transmission Line Project .................................................................................................... 7 -20

7.5.2 Other Indivisible Projects ...................................................................................................... 7 -22

Chapter 8 Financial and Economic Analyses

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8.1 Objectives and Methodology of the Financial and Economic Analyses ..................................... 8 - 1

8.1.1 Financial Analysis ................................................................................................................. 8 - 1

8.1.2 Economic Analysis ............................................................................................................... 8 - 1

8.1.3 Methodology ......................................................................................................................... 8 - 2

8.2 Assumptions used in the Financial and Economic Analysis ....................................................... 8 - 2

8.2.1 Project Life, Salvage Value, and Price Base ........................................................................ 8 - 2

8.2.2 Physical Contingency and Price Escalation ......................................................................... 8 - 3

8.2.3 Tariff ..................................................................................................................................... 8 - 3

8.2.4 Operation and Maintenance (O&M) Cost ............................................................................. 8 - 4

8.2.5 Conversion Factor ................................................................................................................ 8 - 4

8.2.6 Cut-off Rate .......................................................................................................................... 8 - 5

8.2.7 Auxiliary Consumption and Transmission and Distribution Loss .......................................... 8 - 6

8.2.8 Use of Water and Coal for Generation ................................................................................. 8 - 6

8.3 Identification and Quantification of Financial and Economic Costs ............................................ 8 - 7

8.3.1 Financial Cost ...................................................................................................................... 8 - 7

8.3.2 Economic Cost ..................................................................................................................... 8 - 8

8.4 Identification and Quantification of Financial and Economic Benefits ........................................ 8 - 10

8.4.1 Financial Benefits ................................................................................................................. 8 - 10

8.4.2 Economic Benefits ................................................................................................................ 8 - 11

8.5 Conclusion of Financial and Economic Analyses ....................................................................... 8 - 15

8.5.1 FIRR and FNPV ................................................................................................................... 8 - 15

8.5.2 EIRR and ENPV ................................................................................................................... 8 - 17

Chapter 9 Conclusions and Recommendations 9.1 Conclusions ............................................................................................................................. 9 - 1

9.1.1 Thar Coalfield Development ................................................................................................. 9 - 1

9.1.2 Candidate Project for Transmission Line .............................................................................. 9 - 2

9.2 Recommendations ................................................................................................................... 9 - 3

9.2.1 Recommendation for Coalfield Development ....................................................................... 9 - 3

9.2.2 Recommendation for Power Generation Development ........................................................ 9 - 5

APPENDICES Appendix 2-1 Functions of Thar Coal Energy Board, Sindh Coal Authority and Coal & Energy Departments Appendix 2-2 PPIB (Private Power and Infrastructure Board) and NEPRA (National Electric Power

Generation Authority) Appendix 2-3 NEPRA Notice of Hearing for Development of Determination of Upfront Tariff for Coal Power

Projects Appendix 2-4 Assumption of Tariff for 600MW and 300MW Class Coal Thermal Generation Appendix 3-1 Information of Panandhro Lignite Mine Appendix 4-1 Basic Information for Thermal Power Generation Appendix 5-1 Summary of Infrastructures in Thar Coalfield Appendix 5-2 Route Map of Infrastructures in Thar Coalfield Appendix 5-3 Route Map of Access Road to Thar Coalfield Appendix 7-1 Preliminary Scoping of Environmental and Social Impacts of the Indivisible Projects Appendix 8-1 Financial and Economic Analyses (300MW and 600MW)

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TABLES Table 1-1.1 Peak Power Generation and Demand ............................................................................ 1 - 1 Table 2.1-1 Pakistan Coal Resources ............................................................................................... 2 - 10 Table 2.1-2 Coal Production by Coalfield .......................................................................................... 2 - 11 Table 2.1-3 Coal Consumption in Pakistan ....................................................................................... 2 - 12 Table 2.1-4 Import of Coal in Pakistan .............................................................................................. 2 - 13 Table 2.1-5 Coal Quality of Coalfields in Pakistan ............................................................................. 2 - 13 Table 2.1-6 Broad Terms for Mineral Titles, Sindh Province .............................................................. 2 - 14 Table 2.1-7 Application Fees (Sindh Mining Concession Rules,2002) .............................................. 2 - 15 Table 2.1-8 Annual Rental Fee .......................................................................................................... 2 - 15 Table 2.2-1 Exploration Situation and Coal Resources ..................................................................... 2 - 26 Table 2.2-2 Coal Qualities for Block I to XII ....................................................................................... 2 - 26 Table 2.3-1 Factors on Each Seam in Lakhra Coalfield .................................................................... 2 - 28 Table 2.3-2 Elements of Each Area in Sonda - Jherruck ................................................................... 2 - 31 Table 2.3-3 Quality of Badin Coal ...................................................................................................... 2 - 33 Table 2.3-4 Main Characteristics of Lakhra Power Station ................................................................ 2 - 34 Table 2.3-5 Operation Data ............................................................................................................... 2 - 35 Table 2.4-1 Forecasts for Selected Year ........................................................................................... 2 - 38 Table 2.4-2 Generation Expansion Plan ............................................................................................ 2 - 39 Table 2.4-3 Summary of Major Expansion Plan Up to 2016-17 ......................................................... 2 - 43 Table 2.4-4 Summary of Major Expansion Plan Up to 2017-20 ......................................................... 2 - 45 Table 2.4-5 Summary of Major Expansion Plan Up to 2021-30 ......................................................... 2 - 47 Table 2.4-6 Fuel Price Forecasts to the Year 2030 ............................................................................ 2 - 48 Table 2.4-7 Least Cost Generation Plan (Base Case) ....................................................................... 2 - 49 Table 2.4-8 List of Future Plan for Thermal Coal Generation Plants ................................................. 2 - 49 Table 2.4-9 Summary of Jamshoro Thermal Power Plants ............................................................... 2 - 50 Table 2.5-1 Power Generation Application Procedure and Schedule ................................................ 2 - 51 Table 2.5-2 Constitution of Tariff ........................................................................................................ 2 - 52 Table 2.5-3 Levelized Tariff Proposed by PPIB ................................................................................. 2 - 53 Table 2.5-4 Assumption of Tariff of Generation (1,000MW class) ...................................................... 2 - 54 Table 3.1-1 Coal Mine Development and Power Plant Plan .............................................................. 3 - 2 Table 3.1-2 Current Situation of Each Block in Thar Coalfield ........................................................... 3 - 2 Table 3.1-3 Selected Mining Method and Equipment ........................................................................ 3 - 9 Table 3.1-4 Production Schedule (Excavation) – Variant 1 – 6.5 Mt/a T&S ....................................... 3 - 10 Table 3.3-1 Mining Plan for Block II ................................................................................................... 3 - 20 Table 3.4-1 Characteristic of Aquifers ................................................................................................ 3 - 35 Table 3.4-2 Model Settings, Analytical Condition and Boundary Condition ....................................... 3 - 38 Table 3.4-3 Analytical Parameter ...................................................................................................... 3 - 39 Table 3.4-4 Analytical Cases ............................................................................................................. 3 - 39 Table 3.5-1 Comparison of Geological Conditions between Thar Coalfield and Neyveli Coalfield .... 3 - 40 Table 3.5-2 Production and Strip Ratio in Neyveli Lignite Mine ......................................................... 3 - 42 Table 3.5-3 The Outline of Thermal Power Stations in the Neyveli Coalfield ..................................... 3 - 44 Table 4.1-1 Development Plan of Power Plants ................................................................................ 4 - 1 Table 4.1-2 Component Analysis of the Thar Coal ............................................................................ 4 - 2 Table 4.1-3 Comparison of Steam Condition and Plant Efficiency ..................................................... 4 - 4 Table 4.1-4 Water Usage for Coal Thermal Power Plants ................................................................. 4 - 6 Table 4.2-1 Summary of USG in the Thar Coalfield .......................................................................... 4 - 11 Table 4.3-1 Advantages of IGCC ....................................................................................................... 4 - 14 Table 4.3-2 Development Status of Clean Coal Technology .............................................................. 4 - 20

