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KESC signs pact for setting up coal-based power plant

The Karachi Electric Supply Company (KESC) signed a joint development agreement with the Sindh Coal Energy Limited (SCEL) and UK’s Oracle Coalfields on Monday for setting up a coal-based power plant.

The agreement defined the respective responsibilities of each party and marked another key milestone for the KESC following the signing of an memorandum of understanding with Oracle on December 12, 2009 for the Thar coal power project – a venture that aims at developing a mine-mouth coal-powered generation facility at Block-VI of Thar coal fields, having an initial capacity of 300 MW and potential upside of 1,100 MW.

At the signing ceremony, both parties expressed their commitment towards ensuring the successful implementation of the pact and agreed to coordinate their efforts to promote and develop the project.

The integrated arrangement will enable the KESC to secure a long-term fuel supply from the SCEL at competitive prices, while the latter will own and operate the mine that will be integrated with the KESC’s mine-mouth power plant.

With the signing of this strategically important agreement for coal-based power generation by utilising readily available indigenous coal reserves, the KESC aims at not only bridging the prevailing power demand and supply gap, but also wants to translate this benefit into a lower end-user tariff as compared to power generation via the 3.7 times more expensive furnace oil.

The SCEL and Oracle have completed the coal-mine feasibility study and are in the process of carrying out an environment and social impact assessment, whereas the KESC is engaged in short-listing proposals received from leading international consulting firms for designing the power plant.

The KESC has already, earlier in the year, signed a joint development agreement with Bright Eagle Enterprises, a Hong Kong-based investment company sponsored by Chinese and Korean investors.

That project aims at achieving the coal conversion of KESC’s 1,260 MW Bin Qasim Power Station. The feasibility study for the project has been finalised by Knight Piesold and the KESC is in the process of selecting EPC contractors and simultaneously finalising arrangement for coal supply from Indonesia along with provision for indigenous Thar coal.

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