Sindh Engro Coal Mining Company Creating Value Through

Sindh Engro Coal Mining Company Creating Value Through Investment Indigenous Fuel is the Key to Energy Security of Pakistan

Pakistan’s Development Challenge GDP per Capita _______ 980 USD Population Below Poverty Line (income less than USD 2 / day) ___________ 60% Population Growth Rate ____________ 2% …. and needs energy to meet this challenge Source: World Bank

Pakistan’s Power Demand-Supply Forecast Peak Demand Average 3% Growth rate based on GDP & Population Growth Supply Average 2% Growth rate assumed Daimer – Basha Dam (4500 MW) Thar Coal (1200 MW) Only plants that have achieved or are likely to achieve financial close included in the supply forecast

Impact of Energy Crisis Electricity shortage of more than 4500 MW and frequent power cuts translate to: • Impact/Year Total cost of load shedding to the economy USD 2. 5 billion Cost as percentage of GDP 2 % decrease Loss of employment in the economy 400, 000 jobs Loss of exports USD 1 Billion $ billion Increasing dependence on expensive imported energy puts a severe constraint on ability to pay Import bill expected to increase to above USD 8 billion by 2020 Energy Import Bill for Power Generation 16 12 8 4 0 Current 4 Source: State of the Economy – Emerging from Crisis 2008, Beacon House National University publication, Pakistan Economic Survey 2009 Future (2020)

Wrong Fuel Choice Nuclear 2%2008 -09 Hydel 30% Coal 0% HSD 1% Nuclear 3%2009 -10 Gas 42% RFO 25% Gas 29% Hydel 30% Coal 0% HSD 1% RFO 37% Country Power Generated from Coal (%) Australia 80 China 78 India 53 USA 50 Germany 47 UK 30 World Average 42 Pakistan 0. 1 • Due to lack of indigenous natural gas shortages, reliance on expensive imported RFO has increased and exacerbated Circular Debt problem • If Coal had been used instead of RFO to make up for indigenous natural gas shortage, it would have reduced energy import bill by USD 600 M and direct saving of USD 280 M to electricity consumers • 50% reduction in use of RFO for power generation would reduce Pakistan’s energy import bill by USD 900 M and benefit electricity consumers by USD 400 M Source: 1) State of Industries Report 2010, NEPRA 2) Integrated Energy Plan

Thar Coal Potential q Thar Desert contains the world’s 7 th largest coal reserves: 175 Billion Ton = 50 Billion TOE = 2000 TCF Total Thar Coal Reserve 1% = Thar Coal Reserve More than Saudi Arabia & Iranian Oil Reserves 68 times higher than Pakistan’s total gas reserves 25% Pakistan’s Power Generation Capacity in 2010 PAKISTAN Development of Block II alone would bring in investment of USD 12 Billion Entire Thar Coal Reserves can be used to generate 100, 000 MW of electricity for over 200 years Thar Location of Thar Coal Field Source: : GSP data/report – Energy equivalent is based on Shenhua report/RWE

Thar Dream Promises Better Life Tomorrow for all Pakistanis!

Public Private Partnership – Alignment of Incentives Sindh Engro Coal Mining Company’s Vision : To develop and execute technically and commercially viable Coal Mining Project in Thar Block II to generate electric power and bring energy security to Pakistan based on indigenous resource • • Joint Venture (JV) Company Structure : • 40% Shares owned by the Government of Sindh (Go. S) • 60% Shares owned by Engro Power. Gen Limited (EPL) Core expertise and responsibilities of each JV Partner include : • Go. S would assist in timely availability of all relevant data (previous and currently ongoing studies), requisite approvals from Federal and Provincial Governments and timely delivery of infrastructure requirement for the Project including roads and transmission line • Engro Power. Gen will lead development, financing, management and execution of the Project in a professional and fast track manner This Public Private Partnership reflects new strategic focus of Government & Engro to develop Thar Coal reserves, raising the bar on how mega project investment is planned, prioritized, financed and delivered Sindh Engro Coal Mining Company

Bankable Feasibility Study Consultants SECMC RWE-Germany Owner‘s Consultant RWE-Germany SINOCOAL Intl. China North East Coal Bureau (NECB) China SGS Pakistan SRK-UK / Hagler Bailly Pakistan Hydrological Model & GW Abstraction Consultant Bankable Feasibility Study Consultant Hydrological Field Work Contractor Sampling/Coal Analysis Contractor ESIA* Consultants DRD-Pakistan Drilling Work Sub-contractor * Environment and Social Impact Assessment

