Organization Summary

Engro Corporation was founded as a fertilizer business in 1965 in Pakistan. Its head office is in
Karachi. It is one of the largest companies in Pakistan employing over 3,768 individuals (Engro
Corp., 2020). Engro Corporation majorly operates in Pakistan. The company is involved in
producing many products in different categories of food and agriculture, energy and related
infrastructure, petrochemicals, and telecommunication infrastructure. Engro Fertilizers Ltd.
(56.3% owned subsidiary) and Engro Polymer and Chemicals Ltd. (56.2% owned subsidiary)
are revenue generators, majorly, by producing brands like Engro Zarkhez, Zingro, Engro DAP,
and polyvinyl chloride, caustic soda, sodium hypochlorite, hydrochloric acid, and other chlorine
by-products. Major competitors of the company are Fauji Fertilizer Company Ltd., ICI Pakistan,
Nestle Pakistan, Unilever, and Fatima Group.

Thar Coal Power Project by Engro Powergen Thar Pvt. Ltd.

 A set up of 2x330MW power project in Thar, Block ii, Sindh, Pakistan
 A joint venture between Engro Powergen Ltd. (EPL), China Machinery Engineering
Corporation (CMEC), Habib Bank Ltd (HBL), and Liberty Mills Limited.
 EPTL is a power-producing project to generate electricity using indigenous lignite coal
from the Tharparkar district.

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Question 1:

a) Business Case
Pakistan has had an electricity deficit since the 1970s, when the huge Mangla and Tarbela dam
projects were completed, resulting in a brief period of reliable hydro-driven energy production
that met demand. In the last ten years, investment in the power sector has dropped to 0.7
percent of GDP, down from 1.5 percent in the 1980s and 1990s. The condition of energy crisis
has worsened in Pakistan as the population has grown, and as urbanization has spurred the
growth of new factories and other corporate energy users. The lack of policy and political will by
policymakers was one of the main causes of the electricity crisis. There was no comprehensive
and integrated energy policy in place until 2010. Pakistan launched a national energy
programme in 2010. Pakistan has also formed the National Electric Power Regulatory Authority
(NEPRA), which is responsible for ensuring equal electricity competition and protecting
consumers.

To establish mining at Thar Coal Block ii, the Sindh Engro Coal Mining Company (SECMC) will
be started as a joint project between the Sindh government and Engro Corporation. Engro will
be in charge of managing projects and finance, while the Government of Sindh will be in charge
of infrastructure development, according to the agreement.

In the first step, 660 megawatts of electricity will be produced by using and expanding an
adjacent open - pit coal mine ability to extract up to 3.8 million tons of coal a year at 135 meters
depth. In 2014, development will start. By early 2019, the very first step should be completed.

Two 330 MW plants will be built in the first phase, each with a "Sub-Critical Circulating Fluidized
Bed," boiler, steam turbine, and generator. The project's electricity will be fed into the power
network at Matiari, from where it could be sent to Karachi or to northern Pakistan via the 660
kilovolt lines from Matiari to Lahore and Matiari to Faisalabad. Between Thar and the Hesco
grid station in Jamshoro, a 500Kv double-circuit transmission line of the grid network feeds
energy from the new coal-fired power plant.

Tariffs are being discussed with the National Electric Power Regulatory Authority (NEPRA). The
estimated tariffs are 8.5 cents per unit for the first 330 megawatts of electricity, 8.3 cents per
unit for the next 660 megawatts, and 7.9 cents per unit for the next 1,099 megawatts of
electricity. The tariff rates will be in effect for the next 30 years.

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 Project Name Engro Thar Coal Power Project
Project Sponsor Engro Power Gen Thar Ltd. & China Machinery Eng. Corp.
Our strategy is to establish mining at Thar Coal Block ii, the
Contribution to Business SECMC will be started as a joint project between the Sindh
Strategy government and Engro Corporation. This project will ensure
that energy must be provided to every locality. These facts
must align this project with company’s strategy.
Options Consider Additional Labor
Investment in power sector
Benefits Increase in energy to produce more electricity
Better Infrastructure
Timescales 3 Months
Costs US $ 1000 million
Expected Return on
US $ 2 billion
Investment
Risk Financial Risk, Operational Risk, Systematic Risk, Regulatory
Risk, and Resource Risk

Senhri dars, Seengaro, Bitara, Aban Jo Tar, and Thareo Halepoto villages would have to be
relocated as part of the $62 million initiative. Construction would need 3000 unskilled
employees, all of whom will be hired from the local Thar community, as well as 1400 semi-
skilled workers, according to the plan.