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Table 5.1-1 Development Plan of Power Plants in the Thar Coalfield ............................................... 5 - 1 Table 5.1-2 Scope of Works for the 500kV Network Surrounding Matiari S/S ................................... 5 - 3 Table 5.1-3 List of Major Equipment for the 500kV Transmission Line between Thar and Matiari .... 5 - 4 Table 5.1-4 List of Major Equipment for the Extension of 500kV Matiari Switching Station ............... 5 - 4 Table 5.1-5 Summary of Project Cost ................................................................................................ 5 - 5 Table 5.1-6 Comparison between AAAC and LL-TACSR/AS ............................................................ 5 - 8 Table 5.1-7 Comparison of Project Cost for 500kV Transmission Line between Thar and Matiari S/S ........... 5 - 9 Table 5.2-1 Calculation of Pipeline and Pump ................................................................................... 5 - 15 Table 5.2-2 Cost Estimation for Water Supply System ...................................................................... 5 - 16 Table 5.4-1 Road Design Works of Segment-4 and Segment-5 ........................................................ 5 - 23 Table 5.4-2 Design Vehicles for the Road Improvement ................................................................... 5 - 24 Table 5.4-3 Construction Cost of the Road Improvement .................................................................. 5 - 27 Table 5.4-4 Contents, Status and Schedule of Segments (as of 10 December 2012) ....................... 5 - 27 Table 6.2-1 Summary of Candidate Project for Japanese Yen Loan ................................................. 6 - 2 Table 6.2-2 Comparison of Construction Cost in Consideration of Integral Plan ............................... 6 - 3 Table 6.2-3 Comparison of Transmission Line Loss .......................................................................... 6 - 4 Table 6.2-4 Project Implementation Cost .......................................................................................... 6 - 5 Table 7.2-1 Groundwater Quality in Thar Coalfield............................................................................ 7 - 3 Table 7.2-2 Ambient Air Quality in Thar Coalfield .............................................................................. 7 - 4 Table 7.2-3 Flora and Fauna and Threatened Species in the Survey Area ....................................... 7 - 7 Table 7.3-1 National Environmental Quality Standard for Ambient Air ............................................... 7 - 11 Table 7.3-2 National Environmental Quality Standard for Ambient Noise .......................................... 7 - 12 Table 7.3-3 National Environmental Quality Standard for Municipal and Liquid Industrial Effluents .. 7 - 13 Table 7.3-4 Illustrative List of Sensitive Sectors, Characteristics, and Areas in JICA Guidelines and Pakistani Guidelines .......... 7 - 15 Table 7.4-1 Screening and Categorization of Indivisible Projects ...................................................... 7 - 19 Table 7.5-1 Preliminary Scoping of Environmental and Social Impacts of the Transmission Line Project .............. 7 - 19 Table 8.1-1 Financial Analysis for the Generation and Transmission Projects .................................. 8 - 1 Table 8.1-2 Economic Analysis for the Generation and Transmission Projects ................................. 8 - 2 Table 8.2-1 Assumption on Tariff of Coal Thermal Power Plant ........................................................ 8 - 3 Table 8.2-2 Terms of Trade ............................................................................................................... 8 - 4 Table 8.2-3 Percentage of Wage Earners Earning below the Minimum Wage of 2001 ..................... 8 - 4 Table 8.2-4 Monthly Wages of Regular and All Workers by Type of Enterprise 2003-04 ................... 8 - 5 Table 8.2-5 Calculation of Conversion Factor on Local Cost of Procurement and Construction ....... 8 - 5 Table 8.2-6 Cut-off Yield of the Treasury Bills .................................................................................... 8 - 5 Table 8.2-7 Calculation of Economic Price of Coal ............................................................................ 8 - 7 Table 8.3-1 Financial Cost of the Generation Project upon Completion of Construction .................... 8 - 7 Table 8.3-2 Financial Cost of the Transmission Project upon Completion of Construction ................ 8 - 8 Table 8.3-3 Annual Allocation of Financial Cost (Generation) ......................................................... 8 - 8 Table 8.3-4 Annual Allocation of Financial Cost (Transmission) ........................................................ 8 - 8 Table 8.3-5 Economic Cost of the Project upon Completion of Construction (Generation and Transmission Alternative 1) ............. 8 - 9 Table 8.3-6 Economic Cost of the Project upon Completion of Construction (Generation and Transmission Alternative 2) ............. 8 - 9 Table 8.3-7 Annual Allocation of Economic Cost (Generation and Transmission Alternative 1) ............. 8 - 9 Table 8.3-8 Annual Allocation of Economic Cost (Generation and Transmission Alternative 2) ............. 8 - 9

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Table 8.4-1 Economic Price of Tariff ................................................................................................... 8 - 11 Table 8.4-2 Assumption on the Alternative Energy Sources Based on the Types of Consumers ...... 8 - 12 Table 8.4-3 Average Electricity Consumption per Consumer ............................................................. 8 - 12 Table 8.4-4 Household Expenditure on Energy ................................................................................. 8 - 12 Table 8.4-5 Economic Cost of Hi-Speed Diesel Oil (H.S.D) ............................................................... 8 - 13 Table 8.4-6 Variable Cost of Diesel Generation ................................................................................. 8 - 13 Table 8.4-7 Fixed and Variable Costs of UPS .................................................................................... 8 - 14 Table 8.4-8 Calculation of Saved Cost of Alternative Energy Sources .............................................. 8 - 15 Table 8.5-1 FIRRs and FNPVs of the Projects ................................................................................... 8 - 16 Table 8.5-2 Sensitivity Analysis for the Generation (FIRR & FNPV) .................................................. 8 - 16 Table 8.5-3 Sensitivity Analysis for Transmission Alternative 1 (FIRR & FNPV) ................................ 8 - 17 Table 8.5-4 Sensitivity Analysis for Transmission Alternative 2 (FIRR & FNPV) ................................ 8 - 17 Table 8.5-5 EIRR and ENPV .............................................................................................................. 8 - 17 Table 8.5-6 Sensitivity Analysis for Alternative 1 (EIRR & ENPV) ..................................................... 8 - 18 Table 8.5-7 Sensitivity Analysis for Scenario Alternative 2 (EIRR & ENPV) ...................................... 8 - 18

