Pakistan asks US to create fund for coal projects

Proposal prompted by donors’ reluctance due to environmental concerns.

ISLAMABAD: Dwindling investment interest has prompted Pakistan to ask the United States to create a coal development fund in collaboration with multilateral donors, like the Islamic Development Bank, in order to provide a financing window for less-developed but coal-rich countries for setting up coal-fired power plants.

The proposal comes in the wake of reluctance of donors to offer funds for developing coalfields because of concerns about carbon emissions.

Coal remains an untapped resource and comprises only 7% of primary energy mix despite huge reserves of 185 billion tons including Thar deposits of 175 billion tons in the country.

“A major issue is lack of financing by the donors in view of carbon emission concerns and risks associated with the development of new coalfields,” revealed a document submitted by the government to the US Agency for International Development (USAID).

The swelling inter-corporate debt has also discouraged the private sector from investing in coal-based power plants.

At the same time, the government insists that many incentives have been given to the investors under the Power Policy of 2002 and the Private Power and Infrastructure Board (PPIB) is playing its due role.

So far, the Sindh government has assigned six Thar blocks to different investors for coal mining, but progress has been very limited.

Among projects making slow progress are 200-megawatt Dadabhoy coal mining and power project in Jherruk, Sindh and 1,200MW Engro coal power project in Thar, which were scheduled to come online by December this year, but the progress has been limited.

The Planning Commission is working on a 100MW underground coal gasification project in Thar while work is also going on 1,200MW imported coal project at Gadani near Karachi.

The central government considers the Sindh government’s target to produce 10,000MW by 2019-20 far from being met.

“The Sindh government should give top priority to building infrastructure in Thar like roads, rail links and water supply,” a government official said, adding the National

Transmission and Dispatch Company (NTDC) should synchronise high-voltage transmission lines from Thar with timeline of power generation to connect with the national grid.

In its policy guidelines, the Planning Commission has suggested to the government to invest in large-scale mechanised mining so that smooth supply of coal can encourage independent power producers (IPPs) and then mining can be privatised.

“The government can also invest in coal power plants using imported coal with a pre-packaged privatisation option,” the Commission said, adding the Ministry of Water and Power should encourage conversion of existing steam turbines of power generation companies and IPPs to coal.

“This will reduce the cost of power for these plants to around 50% of oil,” the Commission said, adding coal could be utilised for other purposes like gasification (methane), synthesis to liquid fuels and extraction of chemicals.