ISLAMABAD: A consortium of leading international banks including the Asian Development Bank (ADB) is willing to provide Pakistan $1.82 billion for two coal-fired power plants to be installed in Jamshoro with production capacity of 660 megawatts each.
The coal-powered plants are being set up as part of a plan to generate 9,800MW of electricity through coal in an effort to control the re-emerging inter-corporate debt and bring down production cost.
According to sources, the government has completed feasibility study on the two power plants with ADB assistance, estimating total cost at $2.588 billion. Of that, the ADB has shown willingness to provide $900 million, the Islamic Development Bank $440 million and Exim Bank of China $480 million.
The government has decided to press on with discussing the financing with these international banks. It will inject the remaining $768 million as equity into the power projects, said officials of the water and power ministry.
The Planning Commission has given the go-ahead for the plants and now their PC-1 will be submitted to the commission for clearance from the Central Development Working Party (CDWP) and approval from the Executive Committee of the National Economic Council (Ecnec). The projects are expected to be completed by 2016.
According to ministry officials, the plants will be operated through 80% imported coal and 20% local coal from Thar.
The government is pushing ahead with a plan to produce electricity on a massive scale with the help of coal-fired power projects in an attempt to tackle shortages, improve generation and control the re-emerging inter-corporate debt. Under this plan, 9,800MW of coal-based power plants will be built in three years.
To produce that much electricity, three existing independent power plants (IPPs) of 2,590MW capacity will be shifted to coal to bring down the generation cost. These include 400MW Guddu, 840MW Jamshoro and 1,350MW Muzaffargarh plants.
Work on new coal-run power plants will also be undertaken and they will be capable of generating 7,210MW of electricity. These include two plants of 600MW each in Balochistan’s coastal area of Hub, 2,400MW Thar projects, 1,200MW Karachi Coastal project, 1,200MW Lakhra project and 1,320MW Jamshoro projects.
The shift to coal is aimed at avoiding the debt build-up in future and providing cheap electricity to consumers. The debt has plagued the entire energy chain, forcing the government to spend billions of rupees every month to prop up the energy system.
According to a study conducted by the Ministry of Water and Power, the economy can save around $26 billion in fuel costs over the next 15 years if thermal plants of only 420MW are shifted to coal.
About 68% of the country’s power production comes from oil and gas. Though gas is a cheaper fuel, it is getting increasingly scarce, meaning plants that have the capacity to run both on oil and gas are forced to rely on furnace oil. This, however, more than doubles the cost of electricity production.
Published in The Express Tribune, September 24th, 2013.