b) Risks

1. Financial Risk:
Leading to the circular debt, Pakistan's risk level is very strong for Chinese banks. The $2 billion
project has been delayed so far by the risk level and the resulting higher prices requested by
Chinese banks and insurance companies. Chinese banks require Engro to take % of the liability
and Sinosure Insurance to take the other half, but they are hesitant to expand loans based on
the Pakistani government's sovereign guarantee (Chen et al., 2018). Sinosure Insurance and
Banks should have an 80:20 liability ratio. Also financial companies are able to commit to oil-
based project financing, but only China has agreed to do so at a high cost. Engro can manage

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this risk by initiate buy-out of company’ share and forming a strategic alliance and collaboration
with China to involve them as a stakeholder in this project and it will minimize the risk.

2. Systematic Risk:
Pakistan's overall power production is growing as a result of the CPEC's latest power projects.
Pakistan's energy balance is moving away from Furnace Oil and other costly sources to
Solar/Gas/RLNG and coal from newly built plants. Pakistan's overall power production is
growing as a result of the CPEC's latest power projects. The installed power of electricity in
FY2019 was 34,282 MW, up from 33,433 MW the previous year, representing a 2.5 percent
increase. Despite the fact that electricity production differs due to input supply and other
restrictions, it increased by 3.3 percent from 82,011 GWh to 84,680 GWh during the time under
consideration (Aslam et al., 2018). To reduce this risk, apply margin to the price of the source
before including it in the project. During the engagement process, a detailed and comprehensive
risk evaluation is required to determine the risk reduction expense and scheduling conditions
that must be included in the plan.

3. Regulatory Risk:
Under a 30-year Power Purchase Agreement, the electricity generated will be sold to Central
Power Purchasing Agency - (CPPA-G). Furthermore, the Pakistani government guarantees the
power purchaser's responsibilities. Furthermore, the minimum guaranteed power fee ensures a
consistent revenue stream. Using risk control strategies in enforcement will help to reduce
regulatory risk. Advising banks and financial institutions on how to adopt new regulatory
requirements, particularly in the energy sector, in order to anticipate and manage their
regulatory risk.

4. Operational Risk:
EPTL has an O&M contract with Engro Energy Services Limited which is a 100% owned
subsidiary of Engro Energy Limited for 5 years. The O&M operator ensures adherence of the
plant to meet minimum performance benchmarks (Availability: Actual: 85.3% in 1HCY20;
Benchmark: 82.5% during first five years and 85.5% for next 25 years, Efficiency: Actual 37.4%;
BenchMark: 37%). The required availability for Engro Powergen under the PPA is 82.5% during
the first five years and 85.5% for the next 25 years. Meanwhile, the required efficiency of the
plant is 37%. The company's actual availability and efficiency remained above the benchmarks.
Operational risk can cause huge losses in the project and can mitigate through proper planning

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by fully assessing the risk level, and constructing the map for all the internal threats of the
company.

5. Resource Risk:
The Coal Supply Agreement of EPTL is with Sindh Engro Coal Mining Company for 30 years
where SECMC will provide 320,000 tons’ coal per month (IEA, 2019). The Agreement is an
exclusive contract by which EPTL will be allowed to use the substitute coal (Imported coal) only
in case of non-availability of coal by the Supplier. This risk can be reduced by focusing on the
shifting of local coal supplier at low cost and communicating risk with all the stakeholders for the
better solution. Another option could be that the availability of resources on backlog for the
timely completion of the energy project.

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Question 2:

a) Gantt Chart

Task Month - 1 Month – 2 Month - 3 Month – 4 Month – 5

Planning project

Ideation of project

Research analysis of the

external environment

Assigning teams

Allocating resources

Identifying risk

Execution of ideas

Testing Ideas

Installation Process

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 b) Network Diagram

D G
B
Construction of Testing System
Assigning Teams
Plant

C
A E H
Designing coal
Project Planning power plant Testing Integrate System
system

Development of
Project

Thar Coal Power Project

c) Three Ways that could save the time of the project

 Make Practical Projections:
When preparing budget estimates, project teams must be careful and practical. Since
business executives are excited about the anticipated/budgeted advantages of a project,
they may be unnecessarily optimistic about expense and timeline constraints. It is
important to structure a team of accountants, legal advisors, managers, and experts to
come up with budgets that are based upon the realistic approach (Chen, 2011). Rather
than using internal calculations, the team would focus on parametric cost estimates and
comparison data that has been reorganized industry-wide during the implementation
period. It will assist the staff in seeing the big picture.

