Sindh seeks multi-billion-dollar coal supply contract
Keen on exploiting the vast Thar coal reserves, the Sindh government has asked the central government to award a multi-billion-dollar coal supply tender to the province and refrain from offering the lucrative contract to international suppliers.
If the demand is accepted, it will put in jeopardy proposed financing of $1.14 billion from the Asian Development Bank (ADB) for 1,080-megawatt coal-fired power plants. The bank will not provide funds for power plants based on Thar coal.
“The Sindh government wants the central government to award it the contract for coal supply from Thar reserves in response to the bids invited for coal import to run 1,080MW power plants,” an official said.
According to sources, the Thar Coal and Energy Board has approached the central government, saying it can supply coal against the tender.
Earlier, the Genco Holding Company Limited invited bids for pre-qualification of international coal producers, coalmine owners, trading companies and marketing firms for supply of imported coal. The deadline was November 28 for submitting pre-qualification documents.
Coal import was meant for a new 660MW coal-fired power plant and 420MW thermal-based power plants which would be switched to coal, a move expected to reduce circular debt by Rs100 billion a year.
However, the ADB has stalled financing for these plants because of a ban imposed by the prime minister on coal import and directives to use only Thar coal in power plants.
An ADB delegation during a visit to Pakistan last month expressed its willingness to finance the power plants if the government lifted the ban on coal imports. But no decision has been taken so far.
A senior official said Genco was seeking the import of coal having 5,000 kilo calorie (kcal)/kg to 6,000 kcal/kg, the range accepted internationally for coal-fired power plants. However, Thar coal has 2,000 kcal/kg and 60% moisture, considered to be very low energy level in world markets.
“This (Thar) coal needs further processing to make it useful for power plants,” the official said, adding low calorie was the reason why the ADB was not willing to finance Thar coal-based power projects.
Coal with 8% to 20% moisture and 5,800 to 8,000 kcal/kg is said to be the best for power plants.
According to sources, stakeholders have suggested that if the government wants to secure ADB financing as well as utilise Thar coal and reduce consumption of expensive furnace oil, the prime minister should allow both imported and Thar coal-based power plants.
“In the short term, Pakistan should use imported coal to add 1,080MW to the national grid in the next three years and in the long run Thar coal should be utilised,” an official said, adding the Thar coal extraction programme lacked infrastructure and access to water and would take a long time.
“The government is doling out Rs1 billion in power subsidy because of dependence on thermal power plants and even imported coal-fired plants can curtail the circular debt,” he added.
According to a study conducted by the Ministry of Water and Power, the economy will save around $26 billion in fuel costs over the next 15 years after only 420MW thermal plants are switched to coal.
About 68% of the country’s power production comes from oil and gas. Though gas is cheaper, it is increasingly scarce, forcing many plants that can run on both oil and gas to consume furnace oil. This, however, more than doubles the cost of electricity production.
Published in The Express Tribune, November 15th, 2012.
COMMENTS (7)
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I would like to have a quantity of petrol coal for a long term via the next specifications :
Moisture : 8 Total Sulphur : 1.25 Ash Mas : 0.2 Volatile matter : 8 Fixed Carbon : 90 Calorific value Kcal/Kg : 8000
Best Regards
'According to a study conducted by the Ministry of Water and Power, the economy will save around $26 billion in fuel costs over the next 15 years after only 420MW thermal plants are switched to coal."
Considering the size of Pakistan economy, Does the author realize what $ 26 billion adds to in terms of Pakistani currency (even if ts is n 15 years time frame)... and that to for a paltry 420 MW...!.amazingly this is just the saving ..LOL,,Pakistani statisticians really are so dumb...
I hope we keep the "extreme poverty" in rural SINDH in mind before planning any use of the money come from backward areas. We must not forget, the UNHCR has marked rural Sindh as the most neglected areas in the world in-terms of absence of the very basic necessities of life. So much than even African poor, it says, has better life sustenance and facilities in their deserts and jungles than in Rural Sindh. Now imagine the level of helplessness there!
@arsalan anwar and well wisher. I dont understand the need to put regulation on this by the government why not let the invisible hand decide. if the Thar coal is so good (which its not)competitive and cost effective in the international market these plants would automatically shift to Thar coal.
no keeping buying from foreigners bcz there is commission involved.
Yes it is true, as the writer has expressed that , Imported coal can curtail the Vicious Circular Debt, but what is also true and of more interest is the fact that THAR COAL can sway it towards the end. Choice is yours , Continuing within this vicious circle or to try to get out of this maze of Debt by ladder of THAR coal
Senior Officials from Genco even don't know the specs of Thar Coal, Calorific Value of Thar coal is 3100 Kcal/kg. Germany, Turkey, Greece, China, USA(North-Dakota) and many other countries of the world have coal of poor quality than Thar and they are using it for Power Generation. Unfortunately despite of huge and coal reserves in Pakistan with low cost of production, we seeking for Imported coal.