FIGURES Figure 1.1-1 Peak Power Generation and Demand and Power Shortage .......................................... 1 - 2 Figure 1.2-1 Location of Objective Area .............................................................................................. 1 - 3 Figure 2.1-1 Federal Organization Chart on Energy and Power ......................................................... 2 - 3 Figure 2.1-2 Sindh Province Organization Chart on Thar Coal Development ..................................... 2 - 3 Figure 2.1-3 Coalfields of Pakistan ..................................................................................................... 2 - 4 Figure 2.1-4 Coalfields in Sindh Province ........................................................................................... 2 - 5 Figure 2.1-5 Coal Production by Coalfield .......................................................................................... 2 - 11 Figure 2.1-6 Coal Consumption .......................................................................................................... 2 - 12 Figure 2.2-1 Location map of Thar Coalfield, Sindh, Pakistan ............................................................ 2 - 16 Figure 2.2-2 Stratigraphic Sequence in the Thar Coalfield ................................................................. 2 - 18 Figure 2.2-3 Blocks, Cumulative Thickness and Cross Section Line in the Thar Coal Blocks ............ 2 - 19 Figure 2.2-4 Generalized Cross Section through Block I, IV,II and III Thar Coal Blocks ..................... 2 - 20 Figure 2.2-5 Representative Borehole Sections in Thar Coalfield ...................................................... 2 - 20 Figure 2.2-6 Location of Borehole Sections in Thar Coalfield ............................................................. 2 - 21 Figure 2.2-7 Average Monthly Rainfall and Temperature 1979 – 2008 ............................................... 2 - 23 Figure 2.2-8 Bird’s Eye View of Geography and Geology in the Study Area

with Regional Groundwater Direction ........... 2 - 25 Figure 2.3-1 Generalized Cross Section of Lakhra Coalfield .............................................................. 2 - 27 Figure 2.3-2 Generalized Stratigraphy of Workable coal seams ....................................................... 2 - 29 Figure 2.3-3 Located Relation of Lakhra Coal Mine and Power Station ............................................ 2 - 34 Figure 2.3-4 Relation of Coal and Limestone Supply ........................................................................ 2 - 36 Figure 2.4-1 Peak Demand Forecast for High, Base and Low Cases ............................................... 2 - 39 Figure 2.4-2 Capacity Rate in Thar Coalfield on the Generation Expansion Plan ............................. 2 - 40 Figure 2.4-3 Increment of Generation Capacity in Thar .................................................................... 2 - 40 Figure 2.4-4 Existing Grid Map for 500kV and 220kV Systems ........................................................ 2 - 41 Figure 2.4-5 Expansion Plan Grid Map for 500kV and 220kV Systems Up to 2016 - 17 .................... 2 - 42 Figure 2.4-6 Expansion Plan Grid Map for 500kV and 220kV Systems Up to 2020 ........................... 2 - 44 Figure 2.4-7 Expansion Plan Grid Map for 500kV and 220kV Systems Up to 2030 ........................... 2 - 46 Figure 2.4-8 Installed Capacity as of 2010 ......................................................................................... 2 - 48 Figure 3.1-1 Thar Coal Blocks Layout ................................................................................................ 3 - 1 Figure 3.1-2 Isopach Map of Block I ................................................................................................... 3 - 3 Figure 3.1-3 Cross-section along Boreholes of Block I ....................................................................... 3 - 4

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Figure 3.1-4 Isopach Map of Block II ................................................................................................ 3 - 5 Figure 3.1-5 Cross-section along Boreholes on Block II ..................................................................... 3 - 6 Figure 3.1-6 Isopach Map of Heating Values (ar base), Block II ......................................................... 3 - 7 Figure 3.1-7 Seam Correlation Chart of Boreholes around Block II .................................................... 3 - 7 Figure 3.1-8 Seam Correlation Chart Line .......................................................................................... 3 - 8 Figure 3.1-9 Illustrations of Two Variants of Equipment ...................................................................... 3 - 10 Figure 3.1-10 Infrastructure Situation of Block II Development in 2030 ................................................ 3 - 11 Figure 3.1-11 UCG Production Process ............................................................................................... 3 - 13 Figure 3.1-12 Oracle Coalfields Mining Plan ........................................................................................ 3 - 15 Figure 3.1-13 Layout of Mining Area and Mine-mouth Power Plant in Block VI .................................... 3 - 15 Figure 3.2-1 Selective Mining Criteria Example .................................................................................. 3 - 18 Figure 3.3-1 Full Mechanized Longwall Mining Method ...................................................................... 3 - 30 Figure 3.3-2 General Layout of Single Prop and Iron Bar Method ...................................................... 3 - 31 Figure 3.3-3 Concept of the Room and Pillar Mining Method ............................................................. 3 - 32 Figure 3.3-4 Conceptual Layout of Saw Mining Method ..................................................................... 3 - 33 Figure 3.3-5 Conceptual Cross Section of Hydraulic Mining Method .................................................. 3 - 34 Figure 3.4-1 Aquifers in Thar Coalfield Area ....................................................................................... 3 - 35 Figure 3.5-1 Location Map of Thar and Neyveli Coalfields ................................................................. 3 - 41 Figure 3.5-2 Cross-Section Showing Different Aquifers in Block III, Thar Coalfield ............................ 3 - 41 Figure 3.5-3 Neyveli Lignite Deposit Aquifers ..................................................................................... 3 - 41 Figure 3.5-4 Schematic Diagram of Electricity Generation ................................................................. 3 - 44 Figure 4.1-1 Candidate Sites of the Power Plant ................................................................................ 4 - 1 Figure 4.1-2 CAD Model of Lignite Coal Combustion Boiler ............................................................... 4 - 3 Figure 4.1-3 Process Flow of Circulating Fluidized-Bed Combustion Boiler ....................................... 4 - 4 Figure 4.1-4 Hot Day Power Loss ....................................................................................................... 4 - 8 Figure 4.1-5 Typical Environmental Pollution Control Facility ............................................................. 4 - 8 Figure 4.1-6 Typical Desulphurization Process ................................................................................... 4 - 9 Figure 4.1-7 Recommendation of Boiler Type for Thar Coal ............................................................... 4 - 10 Figure 4.2-1 Schematic Model System of UCG in the Thar Coalfield ................................................. 4 - 11 Figure 4.3-1 Configuration of CCT for Power Generation in Japan .................................................... 4 - 13 Figure 4.3-2 Schematic Diagram of Demonstration Plant and the Structure of Gasifier ..................... 4 - 14 Figure 4.3-3 System Outlook for the Future of Zero-emission Technology ......................................... 4 - 15 Figure 4.3-4 Typical Flow of Direct Liquefaction Process ................................................................... 4 - 16 Figure 4.3-5 Typical Flow of Indirect Liquefaction Process ................................................................. 4 - 16 Figure 4.3-6 UBC Process Diagram ................................................................................................... 4 - 18 Figure 4.3-7 New Slurrification Process for Low Rank Coal ............................................................... 4 - 19 Figure 4.3-8 Property Change of Low Rank Coal ............................................................................... 4 - 19 Figure 4.3-9 Schematic Diagram of Brown Coal Drying System ........................................................ 4 - 20 Figure 5.1-1 500/220 kV Grid Map Surrounding Sindh from 2016 up to 2017 .................................... 5 - 2 Figure 5.1-2 Scope of Works for the Expansion of 500kV Network System by Fund Source ............. 5 - 3 Figure 5.1-3 Route Map of the 500kV Transmission Line between Thar and Matiari .......................... 5 - 4 Figure 5.1-4 Tentative Construction Schedule .................................................................................... 5 - 5 Figure 5.1-5 Operation Method of 500kV Transmission Line (Original Plan) ...................................... 5 - 6 Figure 5.1-6 Operation Method of 500kV Transmission Line (Proposed Plan) ................................... 5 - 7 Figure 5.1-7 Section of LL-TACSR/AS ................................................................................................ 5 - 8 Figure 5.2-1 NDP Project Map ............................................................................................................ 5 - 11 Figure 5.2-2 Water Supply Scheme from LBOD ................................................................................. 5 - 12 Figure 5.4-1 Route Map of the Access Road to the Thar Coalfield ..................................................... 5 - 18 Figure 5.4-2 Schematic Route Map .................................................................................................... 5 - 18 Figure 5.4-3 Route of Port Qasim Road ............................................................................................. 5 - 19