1. Create processes and practices that are unique to the project:

Task teams are critical to the project's progress and completion. Collaboration
necessitates a comprehensive collection of procedures and regulations, clear roles and
obligations, and uninterrupted coordination through authorized networks. It is strongly

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 advised that the project set and develop strategies and procedures that are tailored to
the project's unique needs, conditions, and circumstances.

 Obtain the support of senior management.:

Each mega-project corporation should have a vital and strong senior management to
make the project successful, thoroughly. Before the approval of the project, the project
team should approve the complete charter of the project, execution plan of the project,
baseline budget, and baseline schedule. To the stage where the proposal can be
visualized and designed, cash flow modeling, financial analysis, and financing
mechanisms can be analyzed and organized. The strategy should be strategically
compatible with the company's stakeholders' priorities and objectives. Senior
management must determine that the proposal is the right use of capital funds and that it
can provide tangible results.

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Question 3:

a) Resources needed to deliver the project on time

 Workforce:
The labor force is a necessary component for the project's activities to be completed
effectively. Human resources, for some reason, are thought to have complicated
requirements. As a result, project managers should prepare and evaluate eager and
future project team members by ensuring their readiness and project expertise.
A project team is often a group of individuals who are coordinated and led by a project
manager. Team managing is always the most difficult aspect of a project, especially if
the manager has never had to lead before.

 Capital:
As we all know, all programs, regardless of their size, scope, or sophistication, need
funding in order to be completed. The cost resources are used in a variety of ways to
complete the project. Specifically, all of the instruments and facilities that the project and
its bifurcated departments need can be used during the project implementation under
the expense capital. Managing the project budget is undoubtedly one of the key skills
that project managers would learn. The project manager in charge of the project's entire
resources must maintain constant contact with the project's promoters and partners. By
completing the financial statements, you can keep track of all the expenses that
happened, as well as undertakings, gains, and properties.

 Material Goods:
To accomplish projects, material resources are essential that include supplies, heavy
machinery, assets, goods, raw materials, plants, and other miscellaneous materials. For
continuously 5 years, the agreements with the suppliers should be stated, so there is no
issue related to delaying the supplies. The project manager can also use properties
owned by the organization, such as Engro Corporation, though they will need to pay for
borrowing or plan them at the appropriate time.
Material supplies must be prepared ahead of time. Otherwise, the company could face
significant problems with the project's growth. Both tools relevant to the project
management process are critical to completing the project and moving it in the right
direction.

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 Team Management:
For managing the project and its resources efficiently, the managers of the project
regularly need to track, measure, and keep the performance of employees. If required
provide them training to enhance their productivity, thoroughly. Developing teams is an
important factor and is done by those who are linked with human resources who seek
development opportunities and an enriching work experience.

 Control Resources:
Client requirements and project scope may alter with time. Therefore, continuously
monitoring and controlling procedures ensure that the company has a skilled workforce
ready to fill the future work.

b) Cost Reducing Factors

 Ensure estimates are accurate:
While in the pre-planning and planning phases, it is vital to make sure that estimates
related to the project are accurate. It is the most important factor to keep costs
reduced/balanced throughout the project. Otherwise, the project may face hefty costs
later on that may shake the financial position of the project.

 Communication is Key:
Communication between the cost analysis, experts, legal advisors, higher management,
and the sponsors and investors is very important. It will keep everyone aware of the
budgets which will be analyzed and executed later on for the project establishment and
finalization. Maintain the records in the office and provide the essential documents to key
players. Make sure to provide all updates. It will keep conflicts and misunderstandings
away. Even keep in touch with the suppliers and make sure they are aware of the
updates of the project.

 Recognize and plan for potential risks:

Under the pre-building stage of the project, spending ample time to identify the possible
risks that could hinder or disturb the project. As such, the company will able to
coordinate the project timeline and budgets, aptly, to stay secure.

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Question 4:
It includes processes of collection, measuring, dissemination of performance information, and
assessment of measurements and trends to forecast the potential requiring elements for the
corrective actions.

2. Integrated Change Control:

The Integrated Change Management mechanism guarantees that changes/alterations are
necessary and regulated as a result of project decisions and other influencing variables. This
method happens all the way through the project, from start to finish.

