KARACHI, Jan 11: The Sindh government is considering launching a coal-fired electric generation company, in partnership with private investors, Dr Arbab Rahim, the provincial chief minister, hinted on Thursday at a signing ceremony of a Memorandum of Understanding (MoU) for carrying out a bankable feasibility study for a 1,000 megawatt integrated coal-fired power project.

Held at the Chief Minister House, the MoU was signed by Syed Abbas Ali Shah, director-general Sindh Coal Authority and Farooq Hasan of Hasan Associates Limited (HAL) under which the Sindh Coal Authority will allocate for a period of 18 months block-1 for detailed investigation of the feasibility.

Estimated to cost about two billion dollars, the Hasan Associates plans to set up coal-liquefaction and coal-gasification plant in the second phase.

It will also carry out study to find out suitable quantity and quality of coal which could be equally mined, transported and handled to meet the plant requirement.

Speaking on the occasion, the chief minister said that the foreign investors mobilise resources from local financial institutions, and if the local investors have all necessary qualifications, his government would prefer giving them such contracts for mining and electric power generation.

His government, the chief minister said was for all-out support to local investors who were technically equipped also to harness energy and other sources in the province for the interest of the public.

He said that coal exploration is being extended to other parts of the province as there was evidence of presence of coal reserves in other parts also.

Sindh Minister of Mines and Mineral Development Irfanullah Marwat informed the gathering that the Sindh government had invested Rs4.2 billion for infrastructure development in Thar which would facilitate exploitation of proven reserves of 188 billion tons reserve of coal.

``This is the second MoU being signed in two days for exploitation of Thar coal,” he said while informing that a previous MoU had been signed.

He said Mr Farooq Hasan has been a pioneer in mobile phone service in the country and sponsored Uch power-plant, based on gas which has still the lowest tariff as compared to other power projects.

He disclosed that two more investors groups — Habibs and Aqeel Dhedi — were seeking permission to harness coal energy.

``We will evaluate their technical capabilities before awarding them contracts.

Mr Abdul Hamid Akhund, secretary of mining and mineral development, disclosed that Mr Farooq Hasan had sometimes back given a proposal of setting up a 10,000 megawatt coal-fired power project with electric export potential to India to generate an annual revenue of two billion dollars.

Mr Farooq Hassan said he did offer a proposal for setting up a coal-fired 10,000 megawatts power generation plant with export potential to India sometimes in 1997. His proposal was backed by the then president of the World Bank and a giant American company was to implement it.

He was pioneer in private power projects when he set up a 600 megawatt power-plant at Unch at a cost of 800 million dollars. Uch tariff, he said, was a mere 5.1 cent a unit, lowest in the country when private power projects were charging 12 to 14 cents a unit.

``Once I get a Letter of Intent (LoI), I plan to start my work on the project within this year,’’ Farooq Hasan said.

The Sindh Coal Authority will facilitate HAL in obtaining the existing data, reports and related information of Thar coal field to assist it in the preparation of a feasibility study for an early implementation of the power project.

After the signing of the MoU, the Sindh government shall grant exploration licence for a period of one year for the identified area within 30 days.

On completion of bankable feasibility study and commencement of the execution of the project, the Sindh government will grant lining lease of the identified delineated area to the company for an initial period of 30 years which is extendable by 20 years with mutual agreement.

Farooq Hasan said that he enjoys support of a big US investors group and hopes to attain financial close within one year to one-and-a-half.

After getting a letter of intent, the HAL will offer bank guarantee for one million dollars. No private power project has offered any guarantee previously.