Key Highlights – Thar Coal Mining Feasibility Study • Bankable Feasibility Study (BFS) for Thar Block II Coal Mining Project has been completed by internationally renowned Consultants within budget on August 31, 2010 as per target date • Technical, environmental and social viability of the Project has been confirmed meeting all international lender’s standards (IFC/World Bank, ADB etc. ) Salient features of the study for 6. 5 Mt/a Mine are as follows : • Total Lignite reserve in Block II - 2 Billion tons ; Exploitable Reserve - 1. 57 Billion tons which can support 5, 000 MW for 50 years; average striping ratio is 6. 2: 1 • Required Overburden removal ; 140 Mm 3 for initial 4 years ; 1277 Mm 3 over 30 years • Total mine depth is 195 m (640 ft) ; cumulative lignite seam thickness is 32 m • Average lignite quality calculated from 1618 samples is (Heating Value 11. 6 MJ/kg (~ 5000 Btu/lb) , Ash 7. 3 %, Moisture 47. 48 %, Sulphur 1. 1 % ) better than lignite being used in Greece & Germany for power generation • To keep the mine dry for operations, ~ 37 Mm 3/a (~ 41 cusecs) of GW 1 will have to be pumped out the initial years, which will reduce to ~ 25 Mm 3/a ( ~ 28 cusecs) in later years in • Shovel & Truck (S/T) has been selected for Lignite Mining due to its flexibility to achieve mine scalability to 13 Mt/a & 22. 8 Mt/a in a cost effective manner. Bucket Wheel Excavator (BWE) & Spreader system will be utilized for mine expansion to 13 Mt/a & 22. 8 Mt/a

Key Highlights – Thar Coal Mining Feasibility Study Environment & Social Viability Assessment : • No significant or unmanageable environmental threats and social implications indicated • GW impact assessment and mitigation measures finalized ; drawdown in 1 st aquifer will be monitored, reinfiltration may be done after 20 years if required • Only 2 villages will need to be relocated ; 1 st in 2025 and 2 nd in 2035 Mine & power plant to be developed in parallel : • Phase 1 of the project will be development of a 6. 5 million tons/annum coal mine in parallel with development of 1200 MW Coal fired Power Plant. Total Mining and Power Generation Projects Cost is estimated to be 3 – 4 Billion USD • Subsequently, the coal mine will be scaled up to 22. 5 Mt/a capacity and power plant capacity will be increased to 4000 MW expeditiously. This will require investment of over USD 12 Billion • 1 st Phase of Coal Mine & Power Plant construction is targeted to start in 2012 and both Coal Mine & Power Plant will start operations by 2016 • Go. S & Go. P to ensure timely provision of infrastructure requirements including roads network and transmission line

Project Financing from Chinese Financial Institutions • Subsequent to Chinese Prime Minister’s visit to Pakistan in Dec, 2010, a “Joint Energy Working Group” (JEWG) between Government of Pakistan (Go. P) & Govt. of China has been formed to shortlist the energy projects for technical and financial assistance from Govt. of China • SECMC team presented details of Thar Block II Coal Mining, Power Plant & Infrasturucture Projects to Sub-Energy Working Group (SEWG) comprising Joint Secretary Mo. PNR 1, Secretary C&EDD and DG Mines on 7 -8 Jan, 2011. SEWG unanimously agreed to forward the comprehensive proposal for the Projects with their recommendations to Energy Working Group (EWG) of Go. P • EWG has included these Projects in the list of energy projects to be presented in JEWG meeting scheduled to be held in March, 2011 in Beijing to seek Govt. of China support for financing • SECMC has communicated to Go. S / Go. P financing requirement and proposed structure for discussion and approval at JEWG meeting • Go. S to pursue EWG to ensure JEWG recommends to Govt. of China to instruct Chinese Financial Institutions for financing of Thar Projects as per structure proposed by SECMC

Benefits of Thar Coal Development • To overcome the current energy crisis, Pakistan has no other alternative except development of indigenous energy resources • Thar investment will provide the following benefits : o Strategic energy resource that will guarantee energy security to Pakistan in the decades to come o Import substitution of expensive RFO or Natural Gas – Due to import substitution benefits, Thar mining will act as a direct “foreign exchange earning sector“ and help lower the adverse impact of imported fuel on Pakistan’s Trade Balance o Lower power tariff for Coal fired Power Plants as compared to RFO based power tariff o Socio-Economic Development of Thar region § Presently Thar District ranks lowest on all socio-economic development indicators in Sindh o Development of indigenous coal mining industry will lead to skilled job creation and transfer of technology o Potential for future downstream industries in Petro-chemical and Fertilizer products Thar Coal is a fortune turning opportunity for Pakistan

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Mine Equipment – Shovel & Truck Shovel Dump Truck

Bucket Wheel Excavator & Spreader

Mine & Power Plant Layout Township Power Plant Stock Yard MSF Layout - 6. 5 Mt/a Mine with Expansion to 22. 8 Mt/a Mine Sindh Engro Coal Mining Company

Location of Aquifers in Block II Dune Sand Aquifer 50 m 120 m Coal Seam Roof Aquifer 180 m Coal Seam Floor Aquifer