Change of plans: Government to produce diesel, not electricity from Thar coal

‘Production of diesel is much cheaper than generating electricity from gas.

KARACHI: The government has decided to produce diesel instead of generating 100MW electricity from gas extracted from Thar coal, according to an official.

The plan to produce 100MW electricity has been postponed, however, a smaller plant will be set up to generate 10MW to meet electricity demand of the project.

“Expression of interest applications will be sent to the private sector soon,” said an official familiar with the project on Wednesday. The cost of establishing a diesel production plant, estimated between $150 and $200 million, is much less than establishing a power plant to generate 100MW. The proposed plant will have the potential to produce 1,000 barrels of diesel per day.

The Thar coal gasification pilot project has been marred by delays as furnace oil lobbies and the bureaucracy are pressurising the government to shelve the project, official added.

Prime Minister Raja Pervez Ashraf earlier this month released Rs900 million for the underground coal gasification (UCG) project. These funds will be spent on import of infrastructure for generating 10MW and payment of salaries.

Sources said that the process of inviting tenders for the purchase of generators operated by coal gas and other equipment has been being delayed due to massive fluctuation in the import price following the rupee falling to new lows against the dollar.

Sources said that if new tenders for import of generators and other equipment are invited, the plan can suffer another one year delay. Completing the tender process will take three months, three months for import process and another three months for commissioning of the generators.

Published in The Express Tribune, August 23^rd, 2012.