World moves away, Pakistan goes towards coal

Published: April 11, 2016
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Beijing also vowed in the Paris meeting that it would contribute to the efforts aimed at reducing global warming and would shift most of the coal power plants to developing countries. PHOTO: REUTERS

Beijing also vowed in the Paris meeting that it would contribute to the efforts aimed at reducing global warming and would shift most of the coal power plants to developing countries. PHOTO: REUTERS

ISLAMABAD: 

Reports have emerged that several coal mining companies are defaulting on payments including those working in the United States and China following a slowdown in economic growth and an anti-pollution drive that has pushed coal prices to near four-year lows.

In a climate conference held in Paris late last year, 195 countries agreed on a landmark deal and committed to limiting the rise in global temperatures to two-degree Celsius a year.

At a time when the world is making intense efforts to tackle global warming and move towards clean energy such as wind, hydel, gas and solar resources, Pakistan is pressing on with plans to develop coal-based power plants, especially in energy-starved Punjab. This indicates that the policies being designed by the government lack a vital due diligence exercise.

Thar coal – separating facts from fiction

The government must have an understanding where coal prices will be headed in the future, particularly in the backdrop of an increasing number of coal mining companies defaulting on payments.

Their inability to clear debts will create a scenario where most of the companies will abandon the mining business and the gap between demand and supply of coal will widen greatly. In this case, a hike in coal prices will be inevitable.

Under the Paris climate deal, many countries have pledged that they will bring down coal consumption levels in power plants. The US has already embarked on a plan to minimise its reliance on coal-based power plants.

However, China and Japan are still banking on such plants. In the first nine months of 2015, China’s central and provincial governments gave environmental approvals to 155 coal-fired power plants at an average of four per week. It also consumes imported gas from Turkmenistan for producing electricity.

On the other hand, Japan had hitherto been meeting most of its needs from nuclear energy, but now it has started replacing these plants with coal-based electricity projects.

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Pakistan a destination for coal plants

Interestingly, Beijing also vowed in the Paris meeting that it would contribute to the efforts aimed at reducing global warming and would shift most of the coal power plants to developing countries. Pakistan is one of the destinations that China is targeting for installing coal power plants, including some old plants, as suggested by some reports.

At present, Pakistan and China are working on inter-connecting the electricity grid, which suggests that Beijing could set up more coal power plants in Pakistan to meet its energy needs. They are set to develop over 10,000-megawatt plants including coal projects.

China is the only country that is providing financing for Thar coal mining under the economic corridor project, though many coal mining companies there have defaulted on bank debt repayments.

The Paris climate deal has restricted financing for coal power plants and Washington has already refused to dole out funds for such projects in Pakistan.

In such a scenario, China would have monopoly over financing for coal projects, which may be provided at higher rates. This was the reason behind the National Electric Power Regulatory Authority’s (Nepra) decision to increase the rate of return from 17% to 22% for Engro coal mining projects in Thar, which was funded by China.

Absence of policies

Pakistan has not yet developed fully-fledged policies for setting up coal power plants in the country. A couple of them are being developed in the Punjab areas of Sahiwal and Kot Addu. In Kot Addu, reports suggest that locals are protesting against the threat to environment by the coal plants.

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The government should devise a strategy that will allow it to execute different types of power projects depending on the resources available in a region.

Azad Jammu and Kashmir and Khyber-Pakhtunkhwa are suitable for hydroelectric power projects whereas Sindh and Balochistan, which are rich in natural gas, provide a fertile ground for gas-fired power plants.

Thar, situated in Sindh, has abundance of coal and here coal-powered plants should be set up at the mouth of mines. In Punjab, the most populous province of the country, power plants should be run with the help of imported gas, including liquefied natural gas.

This appears to be the most appropriate strategy that the government could adopt to tackle energy crisis in the country and silence critics of environmental hazards but the state seems to be following its own order to serve the vested interests of some investors.

The writer is a staff correspondent 

Published in The Express Tribune, April 11th,  2016.

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Reader Comments (13)

  • SuperNeo
    Apr 11, 2016 - 10:14AM

    Whatever china say to do just bend your head and say yes.Recommend

  • Saleem
    Apr 11, 2016 - 10:49AM

    There is an ideal state and then there is reality. We have an immediate need for cheap energy. Coal is the best answer. We can start with it and have a future planning for cleaner energy. We should not wait for expensive alternatives of clean energy to fulfill the immediate demand that is strangling the economy.Recommend

  • Brainy Bhaijan
    Apr 11, 2016 - 10:56AM

    In the upcoming future countries using coal may have to face penalties in the form of carbon emission taxes.
    For now, the bigger problem is China, not Pakistan.Recommend

  • Fahad Naeem
    Apr 11, 2016 - 1:00PM

    Reason: The world including the 4 largest economies USA, CHINA, GERMANY, INDIA have already made progress on the back of coal power.. Pakistan still have to take advantage of this low cost power.Recommend

  • Last Word
    Apr 11, 2016 - 2:12PM

    Over-dependence on China has made Pakistan dumping ground of former’s obsolete goods and equipment along with unfair trade which is heavily in favour of China. Through CPEC corridor, China will earn billions in trade, but has no agreement with Pakistan to share the profits. Recommend

  • Apr 11, 2016 - 3:34PM

    These uneducated village politicians have made a sump of Pakistan. All the while, for whatever dammed reason, they were not exploiting coal and supply cheap electricity to the nation…….one does not have to guess or ask.
    Now when coal is being put aside to prevent global warming and POLLUTION, we Pakistanis are exploiting coal. Anyway, let’s pray KEL reduces the cost of electricity to the city. Salams Recommend

  • David
    Apr 11, 2016 - 5:16PM

    Are you a 1st World country? No so better provide electricity to your people with whatever viable options you have.

    Once your country will be out of this so called funny word “loadshedding” than choose climate friendly options. Recommend

  • genesis
    Apr 11, 2016 - 5:25PM

    Pakistan and China are working on inter-connecting the electricity grid, which suggests that Beijing could set up more coal power plants in Pakistan to meet its energy needs…you have the answer..china technology for coal and so pollutionRecommend

  • yaqub
    Apr 11, 2016 - 6:46PM

    @David:
    thank you most sensible message yet.Recommend

  • Shah(Berlin)
    Apr 11, 2016 - 7:19PM

    This happens when your people have zero technical knowledge but love to comment on a topic. Green energy is the most expensive energy and countries like pakistan cannot offord it. Wind is free but integrating it in a grid is not a simple task and requires alot of sophisticated setup. Not only that the investment and output is very less.
    Now our people dont want a dam! They dont want coal but want electricity….what a nonsense !!!Recommend

  • darvesh
    Apr 11, 2016 - 10:56PM

    @SuperNeo:
    That’s what Indian army would do at China India border right? It’s not necessary that other would also do that.Recommend

  • Woz ahmed
    Apr 11, 2016 - 11:23PM

    I am astonished that we are providing 22% return on a power project, this the investors get their money back in 3-4 years (if you compound the earnings).

    Are we as a state or even private individuals and institutions unable to finance this ourselves .

    Also this is under CPEC where there is no competitive bidding, so damn sure we could get this cheaper.

    Gives me a bad feeling we have to follow these rules and go with these fellows.Recommend

  • Shaukat ali
    Apr 12, 2016 - 12:21AM

    Such a misleading headline. Even today majority of usa and India’s energy along with several other countries comes from burning coal. Pakistan has a lot of coal and it should absolutely use it.Recommend

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