Chinese firm to help KESC generate power from coal

KESC to approach Nepra for tariff adjustment.

KARACHI: The Karachi Electric Supply Company (KESC) signed a memorandum of understanding (MoU) with a Chinese firm, Global Mining Company (GMC) on Friday. According to the agreement, KESC would operate its plants on alternate energy resources such as coal and the Chinese firm would fund the project.

KESC and GMC will soon finalise their negotiations and conduct studies, said a KESC press release.

The utility and GMC intend to convert two out of the six units at Bin Qasim Power Station – each of 210 megawatts.

The good news for consumers is that KESC will approach the National Electric Power Regulatory Authority (Nepra) for “an appropriate adjustment in the tariff structure”. “KESC would approach Nepra to permit a saving-sharing mechanism in order to adequately incentivise the conversion project,” said the press release.

“The conversion project aims to increase dependability on coal to generate power as at present the delivered cost of coal is about $5.5 to $6 per million British thermal unit (MMBTU) compared to furnace oil which is approximately $13.5 to $14 per MMBTU.”

A large part of KESC’s generation fleet is fuelled by furnace oil, which has increased fuel prices and dues to the federal government. This puts “considerable constraint upon the purchasing power of the utility”.

KESC spokesman Amir Abbasi declined to comment on how many plants are operating on furnace oil and natural gas, the exact amount of electricity borrowed from independent power producers and other sources.

The salient features of this project would be a lower capital cost and reduced completion time as compared to those of a green-field coal project.

When successfully completed, KESC claims that this model would be replicated across the remaining oil-based generation of the utility and could prove to be a viable solution for the prevailing energy crisis.

Published in The Express Tribune, February 5^th, 2011.