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Figure 5.4-4 Typical Cross Section of the Segment-3......................................................................... 5 - 25 Figure 5.4-5 Typical Cross Section of the Segment-4......................................................................... 5 - 25 Figure 5.4-6 Location of New Bypasses ............................................................................................. 5 - 26 Figure 6.1-1 Overall Development Plan for the Thar Coalfield............................................................ 6 - 1 Figure 6.2-1 Summary of Candidate Project for Japanese Yen Loan ................................................. 6 - 2 Figure 6.2-2 Implementation Schedule ............................................................................................... 6 - 4 Figure 7.2-1 Location Map of Runn of Kutch, Ramsar Site ................................................................. 7 - 8 Figure 7.3-1 Environmental Impact Assessment Process in Pakistan ................................................ 7 - 14 Figure 8.5-1 Saved Cost ..................................................................................................................... 8 - 14

x

Abbreviations

AAAC : All Aluminum Alloy Conductor AASHTO : American Association of State Highway and Transportation Officials ACGR : Annual Compound Growth Rate ACSR : Aluminum Conductor Steel Reinforced AJK : Azad Jammu and Kashmir ADB : Asian Development Bank AR : As received basis B.P. : Beginning Point BWE : Bucket Wheel Excavator CCPP : Combined Cycle Power Plant Cct : Circuit CFBC : Circulating Fluidized Bed Combustion CPP : Capacity Purchase Price CRME : Coal Resources & Mining Engineering Co. Ltd CSA : Coal Supply Agreement D/C : Double Circuit DISCO : Distribution Company EAGLE : Coal Energy Application for Gas, Liquid & Electricity EIA : Environmental Impact Assessment EIRR : Economic Internal Rate of Return EPP : Energy Purchase Price EPS : Electro-Static Precipitator ESIA : Environmental and Social Impact Assessment FBC : Fluidized Bed Combustion FDF : Forced Draft Fan FIRR : Financial Internal Rate of Return FO : Fuel Oil FS : Feasibility Study FSA : Fuel Supply Agreement FY : Fiscal Year starting on 1st July ending on 30th June in Pakistan GENCO : Generation Company GOP : Government of Pakistan GOS : Government of Sindh GPS : Global Positioning System GSA : Gas Supply Agreement GSP : Government of Sindh Province HPP : Hydro Power Plant HVDC : High Voltage Direct Current IEE : Initial Environment Examination IEEJ : The Institute of Electrical Engineers of Japan IGCC : Integrated Coal Gasification Combined Cycle IGFC : Integrated Coal Gasification Fuel Cell Combined Cycle IUCN : International Union for Conservation of Nature IPP : Independent Power Producer JCF : JCF Coal Fuel JCOAL : Japan Coal Energy Center JGC : JGC Corporation JICA : Japan International Cooperation Agency KESC : Karachi Electric Supply Company L/A : Loan Agreement LBOD : Left Bank Outfall Drain LC : Local Currency LCDC : Lakhra Coal Development Company LL-TACSR : Low Electrical Power Loss Thermal Resistant Aluminum Alloy Conductor

xi

Steel Reinforced / Aluminum-clad Steel Reinforced LPGC : Lakhra Power Generation Company LOI : Letter of Intent LOS : Letter of Support LRC : Low Rank Coal MCR : Maximum continuous rating N-5 : National Highway No.5 NDP : National Drainage Program NEDO : New Energy and Industrial Technology Development Organization NHA : National Highway Authority MHI : Mitsubishi Heavy Industries, LTD NEPRA : National Electric Power Regulatory Authority NEQS : National Environmental Quality Standards NPSEP : National Power System Expansion Plan NTDC : National Transmission & Despatch Company NWFP : North-West Frontier Province OB : Overburden O&M : Operation and Maintenance ODA : Official Development Assistance PC : Pulverized Coal PEPCO : Pakistan Electric Power Company PF : Pulverized Fuel PMDC : Pakistan Mineral Development Corporation PPIB : Private Power Infrastructure Board PPP : Public-Private Partnership RAP : Resettlement Action Plan RC : Railway Crossing RO : Reverse Osmosis Rs. : Pakistan Rupees SCA : Sindh Coal Authority S/C : Single Circuit SECMC : Sindh-Engro Coal Mining Company Seg : Segment TCEB : Thar Coal & Energy Board TDS : Total Dissolved Solids TOE : Ton of Equivalent UCG : Underground Coal Gasification UBC : Upgraded Brown Coal USGS : United States Geological Survey WAPDA : Water and Power Development Authority WB : World Bank WUL : Water Usage License W&S : Works and Services Department

Exchange Rate (as of October, 2012)

1 US dollar = 95.4 Pakistan Rupee

1 Japanese Yen = 1.21 Pakistan Rupee

(Unless otherwise specified)

EXECUTIVE SUMMARY

Executive Summary

1

Executive Summary

1. Objectives

The Survey aims the following set objectives in order to achieve a stable power supply in

Pakistan:

1) To study the feasibility of utilizing the Thar coal for power generation,

2) To survey the necessity of developing the coalfield, coal procurement system, and power

generation and transmission, and

3) To survey and examine the potential assistance for infrastructure development, such as

installation of transmission lines, securing water for distribution, and development of

roads for transporting coal.

2. Thar Coalfield Development

(1) Summary of the Thar Coalfield

Sindh Province has a total coal resource of 184.6 billion tons, of which mostly are found in Thar

area having 175.5 billion tons reserve. A brief description of the Thar coalfield and quality of

coal are cited below:

1) Thar Desert Area : 22,000 km2

2) Coalfield Area : 9,100 km2

3) Coal Resources : 175.506 billion tons

4) Chemical Analysis of Coal (AR: as received basis)

Moisture (AR) : 46.77%

Ash (AR) : 6.24%

Volatile Matter (AR) : 23.42%

Fixed Carbon (AR) : 16.66%

Sulphur (AR) : 1.16%

Heating Value (AR) : 5,774 Btu/lb (3,208 kcal/kg)

Coal Rank : Lignite-B to Lignite -A

As the lignite coal has high moisture contents generally, and low heating value, it is usually

suitable for domestic use, not for export.

(2) Status of the Thar Coal Development

The Government of Sindh has established and opened 12 blocks, 1,432km2 in total (Block I to

Data Collection Survey on Thar Coal Field

2

Block XII, of which Block III was divided into two) in the Thar coalfield, of which four blocks

listed below are currently being developed:

Table 1 Current Situation of Each Block in the Thar Coalfield

Block Developer Exploration

License Granted

Bankable F/S Completed

Mining Lease Issued

ESIA for Mining Accepted

Mining Start Planned Coal coming Note

I

Global Mining Company of China 10.0 Mt/a

October 2011 March 2012 May 2012

EIA Public Hearing was done on 27 September 2012

In 2013 3 years from the starting mining

Financing of the project is being arranged.