Taking appropriate actions is a reactive approach whereas taking preventing actions is a

proactive approach. It is more important to know when to execute preventive actions as it keeps
the framework of the project stable. During a long-term project, changes occur. It is useful to
rectify or enhance the project’s plan, baseline, policies, or procedures because of changes that
occurred.

3. Scope Verification:
It is a process that keeps the company ensures that the project deliverables are formally
accepted. A control chart should be prepared as it monitors the project’s quality.

4. Requirements Traceability Matrix (RTM):

It's a map that lets the organization keep track of the project's specifications and deliverables.
The relationship between the two baseline documents is correlated in the matrix. This effectively
makes the project's activities more apparent. It also saves any additional activities or
specifications that are applied to the project without prior approval.

5. Communication Plan:
The company must make sure that they execute and review the plans related to the
communication. the various forums and mechanisms of communication should be identified by
the management, in advance. As the project moves forward, the company should add further
types of communication activities, if necessary and previous activities and actions are outdated.

6. Schedule Control:
Schedule control is a process that looks after the changes and alterations happening to the
project schedule either at a basic, medium, or huge level.

While following the project’s outline, this control helps the company to updates its schedule
model data and baseline, measure the performances of the team, cope up with requested

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changes, recommended corrective actions are taken, updates related to process assets of the
organization, and updates related to the project management plan.

Keep the schedules of the project updated. The updates can be done on a monthly or quarterly
basis by updating the further tasks of the project. It is vital for the team to monitor the schedules
of projects and update them, regularly.

7. Cost Control:
This process controls the costs and changes occurring to the project budget. The importance of
this control is high as it will keep the costs lower for the project, throughout.

By such control, the company can update its cost estimates, cost baseline, forecast, and
requested changes. By following such, the company will able to cope up with the variances
occurring in between the project’s performance.

8. Performing Quality Control:

For every project, there are quality standards identified by the company or government which
are mandatory for the organizations to cope up with. By acquiring this monitoring control, the
company gets able to measure the results to determine whether the project is meeting the
benchmark or not.

Quality control measurements can be easily taken while following the control, aptly, with
updates to the quality baseline. Recommended corrective and preventive actions can be taken,
too, by the Quality Control department.

An initial list of risks can be identified and as well on a quarterly or 6-months basis. It will help
the company to approach the team of the project with improvements and enhancements in the
team, labor force, and event management.

9. Managing the Project Team:

The following process tracks the performance and productivity of the members, management,
and labor of the project: by such, it is easy to keep the feedbacks, resolve the
misunderstandings and issues, if any, and coordinates changes to enhance the performance by
providing them further teachings/pieces of training.

The managers of each section should make sure that they have interaction with their team
members on daily basis. Consultation is very important when it comes to interaction with the
labor force because they are aware of all the factors going on in the project which is a vital point
and must be followed by each manager, appropriately.

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 10. Performance Reporting:
This process includes collecting, recording, and reporting the information related to the
performance of the management, labor, key players, and influence and agreements with the key
players, investors, and suppliers. The process also includes status, reports, progress reports,
and budgets and forecasts of the project handled by the company.

The project manager is responsible for ensuring that tasks too small to appear in the project
schedule are recorded completed.

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References
Aslam, Hina; Liu, Jian; Mazher, Abeer; Mojo, Dagne; Muhammad, Imran; Fu, Chao. (2018).
Willingness to Pay for Improved Water Services in Mining Regions of Developing Economies:
Case Study of a Coal Mining Project in Thar Coalfield, Pakistan. Water 10. no. 4: 481.

Chen, C.H. (2011). The major components of corporate social responsibility. Journal of global

responsibility, 2(1), 85-99.

Chen, Xiangmeng, S.K. Joseph and Hamna Tariq. (2018). Betting Big on CPEC. The European
Financial Review, pp. 61-70.

Engro Corp. (2020). Annual Report. Available at: https://www.engro.com/app/media/2021/04/E-

Corp-Annual-Report-2020-1.pdf.

Government of Pakistan. (2017). Economic Survey of Pakistan 2016-2017. Islamabad: Ministry

of Finance.

Government of Pakistan .(2019). CPEC Energy Priority Projects. Retrieved from CPEC China
Pakistan Economic Corridor. Available at: http://cpec.gov.pk/energy.

IEA. (2019). CO₂ Emission from Fuel Combustion Highlights. Paris: OECD/IEA.

NEPRA. (2015). State Of Industry Report. Islamabad: Ministry of Water and Power.

US Dept of Energy. (2018). Levelized cost of energy. Available at: https://bedes.lbl.gov/bedes-

online/levelized-cost-energy

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