Post on 16-May-2020
www.ero-ks.org1
Energy Regulatory Office
Dr. Nick F Frydas
Chairman of ERO
11o Εθνικό Συνέδριο γιά την Ενέργεια
15-11-2006
The New Lignite Mine &
New Generation Projectin Kosovo
www.ero-ks.org2
Project Components
In compliance with the: - Kosovo Energy Strategy- carried out studies and regional electricity market opportunitiesKosovo is soliciting 15/8/2006 expressions of interest from qualified private investors in an energy development projects that encompasses the following components:
The development of a new coal mine for existing generation units(Sibovc SW) and/or the development of a new mine (the Sibovc mine)
for coal supply to the new power plant
Construction of a new power plant ‘Kosovo C’ with an estimated installed Capacity of up to 2100 MW and associated transmission capacity
Rehabilitation of certain units (3 x 200 MW) of the existing power plant ‘Kosovo A’
www.ero-ks.org3
Kosova’s Lignite Basins
Reserves [Million Tonnes]
Geological Exploitable
t t ce t tce
Kosova 264 11500 2957 9804 2521
Dukagjini 95 2737 782 1625 464
Other 87 22 74 19
Total 14324 3761 11503 3004
Lignite Basin
Area[km2]
0.320.9147.8814913.85Sibovc
0.351.0147.5775014.4MirashWest
0.340.9847.7786014.1Bardh
%comb
% total%kJ/kg%
SulphurMoistureLower
heating value
Area Ash
www.ero-ks.org4
Northern part of “Kosova” lignite basin “Sibovc”
542.98542.97542.37542.57541.96541.79
541.30541.16541.20540.96541.64542.25541.20541.02540.35
540.77541.28540.93540.74540.46540.66540.74541.08
542.61542.72542.20542.92542.58 548.16
543.83544.84546.39548.81549.96550.47548.45546.63545.86545.30544.17
545.34548.26548.22547.89548.81543.31550.69550.71550.89
550.32550.09549.06548.05549.92549.39549.52549.79
549.60550.89551.85550.24553.05543.80544.23544.76543.99543.60543.58543.76543.58543.29552.96
543.59543.38545.62545.30545.84546.54546.83547.45547.94
552.00551.71551.93553.21554.32555.27
548.49548.94549.39549.46550.48549.95549.87549.91549.98549.96549.52549.14548.48547.61546.30547.14546.58546.29546.88547.30547.15548.15550.93552.83552.58
556.90557.46561.60561.91562.38565.43561.70565.31
563.78562.49562.36561.69560.78562.28562.90562.88562.54562.83563.34564.82
564.96564.99564.21564.37559.68
563.89564.21563.50558.15
567.20566.97558.45560.14560.86
567.40567.27567.25
562.08563.70562.19 556.64561.63 557.63563.74 557.26564.80565.82565.68566.32557.17557.63558.13559.40559.89560.31560.98562.20562.12562.70562.96
563.51565.39
566.54566.17566.29566.18566.40565.97565.76565.99565.75565.78565.69566.04565.48564.56564.67564.37564.52564.63562.95563.12565.07564.56564.59564.44564.23560.85564.83555.81555.71558.22559.38559.99562.81564.55565.88566.10
568.73572.98573.49573.67573.72573.59573.94
568.30568.42568.26568.40567.94567.76567.75567.73567.76
571.50571.21572.15571.90574.02572.27578.71576.93576.65578.33579.62
568.54572.00575.12576.98579.09
574.92569.58569.30569.29571.00577.34577.51578.38572.81572.05574.80575.33572.01 568.32570.29 569.04569.70 568.92571.62 570.97568.93569.27569.14569.17 574.04578.88
580.67579.91586.38
581.16583.15585.56585.77586.30585.85585.76581.69583.97585.67
598.14601.52602.47605.74608.48611.49610.01612.02611.78609.64613.88610.48615.85613.27
608.71609.64610.65618.70618.39622.19
619.35622.26623.59546.03
550.21550.79550.32551.18551.42552.74547.86547.30545.95544.26542.84 553.75
536.88536.86537.10537.76537.42537.60537.81537.97538.74539.38539.38539.73539.33
537.38537.13537.81537.83537.70538.26538.34538.83539.51539.31539.71
551.79550.51549.96
545.99544.42544.28543.52542.81540.77541.90547.25546.58543.19540.44543.16547.69549.39550.67546.10545.71544.53547.94548.32547.51547.92548.46550.23541.79540.89540.47540.48540.62541.08541.59541.38540.61539.96
540.07542.79544.76546.52545.42546.89540.48549.00540.23547.88548.68549.81547.01545.45546.50540.14542.21540.60542.06544.78
552.87
551.07548.87546.46
552.33551.71562.22552.99553.09554.16554.57555.65562.85
557.54556.74553.60
556.29556.36559.61559.29561.52
S = 234.3565 hA
