Shenhua group likely to invest $1.5 billion on Thar Coal

[LahoreEstate]

AFTAB CHANNA
KARACHI (September 07 2009): A Chinese state-run company, Shenhua Group Corporation, which had rolled back its plan in 2006, is likely to invest $1.5 billion for setting up 1,000 Megawatts coal-fired plants, it is reliably learnt.

The Sindh government had started re-establishing contacts with the Chinese firm and was giving assurances that no hindrance would be put in place in the project, sources told Business Recorder.

They said President Asif Ali Zardari, during his last visit to China, had also met with the representatives of the Shenhua Group Corporation and assured them of full co-operation by the government.

According to the sources, the federal government had contacted the Chinese firm in October 2006 to start work at Thar Coal sites and offered increased electricity rates. But, the company rolled back its plan after the National Electric Power Regulatory Authority (Nepra) fixed the lowest power purchase rates, they added.

Since it was made compulsory that tariff once agreed would not change for 30 years, so the company was insisting to increase the tariff, which would be viable enough to run the business. The rolling back of the plan was a major setback for the country as it was facing the worst ever electricity shortage, they opined.

Recently, a delegation, nominated by the Sindh government, headed by a member of the Thar Coal Energy Board, Syed Asad Ali Shah, and Secretary Mines and Mineral Development Department, Aijaz Khan, went to China and held talks with the representatives of the Shenhua Group Corporation for the restart of work on Thar Coal, they further said.

Sources said the 'ill attitude' of the federal authorities during the tenure of previous regime had compelled the firm to roll back its plan worth $1.5 billion, causing a big loss to the country. The Shenhua Group Corporation had already carried out feasibility studies of Block-II of Thar Coal and the work would shortly be started if the company returned, they said.

They said another Chinese Company, Sino Coal, was playing an active role in restoring the contacts between the government and the Shenhua Group Corporation and it was hoped that at least 1,000MW electricity would be added to the national grid in three years.

Shenhua had vast experience in generating electricity from coal-fired power plants and completed detailed feasibility in collaboration with Geological Survey of Pakistan, they said.

The sources said the uniformed pricing formula for electricity purchase was needed to guarantee foreign investors to set up coal-fired power plants. Many foreign and local companies had carried out feasibility studies confirming availability of vast coal reserves but they were reluctant to start power generation due to 'unfair' pricing formula for the coal fired power generation, sources further said.

http://brecorder.com/index.php?id=958339...=&supDate=