Conversion of 3 imported projects to Thar coal: PPIB rejects technical proposal of SECMC

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The Private Power & Infrastructure Board (PPIB) has rejected technical proposal of Sindh Engro Coal Mining Company (SECMC) prepared for conversion of three imported coal-fired projects to Thar coal as the proposal has neglected commercial, legal and environmental aspects of the plan.

This was conveyed by Managing Director PPIB, Shah Jahan Mirza, in a letter to Chief Executive Officer (SECMC), in response to an email.

On February 10, 2022, SECMC sent M/s Fitchner’s technical proposal for conducting feasibility study on conversion of imported coal Independent Power Producers (IPPs) on Thar coal, seeking comments of PPIB.

Managing Director argued that as per directives of Ministry of Energy (Power Division), a complete bankable feasibility study covering technical, financial, legal and environmental aspects is required to assess both viability and economic bankability in order to convert three imported coal based IPPs to Thar coal.

Accordingly, Terms of Reference (ToRs) were prepared which were duly shared with SECMC. However, as per preliminary review of the proposal submitted by Fitchner, the proposal does not align with the requirements of the ToRs and is only limited to technical aspects whereas other aspects including commercial, legal and environmental have been neglected.

Managing Director PPIB reminded CEO SECMC that during the discussions held among representatives of PPIB and SECMC, it was decided and agreed that SECMC will engage International Consultant to conduct complete bankable feasibility based on PPIB’s shared ToRs.

He also highlighted that financial assessment proposed to be carried out by consultants seems to be an exercise to evaluate only base cost estimates for conversion of projects without much details whereas as per ToRs financial assessment includes cost benefit analysis, sensitivity analysis, impact on overall tariff, impacts on tariff with incremental conversion (starting from 20 percent Thar coal till maximum blended) and present value of saving accrued over the remaining term of project in terms of price difference.

According to MD PPIB the deliverables must also be aligned with the requirements under the ToRs. Regarding time schedule, MD PPIB has apprised that to monitor the progress by Panel of Experts (PoE), consultant needs to submit inception report at the start of the studies followed with mid-term report before submitting draft report for the approval of the PoE.

The PPIB has requested SECMC to approach Consultant for necessary revision in the proposal based on ToRs for conducting a complete bankable feasibility study covering all technical, legal, financial and environmental aspects.

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