Dubai’s Al Maktoum to invest 15% equity requirement in Pakistan coal conversion project

A truck drives past a sign depicting a coal-mining site in Islamkot, Tharparkar, Pakistan, September 20, 2017. Picture taken September 20, 2017. (Reuters)

• Exact cost of the coal-to-gas and coal-to-liquid processing facility not yet decided but Al Maktoum will invest 15% of equity requirement
• Last years, Pakistani Prime Minister Imran Khan said his government had decided not to generate any more power using coal

KARACHI: Senior member of the Dubai royal family, Sheikh Ahmed Dalmook Al Maktoum, will invest around 15 percent of the equity requirement of a coal-to-gas and coal-to-liquid (C2L) processing facility to be set up in Pakistan’s southern Thar desert, officials said on Wednesday.   
Al Maktoum group of private companies mainly focuses on energy, infrastructure, mining, LNG terminal development, oil and gas commodity trading and education and agriculture projects. His business is also a key strategic stakeholder in Oracle Power PLC, a United Kingdom-based power and natural resource project developer.
The exact cost of the project is not yet decided but Al Maktoum will invest 15% of the equity requirement, Naheed Memon, CEO of Oracle Power, told Arab News. 
“He is also an investment partner in our projects in Pakistan in Thar; he has committed to invest 15% of the equity requirements,” Memon said on the sidelines of a stakeholder consultative conference held in Karachi to deliberate upon a coal conversation policy for Thar deposits.   
The Thar desert is home to the largest lignite coal reserves in the world at an estimated 175 billion tons - the equivalent of 50 billion tons of oil and 2000 trillion cubic feet of gas, according to the Geological Survey of Pakistan.   
Four Pakistani leading coal mining and power generation companies are planning to convert huge deposits of coal into gas and liquid in the Thar desert in southern Sindh province, as the country moves to ban new coal-fired power plants.
Last years, Pakistani Prime Minister Imran Khan told a virtual gathering of global leaders: “We have decided we will not have any more power based on coal … We have already scraped two coal power projects which were supposed to produce 2600 megawatt of energy. By 2030, 60 percent of all energy produced in Pakistan will be clean energy.”
Chinese companies are financing and building most of Pakistan’s coal plants through the over $60 billion China-Pakistan Economic Corridor (CPEC), a flagship of China’s belt and road initiative.
Memon said coal to gasification was a “new technology very dependent on international commodity prices of oil and gas and required substantial investment.” 
She said investment requirements were similar to coal mining for power generation; the gasification process also involved mining of coal and then its conversion into syngas, or synthesis gas, by installing gasification units. 
“Approximately we are talking about $2 billion to $3 billion to produce, for example, two million ton of urea - that is the kind of money we are looking at,” said Memon, whose company is operating along with China National Coal Development company (CNCDC), in Thar.  
Participants at Wednesday’s conference called for a comprehensive coal gasification policy to kickstart projects in the country.  
“We have proposed to the government of Pakistan that an appropriate framework be put in place,” Memon said, adding: “The utilization could be for line gas, urea, and  liquid petroleum base products for this sort of development to take place a policy has to be put in place.”  
Nadeem Babar, a special advisor on petroleum, assured the participants that all energy policies would be made in consultation with stakeholders.  
“We have not made any energy policy without consulting the stakeholders during two and half years of our tenure and the process will continue,” he said, addressing the conference. “We need to convert our energy sector into commodity … the government gives great importance to coal gasification and conversion into liquid petroleum”.  
Pakistan currently has four coal-fired power plants worth $6.7 billion, with three using imported coal. The combined capacity of these plants set up under CPEC is 4,620 MW.  
In the last five years, the share of coal-based power in Pakistan’s energy mix has gradually increased from almost negligible to more than 20%, according to the National Electric Power Regulatory Authority (NEPRA).  
The share of coal-based electricity generation in total thermal generation during the fiscal year 2019-20 was 31.84%, up from 18.71% in 2018-19. The utilization of coal-based power plants during fiscal year 2019-20 was almost 66% of total installed capacity of coal-based power plants, NEPRA data showed. 
Coal utilization is set to expand further as five more power plants, built under the CPEC umbrella at a cost of more than $3.3 billion, are scheduled to commence operations by the end of 2026. Among these upcoming power plants, four will use Thar coal, according to the Private Power and Infrastructure Board (PPIB).