II

Sindh Engro Coal Mining Company 6.5 Mt/a (Initially 3.5 Mt/a)

August 2009 August 2010 February 2012

EIA public hearing will be held in November 2012

In 2013 3 years from the starting mining

Financing of the project is being arranged

V UCG Pilot Project by GoP

Test burn conducted in December 2011and Syngas produced

Presently the 8-10 MW Power Plant is being established at the cost of Rs.1.8 billion

VI

Oracle Coalfields, PLC

2.4 Mt/a

November 2007

October 2011 April 2012 In near future In 2013

2 years from the starting mining

JDA was concluded with KESC

Source: TCEB

Note: For the mining of coal in Thar, all license/leases are approved by the Thar Coal and Energy Board

Global Mining Company of China have got No Objection Certificate (NOC) from Sindh Environmental Protection Agency (SEPA) on EIA on 29 Nov.2012

Progress of Block I and Block II is ahead among the others planned. Summary of mining plan

for Block II is shown below. In addition, since public hearing for ESIA is completed already,

Block II will be possibly developed by 2013 year.

1)Total production

: 360～380 million tons of lignite

2) Production level : First phase 6.5 million tons （for 1,200 MW） Second phase 13.0 million tons （for 2,400 MW） Third phase 22.8 million tons （for 4,000 MW）

3) Mining method : Surface mining (Open cut method) Truck & Shovel

4) Mining area : One-third of the southern of Block II with an area of about 20 km² is the initial mining area

5) Overburden removal : Overburden from construction and initial stage will be dumped outside the dumping area located in the eastern corner of Block II. The dumping site will have a capacity of 586 million m3 and can accommodate a maximum height of 88 m.

(3) Thar Coal for Power Generation

The coal is lignite having low calorific value of 3,208kcal/kg, which is relatively low compare

with general coal for generation having calorific value of 5,000~6,000kcal/kg, and the high

moisture of around 47%.

As the almost of all coal are imported from abroad in Japan, there is no coal thermal plant

Executive Summary

3

utilizing same quality of coal in Thar. However, there are some countries that have the power

plants utilizing the similar quality of coal of Thar. Therefore there no issues utilizing Thar coal

for power generation.

(4) Applicable Japanese Technology

The average depth of coal in the Thar coalfield is 170 m, wherein the above 50 m is made up of

loose sand.

Open cut mining is suitable in the Thar coalfield. However, most of the coalfields in Japan

adopt underground mining and only minor cases of open cut mining. Hence, there is no

Japanese technology applicable for open cut mining of coal.

3. Power Generation

(1) Development Plan of Power Generation

At present, the developers for the three blocks, namely, Block I, Block II, and Block VI in the

Thar area have initiated their development of power generation, as listed in Table 2.

Table 2 Development Plan of Power Plants Block I Block II Block VI

Developer Global Mining Company of China Engro Powergen Oracle

Capacity 900 MW Initial phase: 600 MW Final phase: 1200 MW Initial phase: 300 MW; Final phase: 1100 MW

Souse : TCEB

(2) Recommended Generation Facilities

Boiler types recommended to be applied in the Thar coalfield are CFBC and PC with up to 300

MW(Sub Critical) and 600 MW(Super Critical ) unit generation capacities, respectively.

As for the cooling system, since ambient temperature is very high in the Thar area, efficiency

needs to be decreased in case of dry condenser cooling type. Therefore, it is recommended to

apply wet cooling system.

(3) Applicable Japanese Technology

Japanese clean coal technologies such as IGCC and gasification, take into account

high-efficiency and reduction of environmental burdens. However, there have been protests

against these technologies at present, and corresponding price values are relatively high.

Therefore, Japanese technology is not recommended to be applied in the Thar coalfield at

present.


4

However, if the mine-mouth power plants utilizing the Thar coal will operate steadily in the

future, it is necessary to reconsider the clean coal technology of Japan.

4. Infrastructures

Important infrastructures such as ttransmission line, water supply, effluent disposal, and road

are currently under development as shown in Table 3. The budget have been allocated for the

latter three infrastructures by the Government of Sindh, and the design and construction have

been started. As for the transmission line, it is necessary to provide support for the

construction fund.

Table 3 Current Situation of the Development of Infrastructures

No. Type of Infrastructure Budget Allocation Progress

1. Transmission Line Budget is not allocated F/S is completed already

2. Water Supply Budget is allocated by the Government of Sindh Construction stage will start in 2013

3. Mine Water Disposal Budget is allocated by the Government of Sindh Construction stage will start in 2013

4. Road Budget is allocated by the Government of Sindh Construction stage will start in 2013

Source：TCEB

5. Candidate Projects for Japanese Yen Loan

(1) Transmission Line

Candidate projects for Japanese yen loan are shown in Table 4. It is noted that there are two

alternatives applicable as conductor for transmission lines. However, although its initial cost is

high, it is recommended to adopt LL-TACSR/AS conductor of Japanese technology based on

the conclusion derived from the financial analysis.

Outline of the candidate projects are described in Chapter 6.

Table 4 Candidate Projects for Japanese Yen Loan Unit: Rs. million

Description Alternative 1 Alternative 2

AAAC “Araucaria”

LL-TACSR/AS 750 mm2

1) Construction of the 500 kV Transmission Line (250 km, 2 cct.) 15,356.35 20,214.132) Expansion of the Matiari S/S (2 line bays with SR) 1,349.35 1,349.35

Total Construction Cost 16,705.70 21,563.48

Source: Prepared by the JICA Survey Team

Note: Above cost is based on PC-1 for interconnection of Thar Coal Based 1200 MW Power Plant with NTDC system.

Executive Summary

5

Above cost excludes price escalation, contingency, consulting services of eligible cost, non-eligible cost, interest and commitment charge.

(2) Power Generation Plants

Currently, the construction of power generation plants is planned by private sector by IPP.

Where the investment for the IPP by private sector will not proceed, JICA has potential to

finance the Yen loan to construct the power plants through the Government of Pakistan.

6. Environmental and Social Considerations

The candidate project for Japanese yen loan involves the construction of a 500 kV

transmission line with a 250 km length. The project needs to compensate affected farmers for

their agricultural land even though it is expected that said project will not cause destruction of

the natural protected area, and deforestation. According to JICA guidelines, the project could

be classified as Category A.

Moreover, according to a local regulation in Pakistan, the candidate project is classified as

“transmission lines (11 kV and above) and grid station” in Schedule II; and hence, the project

needs to undergo the official procedure for EIA approval as prescribed under the Pakistan

legislation.

In addition, since the candidate project is applied as an indivisible project, it is necessary to

undergo the procedure for EIA as a relevant project. Screening and categorization of

indivisible projects are shown in Table 5.

Table 5 Screening and Categorization of Indivisible Projects

Projects Categories by JICA Guideline, 2010 Appendix3

PEPA (Review of IEE and EIA)

Regulations, 2000

Coal Mining Projects A Sensitive Sector EIA

Thermal Power

Generation A Sensitive Sector EIA 1,200MW (over 200MW)

Road Project A Sensitive Sector EIA Federal or provincial highways or major roads greater than Rs. 50 million in value.

