Govt to invite bids for $1.7b Jamshoro coal plants

Two 660MW plants show govt’s determination to push coal into energy mix

ISLAMABAD:

The Ministry of Water and Power has decided to invite international competitive bids for engineering, procurement and construction (EPC) contract for installing $1.7 billion Jamshoro coal-based power plants.

An official said the Asian Development Bank (ADB) has given no-objection certificate for the bid document for setting up two coal-based power plants with 660-megawatt generation capacity each at Jamshoro.



Background

Jamshoro power plants are an important part of the government’s plan to increase the share of coal-based power generation to 24% of the total fuel mix by 2019. This is to be achieved by reducing the share of oil-based power generation from 38% to 14%.

In February 2014, Pakistan signed a loan agreement amounting to $900 million with the ADB, terming it a big step towards achieving the goal of increasing the share of coal in power generation.

Additionally, the Islamic Development Bank will also provide $220 million for the project.

Global comparison

In the first 15 years of the new millennium, 39% of the power generated globally came from coal, while only 6% was generated through oil, since it is considered significantly more expensive.

During 1980 to 2014, the United States produced 44% of power from coal, Russia 14%, China 75%, India 67% and Pakistan 0%.

At present, Pakistan is producing 30.82% from hydro, 4.2% from nuclear, 38.9% through furnace oil and 25.3% from natural gas compared to a minuscule 0.1% from coal.

Coal

Throughout the world, most of the coal is used in the country where it is produced since transportation cost accounts for a large share of the total delivered price of coal. Many countries, however, continue to import and use the cheap energy fuel.



Post-Fukushima plant disaster, Japan plans to build 43 coal-fired power projects to replace the loss of nuclear power capacity.

China has shut thousands of coal power plants but these plants were inefficient and are now being replaced by new state-of-the-art coal plants. About 155 new coal-fired power plants received the green signal in China during the first nine months of 2015 alone.

The US Energy Information Administration still predicts in its most recent annual energy outlook that coal will account for the largest share of the US electricity generation mix through 2034.

A World Resources Institute report says that currently 1,200 coal power plants are being planned in the world. Even Dubai has announced putting up a coal power plant (2x660MW).

Affordable power is one of the key elements required for socioeconomic development of Pakistan. Severe shortage of electricity has been a major impediment to achieving economic stability and sustainable growth for the country.

At present, the demand for electricity exceeds the current generation capacity by up to 5,500MW.

Published in The Express Tribune, May 7^th, 2016.

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