ISLAMABAD:
The Asian Development Bank (ADB) has told Pakistan that it will hold back financing of $1.14 billion for over 1,000-megawatt coal-based power plants if the government continues to insist that these plants will run on Thar coal instead of imported coal.
A high-level ADB delegation, in meetings with Pakistani officials here on Thursday, said the bank would not finance Thar coal-based power plants as specifications of Thar coal did not meet requirements of the plants, say sources. Instead, the bank will provide funds for only 1,080MW power plants based on imported coal, which are in the pipeline.
However, the fate of these power plants is unclear as the prime minister has placed a ban on imported coal-powered plants and stressed that Thar coal should be used for such projects.
According to the sources, the Prime Minister Secretariat has asked the water and power ministry to allow investors installation of power plants that will be based on Thar coal and reject imported coal-fired plants.
In a three-year programme, new imported coal-based plants of 660MW were planned to be installed and existing 420MW thermal plants were to be shifted to imported coal.
“The government’s ban has halted work on these power projects,” an official of the water and power ministry said. Earlier, international bids had been invited for the import of coal, but “now the process has been stopped,” he said.
The official claimed that the ban had been imposed on the insistence of Sindh, which is encouraging exploration of Thar reserves. He said the government was spending billions on inter-corporate debt to run the expensive thermal plants and the prime minister’s decision would further delay the coal-based plants.
The shift to coal is aimed at reducing the runaway circular debt by Rs100 billion per annum. The debt has plagued the entire energy chain, forcing the government to spend billions of rupees every month to prop up the energy system.
“In the current month, the government has given over Rs20 billion to Pakistan State Oil (PSO) on account of oil supply to thermal power plants,” the official said.
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.
The recommendation came following the recent plunge in electricity production, caused largely by the financial crunch faced by power companies.
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 run on furnace oil. This, however, more than doubles the cost of electricity production.
In an effort to encourage independent power plants (IPPs), the water and power ministry has decided to reduce customs duty on equipment and spare parts needed for the shift to coal to just 5%.
Under a proposed plan, the IPPs will be given a maximum of one year to shift from oil and gas to coal. In this period, they will be paid to cover their returns and also interest payments on funds raised for the conversion.
The IPPs, which are regulated under the power policy of 1994, will be allowed to sell coal-based power to the national grid without any modifications to their contracts or approval from the regulators. However, those plants that come under the policy of 2002 will require regulatory approval.
Published in The Express Tribune, October 19th, 2012.
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so y ban on imported coal... shld allow it until they start mining from thar...thats save 100 billion a year.. thar mining still take 3 to 4 years that save upto 300 to 400 billion of tax payer money..
Pretty clear that the Asian Development Bank has done it's homework on the Thar Coal project and found it unsuitable - perhaps it's time for Pakistan to do it's own homework and focus on viable solutions to it's energy crisis.
The confusion is primarily at the reporters end. It's fairly clear to the government that short term initiatives shall be based on imported coal. Detailed analysis of some major blocks of Thar field is in it's final stages. Most likely open pit mining will be used to kick off. It will take a few years before the area can have reasonable excavation capacity.
Why is there so much confusion and contradiction on this issue?