Water supply A Sensitive Sector EIA Major urban water supply infrastructure, including major head works and treatment plants.

Mine Water Disposal A Sensitive Sector (as a reservoir) IEE

Dams and reservoirs with a storage volume less than 50 million m3 or surface area less than 8 sq km)

Source: JICA Survey Team based on JICA Guidelines and PEPA Regulations


6

7. Economic and Financial Analysis

Economic and financial analyses were done for constructing 500kV 250km transmission line

and 1,200MW power generation.

(1) FIRR and FNPV

Benefits and costs are compiled and calculated considering the 2012 prices in order to obtain

the financial investment rate of return (FIRR). Moreover, the opportunity cost of capital (12%)

is used as the discount rate for calculating the financial net present value (FNPV).

The power generation project showed a positive NPV and slightly higher return than the cut-off

rate for FIRR. However, it should be noted that this return can only be achieved if the cost of

the generation is immediately translated into tariff. If the tariff approval by NEPRA and the

notice of the government’s gazette are delayed and/or the petition on tariff increase is partially

approved or disapproved, the rate of return of the generation project will reduce accordingly.

Both alternatives for the transmission project showed negative NPVs and below the cut-off

rate for FIRR (12%). The FIRRs of the transmission projects are significantly lower than the

cut-off rate. This is because the same fixed tariff is applied regardless of the length of the

transmission line. The longer the transmission line, the lower the IRR because of the higher

capital cost. However, as the peak demand increases after the completion of other Thar

generation projects, the FIRRs of the transmission project alternatives are expected to

increase.

Table 6 FIRR and FNPV

Case FIRR FNPV (Rs. million) FNPV (US$ million) Generation 14.1% 22,765 239 Transmission (Alternative 1) 4.0% (8,479) (89) Transmission (Alternative 2) 1.6% (13,140) (138)


The FIRR of Transmission (Alternative 2) is lower than Transmission (Alternative 1). This is

due to the fact that the capital cost of the former is more expensive than the latter at the initial

stage, while the expected transmission loss is almost the same between the two alternatives.

However, if the cost for accommodating the future expansion of generation is taken into

consideration, the additional cost of Alternative 2 amounting to Rs.0.8 billion is significantly

smaller compared to Alternative 1 at Rs.13 billion. As a result, the total cost of Alternative 2

amounting to Rs.22.9 billion becomes smaller than Alternative 1 at Rs.30.4 billion, and hence,

the FIRR of the former is expected to be higher than that of the latter.

Executive Summary

7

(2) EIRR and ENPV

Benefits and costs are compiled and calculated using the economic cost, in order to obtain the

economic internal rate of return (EIRR). Moreover, a social discount rate of 12% is used to

calculate the ENPV.

Table 7 EIRR and ENPV

Case EIRR ENPV (Rs. million) ENPV (US$ million)Generation + Transmission (Alternative 1) 28.9% 242,181 2,539 Generation + Transmission (Alternative 2) 28.9% 237,995 2,495


In both cases, the economic benefit is ensured as the EIRRs are significantly higher than the

cut-off rate (12%), and the ENPVs are positive. Thus, the project can be justified for

implementation as it contributes to the national economy’s enormous savings from the

alternative energy sources.

Location Map

IRAN

Islamabad

Lahore

INDIA

CHINA

AFGHANISTAN

Karachi

PAKISTAN

ARABIAN SEA

Thar Coalfield

Source：UNITED NATIONS

Source：JICA Survey Team

CHAPTER 1 INTRODUCTION

Chapter 1 Introduction

1 - 1


1.1 Background of the Survey

1.1.1 Present Situation of the Power Supply and Demand

In the Islamic Republic of Pakistan (hereinafter referred to as “Pakistan”), the power demand

has increased to 9.3% per annum in the past ten years along with the economic growth of the

country. However, the power supply capability could not catch up with the power demand that

continue to increase year after year. Consequently, about 6,105 MW power supply-demand

gap was recorded in the summer of 2011. While the peak demand was 18,860 MW, the actual

generating capacity is 12,755 MW only, though the installed capacity is approximately 21,000

MW. Under these circumstances, people of the country have been forced to accept the

scheduled power outage for about 8 hours a day on the average. The power outage has

caused difficulties in people’s lives and development of agriculture, which needs power for

irrigation. The industry has also suffered a great loss due to power outage, causing

unemployment and high cost of finished products. Therefore, reduction of the power

supply-demand gap on the power sector of the country is urgently required.

Table 1.1-1 shows the peak generation power, peak demand, power shortage, and power

shortage ratios against the peak demand from 2001 to 2011, while Figure 1-1.1 illustrates the

trend of the parameters shown in Table 1.1-1.

Table 1.1-1 Peak Power Generation and Demand

Year

Peak Generation Power [MW]

Peak Demand

[MW]

Power Shortage

[MW]

Power Shortage Rate [%]

2001 10,894 10,459 -435 -4.2

2002 10,958 11,044 86 0.8

2003 11,834 11,598 -236 -2.0

2004 12,792 12,595 -197 -1.6

2005 12,600 13,847 1,247 9.0

2006 13,292 15,838 2,546 16.1

2007 12,442 17,398 4,956 28.5

2008 13,637 17,852 4,215 23.6

2009 13,413 18,583 5,170 27.8

2010 13,163 18,521 5,358 28.9

2011 12,755 18,860 6,105 32.4

Source: Presentation Documents for Participants of 10th SMC of National Institute of Management, Karachi


1 - 2

Source: Presentation Documents for Participants of 10th SMC of National Institute of Management, Karachi

Figure: 1.1-1 Peak Power Generation and Demand and Power Shortage

For the power generation mix in the country, almost 37% comes from oil thermal, 31% hydro,

30% gas turbine, 2% nuclear, and 0.1% coal thermal. Coal thermal power generation in the

neighbouring countries India and China are more than 50% and 80%, respectively. Compared

to these countries, the dependency on coal thermal is relatively low in Pakistan. Oil thermal

generation is the most dependable fuel in Pakistan at present; however, oil cost remains high

and is fluctuating in the international market, which indicates that oil unfortunately cannot be a

suitable fuel. Utilizing coal and renewable energy including hydro, which are presently

available energy sources in Pakistan for generation, are the most essential means of securing

stable power.

1.1.2 Political Measures on Energy Sector and Development Plan

In "Vision 2030" and "Medium Term Development Framework (MTDF) 2005-2010 ", which are

highly ranked policies of the country, Pakistan formulates the energy policies consisting of i)

developing the power sources by utilizing the domestic resources such as hydro power, coal,

and natural gas, ii) promoting the power generation by public private partnership, iii)

promoting the privatization of all power sectors, and iv) reducing the power system losses. In

addition, the Government of Pakistan has announced its energy policy that the power supply

should increase to around 24,000 MW by 2020, in which 13,200 MW is expected to be from

coal thermal generation.

Under such circumstance, JICA has decided to conduct data collection survey (hereinafter

referred to as “the Survey”) in order to collect and organize the necessary information to

examine potential assistance for infrastructures, such as transmission line, water supply and

road access.