Palaj
Janjina Voda
DumpOutside
Sibovc
Lajthisht
Hade
TPP B
Obiliq
TPP A
Krushec
DumpAsh
DumpAsh
DumpDumpOutside
Lismir
Nakarade
7499000 7500000 7501000 7502000 7503000 7504000 7505000 7506000 7507000 7508000 7509000 7510000 7511000
4722000
4723000
4724000
4725000
4726000
4727000
4728000
4729000
0 500 1000 1500 2000
Sibovc
North
South
D-Field
"South-Field"Bardh
Mirage
MirageSE
MesozoicOutcrop
Lignite Pinch-out
Decoaled
Decoaled
Structur Map
1 1´
3
3´
2
2´
Sibovc Lignite Field
Area: 19.7 km²Geological Reserves: 990 mt Exploitable Reserves: 830 mt
www.ero-ks.org5
Sibovc Lignite Mining Area – Cross Section
0 250 500 750 1000 1250 1500 1750 2000 2250 2500 2750 3000 3250 3500 3750 4000 4250 4500 4750 5000 5250 5500 5750 6000 6250 6500 6750 7000 7250 7500 7750 8000Section Meter
300
350
400
450
500
550
600
650
700
750
800Me
terA
bove
Mean
Sea
Leve
l
300
350
400
450
500
550
600
650
700
750
800
578
473
547
476
599
469
537
472
623
461
528
473
631
461
542
475
631
450
541
466
626
461
531
469
602
451
538
472
620
460
538
464
632
431
495
444
633
444
515
449
613
441
512
448
613
440
515
449
615
441
507
443
613
425
490
426
589
407
470
417
605
395
460
395
584
373
439
374
628
572
623
578
609
544
603
552
646
511
593
526
609
488
557
500
571
462
560
493
599
490
562
491
561
469
549
481
562
475
556
486
564
468
556
485
39198616
7356618360676833700564157771
8382810184629098
8419
85467243
83788311
6498
73758269898990567214838784708399884094378156819481608504
76916088350037686603
87979680
860487938948
66957319
933794719965881898188667917887099613
736195219211923290778734
85708801
93707884
845969257507
8683900288019077
7235
84496783
80479203
86798361
696388478537
8927912388018843
79307955
69509064
51339475
869294378156
8859744479558600
62136762
685892281012498229144
9534949297989994947185589362870191448466
90157750
925393919262
92878328
77427587
953010045
85059275
8400899091409250
84558435
73458070
960890519030
7460
835087758800
5655
8213
9610
8250
9125
6390
9601
9077
8935
94588860
66537578
99229386912397719646
852091398515
692470427770
56367607
8990
8643
75498550
689272487677
72854802
9839
10120
9643
83748378
77466913
972688939458
70478320
8395
0
8981
88688426811082236465
1025010210
95679337
846681568654
99699676
8809
88938290
6477
578
552
526
492 493 491477 481 475 476 472 467 464 466 463 458 462
439449 448 445 443
426417
395
374
3 3`
SENW
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6/6 3
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Erosion
Section 3 - 3'
D-FieldBardh-MirashSibovc
0 250 500 750 1000 1250 1500 1750 2000 2250 2500 2750 3000 3250 3500 3750 4000 4250 4500 4750 5000 5250 5500
Section Meter
300
350
400
450
500
550
600
650
700
750
800
Met
er A
bove
Mea
n Se
a Le
vel
300
350
400
450
500
550
600
650
700
750
800
574
524
549
535
584
525
542532
583
514
541
516
577
502
544
508
581
501
559
519
592
493
551
503
607
512
556
512
632
480
537
494
649
465
520
482
626
461
531
469
585
470
535
471
595
463
539
464
583
464
544
477
586
462
538
466
599
464
537
468
598
447
540
456
598
480
557
483
597
524
541530
596
562
581573
959298 65
1004 5
903 5
905 2
9010
8 466
73157 285
7 273
96 9395 30
9 722932 0
950 9
8 232
882 6
9665
97 30
93 75
9625
8 275
8 260
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10 183
9877
94 63
943 79 006
875 96883
6 850
953 01004 5
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8 4558 435
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60 60
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915 7
8 235
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7051
741 161 26
Section 2/ 2`
2
NE
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SbV
7XXX
4/ 5
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511
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DJ5
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SbD
J6X
XXIII
0/ 2
17
DJ7
XXXI
II1/ 2
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SbE
0XXX
III2/
194
Erosion?
