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Prospects of coal fired power in Pakistan

Published on 3rd Feb, Edition 5, 2014

 

One of the most inexpensive energy resources in the country, having the potential to not only make the energy sector self-sufficient but to turn Pakistan into a power exporting country is coal . Around 41 percent of electricity generation is accounted through coal all over the world.

Recently, China has agreed to set up four coal fired power stations in Balochistan at the Gadani Power Corridor. This announcement was made when the Prime Minister, Nawaz Sharif made a visit to the location in July last year, which is going to be called the Gadani Power Park. The Prime Minister stated that the power plant would be established at that particular location in order to attract both local as well as foreign investors.

While the park has a capacity of the establishment of 8 power plants having an aggregate capacity of 5,200 MW, Nawaz Sharif desired that this be increased to a capacity of 10 plants generating 6,600 MW. During his visit he also instructed for the implementation of these plants to begin immediately as the nation is already undergoing an energy crisis and no further time can be wasted.

He also stated that with the plants and projects being established in these areas costing billions of dollars, it would help to create a great deal of employment and economic opportunities for the regions of Sindh and Balochistan. Since, the requirements of the nation in terms of electricity are high, the Prime Minister stated that 4-5 more power parks like the one being established at Gadani would be required in the country.

While the country was producing electricity at its highest level, which had been recorded in the history of the country (16,170 MW), the demands of the country has increased and the gap between supply and demand remained at around 3,000 MW back in August 2013. Furthermore, Nawaz Sharif also asked for work to be expedited regarding the utilization of the Thar Coal. He stated that the mining and setting up of the coal fired power plants should be undertaken together in order to avoid wastage of time.
The Prime Minister also said that a proposed six-lane Lahore-Karachi motorway project would also be helpful in accelerating the economic pace development in various areas of the country. While terrorism and extremism are problems which the country continues to face, the Prime Minister stated that despite the challenges, it should be seen as encouraging seeing the government working towards the issue in a civilized manner.

According to a study, which was conducted by the Ministry of Water and Power, it was found that the economy of Pakistan would be able to save a sum of $26 billion in fuel costs over the coming 15 years if the existing thermal power plants of 420 MW were to shift to being fired through coal. Granted that 68 percent of the power production in the country is a result of oil and gas and gas being a cheaper fuel, it needs to be taken into consideration that gas is relatively scarce. This means that those power plants having the capacity of running on both oil and gas are forcefully required to run on furnace oil which doubles the price of electricity production.

 

In order to encourage independent power plants to make the shift towards coal fired power production, the Ministry of Water and Power has decided to reduce the customs duty on spare parts and equipment needed to just 5 percent as an incentive.

With the plan proposed to them, these IPP’s would be given a maximum of 1 year to shift their production practices from oil and gas to coal. These IPP’s regulated under the power policy of 1994 would then be allowed to sell coal fired power to the national grid without their contracts being modified or any approval being required by the regulations. Regulatory approval, however, would only be required for those IPP’s, which fall under the 2002 power policy.

A seminar held recently on ‘coal being the future fuel for the industries in Pakistan’ stated that while coal is being used for power generation throughout the world, it is unfortunate that within our nation, it is being underutilized despite there being a great amount of reserves available. Thar coal reserves are seen to be greater than the oil reserves found in Iran and Saudi Arabia, which have a collective quantity of almost 375 billion barrels.

Within the seminar, the Punjab government’s efforts were appreciated as they have been giving incentives for establishing coal fired power plants. Optimism was also expressed regarding the government ensuring one-window operations for successful completion of the initiative taken by the Punjab government. Policy incentives include power evacuation by National Transmission, coal logistics through Pakistan Railways and Dispatch Company and land acquisition by the government of the province, which would help in attracting investment for the private sector.

The seminar was organized by the Lahore Chamber of Commerce and Industry (LCCI) in collaboration with Petro Coal Synergies. At the seminar, Mr. Sohail Lashari, president LCCI stated that the LCCI was not cutting down on efforts for the promotion of alternate sources of energy. He also stated that two seminars had also been arranged at the Kalabagh Dam as the LCCI believed that the future of the country lies with cheaper energy options. He further stated that a study was underway by the LCCI to establish a self-finance power project, which would also pave the way for other similar projects in the private sector. Along with these efforts, the LCCI would also continue to aid governmental efforts which were aimed towards improving the energy related situation in the country.

Asad Wasi, coal expert stated that Pakistan was producing a very small portion of the total electricity being consumed whereas only 2% of the Thar Coal could be used in generating 20,000 MW of electricity for the next 40 years without any kind of load shedding thereby giving an idea of just how much coal reserves the nation has and how much energy would be available for the fulfillment of the needs of the nation. He also said that more than 32 countries are at present producing power through coal. These countries are China, USA, Russia, Australia whereas countries like the UK generate 16 percent of their share of electricity through coal, 67 percent of electricity is produced by coal in China, 24 percent in Canada and 64.6 percent in India.

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