0

5,000

10,000

15,000

20,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Year

Peak Generation PowerPeak DemandPower Shortage

Pea

kGen

erat

ion

Pow

er,

Pea

k Dem

and,

Pow

er S

horta

ge [M

W]


1 - 3

1.1.3 Latest Government Decision

According to a write up released on 4 October 2012, the Government of Pakistan has decided

on 3 October 2012 that Thar coal will be used for coal based power generation, and all

conversions of existing and construction of new power projects will be designed on the basis of

Thar coal specification, throughout the country. The decision encourages both public and

private sectors to join in the development of Thar

coal.

1.2 Objectives of Survey

1.2.1 Objectives of the Survey

For achieving stable power supply in Pakistan, the

following are the set objectives of the Survey:

1) To study the feasibility of utilizing the Thar coal

for power generation;

2) To survey the necessity of developing the

coalfield, coal procurement system, generation

and transmission; and

3) To survey and examine the potential assistance for infrastructures such as construction of

transmission lines, securing water for generation and development of roads for transporting

the coal.

1.2.2 Survey Areas

The main survey area is the Thar coalfield shown in Figure 1.2-1. In addition, as reference,

existing coalfield and coal thermal power plant in Lakhra, as well as Sonda coalfield are

included in discussing the subject survey area.

1.3 Scope of the Survey

The following are the contents of the Survey:

1) Review of coalfield developments in Pakistan;

2) Collect and analyze the data on the development of Thar coalfield;

3) Review power development plan;

Source: JICA Survey Team

Figure 1.2-1 Location of Objective Area

Thar Coal Field

Islamabad

Lahore

Karachi Sonda Thatta Coal Field

Lakhra Coal Field


1 - 4

4) Review power generation development plan;

5) Review the present infrastructures surrounding and/or relevant to the coal thermal power

station;

6) Conduct economic and financial analyses; and

7) Hold seminar in Karachi in January 2013.

1.4 Survey Schedule

The entire survey schedule is about six months, from September 2012 to February 2013. The

first field survey in Pakistan was conducted from September 17, 2012 to October 16, 2012.

The second and third field surveys in Pakistan are to be conducted in November 26, to

December 15, 2012 and January 2013, respectively.

Submission schedule of reports during the survey period is as follows:

1) Inception report: end of September 2012

2) Interim report: middle of November 2012

3) Draft final report: early January 2013

4) Final report: middle of February 2013

CHAPTER 2 BASIC DATA AND INFORMATION

Chapter 2 Basic Data and Information

2 - 1


2.1 Coalfield Developments in Pakistan

2.1.1 Coal Role in Pakistan National Energy Policy

Pakistan does not have a national coal policy. The Government of Pakistan National Mineral

Policy (September 1995) states clearly in its Chapter 2 that “minerals are a provincial subject

under the Constitution, except oil, gas, and nuclear minerals and those occurring in special

areas”. Therefore, coal development works are under the provincial governments. Small

private mining companies are producing more than half of coal production in Pakistan for

supply to the brick and cement industries in each province. The GoP announced a private

power policy entitled “Policy for Power Generation Project 2002” which focuses on the use of

indigenous resources, especially coal, for power generation1. The Thar coal development

goes forward under the policy.

Coal had historically been the primary fossil fuel in Pakistan with the major consumers being

railways and cement, fertilizer and power plants. This was true until large deposits of oil and

natural gas were discovered in the 1960s2. As of 2006, coal shared 7% of Pakistan’s total

primary energy consumption, compared to natural gas at 45%, oil at 33%, and hydroelectricity

at 13% (EIA, 2008). Given the increasing costs of imported energy, Pakistan is, however, now

seeking to expand the share of coal in its energy mix to 19% by 2030 and to 50% by 2050.3

The Energy Security Action Plan has set a target of generating 20,000 MW power from coal by

2030. There is presently only one plant in the country that uses coal as fuel, i.e., the 150 MW

Lakhra Power Plant in Lower Sindh. However, the coal thermal plant can only presently

generate 35 MW power using coal from Lakhra.

There is limited production of oil and natural gas, and even more limited production of coal. No

coal has been produced in the Thar coalfields, the seventh largest lignite field in the world,

after being discovered in the 1990s. Some amounts of coals are imported, which have much

higher quality than the indigenous coal in Thar.

According to Pakistan Energy Yearbook 2011, total coal consumption, coal domestic

production, and imported coal in 2010-11 were 7,717,149 tons, 3,450,091 tons, and 4,267,058

tons, respectively. Coal comprises 10.4% (4,025,380 TOE) of the final energy consumption

(38,841,783 TOE) in 2010-11. The occupancy state of coal in the total energy consumption is

stably low at 10% to 13%. Main users of coal are brick-kiln and cement industries. Pak Steel

1 Raja Pervez Ashraf, Federal Minister of Water & Power, July 2008 2 Coal, Pakistan & Gulf Economist, July 2001 3 The figures are changed in NTDC National Power System Expansion Plan 2011-2030


2 - 2

uses imported bituminous coal at 429,000 tons/year and WAPDA coal thermal power plant

burns up only 93,000 tons of Lakhra coal per annum. While Lakhra Coal Development

Company (LCDC), a main coal supplier to GENCO, says that their original consumption plan

was about 750,000 tons per annum, and 300,000 tons per annum as of 1996 4 , their

consumption as of 2010-11 is only 93,000 tons as stated above. The decrease in consumption

is only due to GENCO Lakhra Power Station. The LCDC mine has a capacity of production of

800 tons/day (800 tons x 300 days = 240,000 tons/annum). However, LCDC’s production level

is less than 200,000 tons/annum due to WAPDA’s reduced consumption. Summarizing the

above, coal plays a minor role in the energy planning in Pakistan.

After Thar coalfield was discovered early in the 1990s, Thar coal has drawn the attention of

energy policy planners as an unlimited indigenous fuel. Thar coalfield has immense coal

resources of 175 billion tons that would be sufficient for generating 100,000 MW of electricity

for 300 years. However, the development of Thar coalfield made not the slightest progress for

a long time.

“Circular debt, week financial position of energy companies, falling gas production, high

dependence on oil and gas at over 80%, low exploitation of indigenous coal and hydro

resources, and unutilized power generation capacity owing to fuel supply constraints are

leading to severe energy shortages.”5.

The GoP has decided that in the future, only Thar coal would be used for thermal power

generation. In the future, all conversions of existing power projects and construction of new

ones will be on the basis of Thar coal specifications throughout the country6. This is the

foundation of an energy policy which is based on Pakistan’s indigenous resources today.

2.1.2 Coal-related Organization

Organizations related to coal development in the federal government are shown in Figure

2.1-1. Also, the Sindh Province organization chart on Thar coal development is shown in

Figure 2.1-2.

4 NEDO study 1996 5 Presentation by Aamer Mehmood, Research Officer, Planning Commission, Planning & Development Division at IEEJ, May 2012 6 News, Oct. 5, 2012


2 - 3

Source: JICA Survey Team

Figure 2.1-1 Federal Organization Chart on Energy and Power

Source: TCEB

Figure 2.1-2 Sindh Province Organization Chart on Thar Coal Development

Coal and Energy Development Department

Major Task- Development of coal resources - Grant of license, permits, leases for coal mining

Government of Sindh Province

Sindh Coal Authority

Main Subjective

- To attract potential investors to establish integrated projects of coal-mining and coal-fired power plants in Sindh

Major Task - To develop infrastructures for coal related projects - To accelerate the pace of activities relating to responsible for

planning, promoting, organizing, undertaking appropriate projects in this behalf and implementing programmed for exploration, development, exploitation, mining, processing and utilization of coal

Thar Coal and Energy Board Major Task - One-stop organization on behalf of all the ministries, departments

and agencies of the GoP and the GoS in the matters relating toformulation of policies

- To accord approval of projects for coal mining in Thar and for coalfired power generation plants or for other uses of Thar coal forother uses of Thar coal.