Section 2 - 2'
Sibovc
Key parametersArea: 19.7 km2
Geological reserves: 990 m tExploitable reserves: 830 m tOverburden to Coal Ratio: 0.9 m3: 1 tAverage Coal Seam Thickness: 75 m
www.ero-ks.org6
Comparison of Sibovc with European Coal Mines
Shikule
Dubrava
Gracanica
Tamnava
Drmno
CirikovacOslomej
Bogutovo selo
Kysloki
Bardh, Mirash
Ptolomajs
Megalopolis
Visonta
Bukkarbany
Trojanovo 1
Trojanovo N
Trojanovo 2
Oltenija Lausitzer
Zapadni ceski
Belhatov
Konin
Rheinland
Mitteldeutschland
Suvodol
Sibovc
0
1
2
3
4
5
6
7
8
9
10
3000 4000 5000 6000 7000 8000 9000 10000 11000 12000 13000 kJ/kg
[ m3
: t ]
Sikule (BiH)
Dubrava (BiH)
Gracanica (BiH)
Tamnava (Ser&Mo)
Drmno (Ser&Mo)
Cirikovac (Ser&Mo)
Oslomej (MK)
Bogutovo selo (BiH)
Kysloki (TR)
Bardh, Mirash (Kosova)
Ptolomajs (GR)
Megalopolis (GR)
Visonta (H)
Bukkarbany (H)
Trojanovo 1 (BG)
Trojanovo N (BG)
Trojanovo 2 (BG)
Oltenija (RU)
Lausitzer (D)
Zapadni ceski (CZ)
Belhatov (PL)
Konin (PL)
Garzw eiler II (D)
Mitteldeutschland (D)
Suvodol (MK)
Sibovc
www.ero-ks.org7
Potential Mines
Existing PP (KEK) and other consumer – 140 mtNew IPP – 690 mt
990 mt(19.7 km2)
690 m.t mine.8200 kJ/kg2000 MW
395 mt7300 kJ/kg600 MW537 mt
8150 kJ/kg1000 MW
new minenew mine - which start from the existing mines Mirash/Bardh and advances in Northern direction of the Sibovc field
For illustration:For illustration:2000 MW
7500 h/a = 15 TWh1.1 t/MWh
= 16.5 mt/a690 mt
>> 41.8 years
140 m.t mine.
www.ero-ks.org8
Main Mining Plan - SibovcCapital Expenditures - Sibovc
Approx. 370 m€ - equipment 60 m€ - resettlement
Coal Production16 mt/yearfrom 2019 - 22 mt/year
Cost of Coal€ 7.51/ton at 12% IRR€ 8.69/ton at 15% IRR
Assumed cost of equity 20 %Assumed WACC 15 %
Country - IRR Comparisons IRR (nominal)Egypt 15%-18%Kenya 15%Malaysia (1st wave IPPs) 18%-25%Malaysia (2nd wave IPPs) 12% (target)Philippines 17,50%
www.ero-ks.org9
New Power Plant Site – Comparative Advantage
Water Supply / Iber Lepenci Irrigation System
Road and Rail infrastructure
Close vicinity to the new lignite mine – Sibovc
Interconnection / 400 kV Switch Yard
www.ero-ks.org10
New IPP – Construction Phases
Commissioning of the new TPP (first unit 300 MW or 500 MW) in two phases:
- 1st phase, € billion 1.1 – 1.3 + development cost of mine € million 300
- 2nd phase (10% less expensive), if two 300 MW units in one 600 MW –saves additional 15 %.
