Shifting to local coal could save over $800m annually: experts

Industry experts believe the government’s decision to convert three power plants from imported fuel to local coal could result in savings of $175 per tonne which would translate to over $800 million in savings annually from each plant

“The government’s decision to bet on local fuel will not only reduce the country’s import bill, on which fuel imports bear the biggest burden, it will also bring down electricity tariff rates,” predicts an analyst.

On June 15, 2022, Federal Minister for Power Khurram Dastgir Khan said the government had decided to shift from imported coal to Thar coal in order to generate 3,960MW electricity from three coal fired power plants; namely, Sahiwal coal power plant, China Hub coal power plant and Port Qasim coal power plant.

The government has already appointed consultants to work out a feasibility plan in lieu of converting the plants. According to research under taken by the Lahore Chamber of Commerce and Industry (LCCI), Pakistan is ranked seventh in the world with total estimated coal reserves of 185 billion tonnes. In return, the Thar coalfield has 175 billion tonnes of assessed coal reserves, which is the 16th largest coal reserve in the world and can generate 30,000 MW of electricity for the next 100 years.

“The 660MW (2x330MW) power plant that is utilising Thar Coal is a good example of producing cheaper electricity using an available indigenous resource. This is enough to guide our policy makers to start utilising local coal resources as well,” said experts.

Sindh Engro Coal Mining Company (SECMC) is engaged in coal mining from Block-II and is currently extracting 3.8 million tons of lignite annually. SECMC’s capacity of extraction is projected to increase to 7.6 million tonnes by the end of this year while a further increase to 12.2 million tonnes is expected by the end of 2023.

“If the government converts all three aforesaid plants to local fuel, they will require an additional 24 million tonnes of coal from Thar Block-II,” added an analyst.

The inauguration of the 330 MW Hubco power plant, by Sindh Chief Minister Syed Murad Ali Shah, enhanced the district’s electricity generation capacity to 990 MW via Thar Coal which has been added to the national grid after becoming operational.

According to industry experts, there are various way to convert the said plants including a 10-20% mix of Thar coal and imported coal, total conversion from imported coal to Thar coal with significant technical changes, and the use of CFB boilers.

Energy sector stakeholders lauded the government for focusing on available resources such as Thar coal and other indigenous sources calling it “the need of the hour”. The government’s plan to convert the three power plants can safeguard the country’s energy security and will have a positive impact on the national economy as well, they added.

Published in The Express Tribune, August 30^th, 2022.

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