Sindh coal project to get $26-mn WB loan

Faisalabad: World Bank will provide technical assistance Credit of approximately $26 million for Sindh Coal Technical Assistance Project (SCTAP), while Pakistan Government would arrange $6 million for this project.

In a project report, Michael Stanley, Lead Mining Specialist Oil, Gas, Mining and Chemicals Department of World Bank said that this Project will help the Governments of Sindh and Pakistan strengthen the enabling policy, legal, and regulatory frameworks conducive to new investments in the coal-to-energy sector; and to assist the Governments of Sindh and Pakistan to attract qualified private investors to develop Thar coal deposits and build new capacity for coal thermal power generation, guided by high standards of environmental and social sustainability.

The Project will also ensure that the coal-to-power sector development responds to the needs of Pakistan's long-term energy strategy. Expected Project outcomes would be: (i) various policy, legal and regulatory instruments, consistent with international good practice, used by the Governments of Sindh and Pakistan in developing coal-to-power sector; and (ii) bidding and negotiations leading to financial close on new investment into at least one coal mine and at least one independent power producer (IPP) in Thar, he added.

Commenting on the first Component, WB expert Michael Stanley said that this component Provide policy, legal and regulatory advisory services to key government agencies and other counterparts in order to facilitate coal-to-power sector development, including ancillary infrastructure development, and complete the transaction for a selected Thar coal block.

To this end the project will assist in developing the coal sector policy and the coal development road-map in line with Pakistan's long-term energy strategy, updating applicable laws and regulations (including those related to mineral licensing and tendering procedures), and setting up operational environmental and social management framework for coal-to-power sector.

The project will also strengthen the capacity of the provincial and federal governments to improve sector governance and attract quality private investments.

Second Component related to Transaction Advisory Services, which will support of the governments' efforts to attract quality private investors to develop Thar coal and to produce thermal power, the project will (i) update, or develop where needed, key technical, financial, market, and local impact analysis and other information relevant to the investors, including a basin-wide land-use plan for Thar; and (ii) provide transaction advisory services and due-diligence monitoring for a coal mine and an IPP transactions in a selected block of Thar, including preparation / issuance of requests for proposals, and assistance to the government with bid evaluations, negotiations, and financial closing, he mentioned.

Commenting on the Third Component, Michael Stanley said that this related to Project Management and Communications. Finance costs associated with managing the proposed Project, including project co-ordination among implementing agencies, procurement and financial management, and environmental and social management.

The project will also assist the Government of Sindh and Government of Pakistan to develop communications and outreach strategy with regards to the Project and to improve public consultations. Michael Stanley said that Pakistan faces increasing economic hardship through reliance on high-cost, imported energy resources used in end-use markets.

The healthy energy demand growth is expected to continue in the coming two decades, with Pakistan requiring an estimated additional 35,000 MW of power generation capacity by 2020, according to GoP's projections. The GoP expects a significant demand-supply gap to remain even after all low-carbon energy resources (such as indigenous hydropower, gas, and renewables) are matched to demand:

Pakistan