www.ero-ks.org11
LPTAP – Project Management
Chair: Minister of Energy and Mining
• SRSG’s office • Head of UNMIK Pillar IV (EU Pillar)• Minister of Environment
and Spatial Planning• Chair. Energy Regulatory
Office
• Prime Minister’s Office • Minister of Economy and Finance• Minister of Labor and Social Welfare• Chair. Ind. Commission for Mines and Minerals
Project Steering Committee
Environmental and SocialTask Manager and assistant
Administration and AccountingTask Manager and assistant
PowerTask Manager and assistant
MinesTask Manager and assistant
Project Manager
ProjectOffice
www.ero-ks.org12
LPTAP – Procedures and Timing
2006 2007 2008
EOICall for EOI has been published on
August 15, 2006
Deadline for submission of EOI is
November 30, 2006
Procurement of:
1.Transaction Advisory Services
2.Legal Advisory Services
3.Social and Environmental Safeguards Advisory services is ongoing
RFP
• Short listed Companies / Consortia will receive Request for Proposal during Q2 of 2007
• Evaluation of Proposals and selection of successful bidder shall be concluded by Q4 of 2007
Contract Negotiation and Closing
Negotiations with a successful bidder on mutually-acceptable, appropriate terms and conditions that will assure the successful development of the Transaction
www.ero-ks.org13
Criteria for expression of interest
A Prospective Bidder must meet the following minimum criteria:
1. Has developed green field, coal or lignite fired electric generation projects, which are now either in construction or operation, totaling more than 2,500 MW
2. Has raised more than € 2 billion of limited recourse project debt or through long term corporate financing as of November 30, 2006 inthe energy and/or mining sector; or has a minimum of € 2 billion in free cash reserves, as stated in the year-end 2005 audited financial statements
3. Has developed and is operating, as of November 30, 2006, mines producing more that 20 million tons per year of coal or lignite
4. Has control of or operates one or more generation companies and/or concessions with an aggregate capacity of at least 10,000MW as of November 30, 2006
www.ero-ks.org14
Asset Packages
Asset Packages Lignite
- Sibovc SW Lignite Field
- Whole Sibovc Field
Asset Packages Power Generation
- TPP Kosovo A• Over haul (life extension until 2010/14, approx. EUR 50 mln)• Capital rehabilitation (life extension until 2020, approx. EUR 145 mln)
- TPP Kosovo C
• 1.000 MW
• 2.000 MW
www.ero-ks.org15
One Vertically Integrated Mining-Power Project- One Investor -
In this case we have one single investor and operator who:
- develops and operates whole Sibovc Field
- invests in and operates Kosovo A (two asset options, overhaul and rehabilitation)
- invests and operates Kosovo C (two asset options, 1.000 MW and 2.000 MW)
- supplies lignite to Kosovo A, B and C
Investor 1
Kosovo A
Kosovo B
Kosovo C
Kosovo A
Kosovo C
WholeSibovc Mine
develops and operates
supplies with lignite
www.ero-ks.org16
One Vertically Integrated Mining-Power Project - One Investor, only Kosovo A -
In this case we have one single investor and operator who:
- develops and operates Sibovc SW
- invests in and operates Kosovo A (full rehabilitation)
- supplies lignite to Kosovo A, B
Investor 1
Kosovo A
Kosovo B
Kosovo A
Sibovc SWMine
develops and operates
supplies with lignite
www.ero-ks.org17
Two Vertically Integrated Mining-Power Projects - Two Investors -
Investor 1
Kosovo A
Kosovo B
Kosovo A
Sibovc SWMine
Kosovo C
Kosovo C
Investor 2
Rest of SibovcMine
develops and operates
supplies with lignite
www.ero-ks.org18
Arms Length Mining and Power Projects- One Mining Investor / Two Power Investors -
Investor 1(lignite investor)
Kosovo A
Kosovo B
Kosovo C
Investor 2
Investor 3Sibovc Mine
Kosovo A
Kosovo Cdevelops and operates
supplies with lignite
www.ero-ks.org19
Arms Length Mining and Power Projects- One Investor in each -
Kosovo C
Investor 2(power investor)
Investor 1(lignite investor)
Kosovo A
Kosovo B
Kosovo C
Kosovo A
Sibovc Mine
develops and operates
supplies with lignite
www.ero-ks.org20
Findings of Market Test – Ranking of Options (i)
Integrated vs. diversified options
Almost all major companies showing their interest expressed a high preference to have a captive mine which is under their control.
