KARACHI ELECTRIC SUPPLY COMPANY LTD.

K.E.S.C House, 39-B, Sunset Boulevard, Phase-II, Defence Housing Authority, Karachi. Phone: (92 21) 3263 7133 Facsimile: (92 21) 9920 5192

SBD/PQA/CCP-056/2012-0313 March 13th, 2012 Mr. Naveed Ismail Managing Director, NTDC, Karachi, Pakistan

Subject:

Support required from NTDC

Dear Sir,

KESC has embarked on a fast-track program to overcome the existing energy shortage by developing and implementing several power projects focusing on indigenous energy sources such as coal. The majority of KESCs Generation stations are dependent on gas supply; this generation has declined and will continue to do so in near future as gas resources deplete and supply is reduced. In order to maximize fuel supply security and pass on the benefits of a varied fuel portfolio to consumers, KESCs current management is actively engaged in the drive to diversify its fuel mix to include coal and other types of indigenous fuel.

With the intention of tapping into indigenous fuel sources, KESC aims to develop minemouth power generation facilities fueled by coal mined at Thar Coalfields (Sindh) which will provide opportunities for large scale mining and power generation. As a step towards development, KESC has signed a joint development agreement (JDA) with Sindh Coal Energy Limited (SCEL) and Oracle Coalfields PLC (Oracle) of the UK which is engaged in coal exploration, mining and production, for establishing a coal-based power plant to tap into the indigenous Thar coal reserves for power generation. The JDA defines the respective responsibilities of each party and marks another key milestone for the KESC following the signing of an MOU with Oracle on 12th December 2009 for the Thar Coal Power Project - a venture that aims to develop a mine-mouth coal -powered generation facility at Block VI Thar Coal Fields, having an initial capacity of 300 MW and potential capacity of 1,100MW.
www.kesc.com.pk

KARACHI ELECTRIC SUPPLY COMPANY LTD.

K.E.S.C House, 39-B, Sunset Boulevard, Phase-II, Defence Housing Authority, Karachi. Phone: (92 21) 3263 7133 Facsimile: (92 21) 9920 5192

Another key initiative which KESC has taken as a step towards the utilization of indigenous coal is the recent signing of a multi-faceted Memorandum of Understanding with Engro Corporation Ltd (Engro Corp) to cooperate on projects of mutual interest which includes the possibility of jointly working on a 300-600 MW mine-mouth coal project at Thar, which will utilize the indigenous coal to be mined by Sindh Engro Coal Mining Company Limited holding the mining lease rights in Block-II of Thar.

Keeping in view the current transformation phase, KESC seeks full support from NTDC

By utilizing readily available indigenous coal reserves, KESC aims at not only bridging the prevailing power demand - supply gap, but also has an objective towards translating this benefit into a lower end user tariff, as compared to power generation via the 3.7 times more expensive furnace oil.

KESC

We look forward to your participation in the project which is expected to change the roadmap of power generation in the country.

Thanking you. Yours sincerely,

Dr. Naveed Ahmed Executive Director

www.kesc.com.pk