Compositions of Thar Coal and Energy Board - Chief Minister Sindh - Federal Minister for Water & Power - Federal Minister for Finance - Federal Minister for Law and Justice - Deputy Chairman, Planning & Commission - Province Minister (Irrigation) - Province Minister (Revenue) - Province Minister (Finance) - Woman MNA from Thar - region - Federal Secretary, Ministry of Water and Power - Chief Secretary, Government of Sindh - Secretary, Coal & Energy Development Dept. - One Eminent Person - Managing Director, TCEB

Government of Pakistan

Ministry of Planning and Development

(MPD)

Ministry of Petroleumand Natural Resources

(MPNR)

Ministry of Waterand Power

(MPNR)

Ministry of Industry (MOI)

Geological Surveyof Pakistan

(GSP)DISCO

GENCO

NTDC

PPIB

NEPRA

Pakistan MineralDevelopment Coap.

(PMDC)

Lakhra CoalDevelopment Coap.

(LCDC)

Oil and GasDevelopment Coap.

(OGDC)

Sui Northern GasCoap.

Sui Southern GasCoap.

Pakistan State OilCoap.

PAKISTAN PETROLEUMLIMITED

KESC

IPPS

Private


2 - 4

2.1.3 Coalfields in Pakistan

The presence of coal deposits in Pakistan was known before independence. Seventeen

coalfields are confirmed, locations of which are shown in Figure 2.1-3, and the other coal

occurrences are observed all over Pakistan. Coal resources in Punjab and Balochistan

provinces were developed before the World War II. Its economic value was highlighted in 1980

when large coal resources were discovered in the Lakhra and Sonda areas of Sindh Province.

In the 1990s, the discovery of Thar coalfield depositing 175 billion tons at an area of about

9000 km2 in the Tharparker District of Sindh Province puts Pakistan up as the world’s fourth

largest coal resources

country.

Mining takes place in a

number of areas.

Recently, the

production from

Balochistan Province

was more than half of

Pakistan’s annual

output. All coals are

extracted manually and

come from small

underground mines.

There are several

hundred mines (IEA

2004).

The well-developed

coalfields in Pakistan

are located in Punjab, Balochistan, and Sindh, which are situated in three distinct areas

termed as coal provinces, while there are other coalfields in NWFP and the northern state,

which are being exploited on small scale. Figure 2.1-3 shows the positions of these coalfields.

Figure 2.1-3 Coalfields of Pakistan


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(1) Sindh Coalfields

Sindh Province has total coal resources of 184.6 billion tons. The quality of coal is mostly

lignite-B to sub-bituminous A-C. Locations of six major deposits are shown in Figure 2.1-4.

Brief descriptions of major coalfields are as follows:

1) Lakhra Coalfield a. Distance from Karachi 193 km b. Area 1,309 km2 c. Coal Reserves 1.328 billion tons d. Chemical Analysis of Coal:

Moisture (AR) 28.9% Ash (AR) 18.0% Volatile Matter (AR) 27.9% Fixed Carbon (AR) 25.2% Sulphur (AR) 4.7% to 7.0%

Source: Original Base Map of Sindh Coal Authority (Coalfields of Sindh)

Figure 2.1-4 Coalfields in Sindh Province


2 - 6

Heating Value (Ave.) 4,622 Btu/lb to 7,554 Btu/lb

(2,568 kcal/kg to 4,197 kcal/kg)

e. The exploration and evaluation of North Lakhra coalfield have been sponsored with an estimated cost of Rs.38,516. The study is presently at the exploration stage.

2) Sonda-Jherruck coalfield a. Distance from Karachi 150 km (approx.) b. Identified Area 1,206 km2 c. Shallowest Coal Bed 37.8 m d. Deepest Coal Bed 265.28 m e. Coal Resources 7.112 billion tons f. Chemical Analysis of Coal:

Moisture (AR) 31.23% to 34.72% Ash (AR) 7.69% to 14.7% Volatile Matter (AR) 27.9% Fixed Carbon (AR) 25.2% Sulphur (AR) 1.38% to 2.82% Heating Value (Ave.) 6,780 Btu/lb to 11,029 Btu/lb


3) Indus East coalfield a. Explored Area 616 km2 b. Drill Holes 16 c. Thickest Coal Bed 2.40 m d. Coal Resources 1.5 billion tons e. Chemical Analysis of Coal:

Moisture (AR) 33.1% Ash (AR) 15.2% Volatile Matter (AR) 27.7% Fixed Carbon (AR) 23.9% Sulphur (AR) 2.6% Heating Value (Ave.) 6,300 Btu/lb to 8,000 Btu/lb

(3,500 kcal/kg to 4,444 kcal/kg) Coal Rank Lignite-B to Sub-bituminous-B

4) Thar coalfield a. Thar Desert Area 22,000 km2 b. Coalfield Area 9,100 km2 c. Total Drill Holes 217 d. Coal Resources 175.506 billion tons e. Chemical Analysis of Coal:

Moisture (AR) 46.77% Ash (AR) 6.24% Volatile Matter (AR) 23.42% Fixed Carbon (AR) 16.66% Sulphur (AR) 1.16% Heating Value (Ave.) 5,774 Btu/lb (3,208 kcal/kg) Coal Rank Lignite-A to Lignite-B ------Data Source7

5) Metting-Jhimpir coalfield The coalfield is situated 128km from Karachi, The area of 896km2 is near the railway station. Small amount of coal are produced.

6) Badin coalfield The coalfield is new still in geological exploration stage. Section 2.3.3 shows the outline.

7 Harnessing of Coal Resources of Sindh Province December 2003, Sindh Coal Authority


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(2) Balochistan Coalfields

The coal seams in Balochistan are found in Ghazig Formation of Eocene Age. The quality of

the coal is sub-bituminous A to high volatile bituminous B. There are five known coalfields that

mostly lie around Quetta.

1) Sor-Range - Deghari Coalfield

Sor-Range - Deghari coalfield lies 13 km to 25 km southeast of Quetta covering an area of

about 50 km2 and is easily accessible through a metalled road from Quetta. The northern half

of the field is known as Sor-Range while Deghari is situated in the southern end of the field.

The thickness of the coal seam varies from 1.0 m to 2.0 m but in Sor-Range, seam sections up

to 5.0 m have been encountered. The Sor-Range coal is of better quality, with low ash and

sulphur content. The quality of the coal is high sub-bituminous A to high volatile bituminous B.

The following is the average composition:

Moisture 3.9% to 18.9% Volatile Matter 20.7% to 37.5% Fixed Carbon 41.0% to 50.8% Ash 4.9% to 17.2% Sulphur 0.6% to 5.5% Heating Value 11,245 Btu/lb to 13,900 Btu/lb


2) Chamalang Coalfield

This coalfield is newly discovered and needs detailed exploration and development. The GSP,

which did the preliminary work in these areas, has indicated that it has a good potential. The

quality of coal is better compared to the coals produced in the rest of Balochistan. The rank of

coal ranges from high volatile

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