Main reasons for this:
security of supply
operational synergies
technological synergies
The first argument is also very important for companies which would consider a diversified option. The mining operator in this case would have to demonstrate an adequate and very solid track record in lignite mining in order to keep the performance risk of the lignite supplier within acceptable levels.
www.ero-ks.org21
Findings of Market Test – Ranking of Options (ii)
Non competitive vs. competitive options
The companies accept competition although the opinion prevails that the local market is not ready for competition at the moment because of:
low willingness to pay by the end customers
legal conditions are not given by now (all customers will be eligible only after 2013)
persisting monopoly in the distribution sector
Furthermore the functioning of the South Eastern European EnergyMarket has yet to be tested. They acknowledge that competition will happen anyhow in the export market.
www.ero-ks.org22
Findings of Market Test – Ranking of Options (iii)
Overhaul vs. capital rehabilitation of Kosovo A
Full rehabilitation of Kosovo A on a stand alone basis was not considered an attractive option to most of the companies
A few medium sized companies would consider that option as possibility to achieve market entrance and presence in order to expand the operations at a later stage
Clear preferences emerged towards the option to keep Kosovo A operative only until Kosovo C is commissioned.
It is argued that:
Real status & costs of capital rehabilitation of Kosovo A is not known (All companies will conduct their own technical and economic feasibility studies)
Kosovo A is basically outdated technologically
Carbon credits would only be available if efficiency gains would be achieved (It is assumed that with the investments proposed this would not be the case)
www.ero-ks.org23
Findings of Market Test – Ranking of Options (iv)
Small (1.000 MW) vs. Large (2.000 MW) configuration of Kosovo C
Kosovo C – in first stage - smaller option (up to 1.000 MW)
Second stage - to build another up to 1.000 MW capacity
This is recommended by the respective pre-feasibility study for Kosovo C for several reasons:
grid might not be in the condition to guarantee stability for 2.000 MW
market risk and performance has to be assessed by a smaller configuration
investment would be distributed over a longer period of time
www.ero-ks.org24
Findings of Market Test –Major Concerns
Pre-qualification criteria
Creditworthy off taker in the internal market
Possibility of Public Service Obligation also for new generation capacities
Status of related infrastructure
Property of assets
www.ero-ks.org25
Conclusions
Sibovc SW on stand alone basis is not attractive to market players
Market players interest in Sibovc SW is only in combination with Kosovo C (and whole Sibovc)
Market players interest in Kosovo A is limited to short term until commissioning of Kosovo C
www.ero-ks.org26
Illustrative example of participation and linkages
SPV - Mining Kosovo C
Kosovo A
Kosovo B
Lignite supply agreements
Investor*
owns 100%
affermage
Kosovo
PPA with guarantees
Investor*
holds up to 100%operates mine through MCpays for costs incurred so far up to its sharebuy out option
Kosovo
holds up to 49%transfers license
IFIscan hold minority shareprovide guarantees
Export Marketsellspower
*Investor is the same in mining and power
www.ero-ks.org27
Energy Regulatory Office
ThankYou
Energy Regulatory OfficeHamdi Mramori Street No 1Prishtina – Kosovo (UNMIK)
Tel: +381 (0) 38 247 615 ext. 101Fax: +381 (0) 38 247 620e-mail: info@ero-ks.org
www.ero-ks.org
www.ero-ks.org28
Transaction Adviser
Purpose
To provide transaction advisory services and assisting the PSC of LPTAP in attracting private sector participation
Scope of work (in three phases):
Phase 1: Preparatory work
• review the market structure & take measures (structural, legal environmental etc.) to facilitate the transaction
• prepare final investment package (based on Options Analysis) & recommend short list of qualified bidder
Phase 2: Prepare RFP and Bidding
• prepare necessary documents to undertake a competitive & transparent bidding process – issuance of a RFP to approved short list bidders
Phase 3: Negotiations and Closing
• Assistance in concluding negotiations with a successful bidder on mutually-acceptable, appropriate terms and conditions (in close cooperation with Legal Advisors)