Lakhra Power Company revokes coal supply contract

Conflict between the company, coal supplier results in closure of power unit.

KARACHI: Lakhra Power Generating Company (LPGC) has revoked the contract of state-owned Lakhra Coal Development Company (LCDC) and now it will either import coal or purchase from private contractors in Pakistan. This has resulted in shutdown of the only power unit in the area generating 50 megawatts.

An official of LPGC says coal extracted from Lakhra was not up to the quality which can be used to produce power and its specification was below the standards recommended for the plant.

When contacted, LPGC CEO Engineer Abdul Malik told The Express Tribune, “I have decided (to revoke the contract) on the directives of high-ups in Islamabad, who have expressed concern over the quality of Lakhra coal.”

He added that coal’s specification was not in line with the standards needed to be complied with for power generation.



For the last 20 years, the power generating company had been dependent on indigenous (lignite) coal to produce electricity from Pakistan’s first-ever coal-based power plant located near Jamshoro.

“Being a nationalised company, LCDC’s prime goal is to provide coal for the power plant. We have been performing our duty for the last 20 years providing coal at a 50% discount,” said a senior official working with LCDC while talking to The Express Tribune.

In the open market, coal is being sold at Rs6,000 per ton and LCDC sold it to the power generating company at Rs3,320.

“It is incomprehensible why they revoked our contract and search for a private company to purchase coal of the same specification at an exorbitant rate,” he said.

If coal is imported, it will cost the government Rs13,000 per ton excluding transportation charges. LPGC awarded a tender for supply of 800 tons of coal per day on January 23 and asked the state-owned coal supplier to stop supplying indigenous coal, he said.

According to Rizwan Bhatti, a senior geological engineer, before Lakhra power plant was envisaged in 1989, the Water and Power Development Authority (Wapda) in collaboration with a US-based mining consultant firm John T Byode conducted geological survey and extracted coal samples from Lakhra. In their report, the mining consultant declared coal from the region compatible and could be used in power production.

Later, a contract was awarded to a US-based engineering firm Foster Wheeler to design boiler for the plant.

Moisture, heating value, ash and volatile matters were found up to mark in the coal samples from Lakhra, but the only hindrance was the sulphur content, which was higher than the standard.

“It was decided that limestone would be mixed in coal, but it never happened,” Bhatti said, adding that many private miners were operating at the Lakhra site, but state-owned LCDC supplied the highest standard coal in the area. The coal supplier pays 80% dividend to the government per annum.

The revocation of the contract has also created resentment among employees of the coal supplier.

Lakhra Employees Union President Alam Din Khoso said the power plant was built on the basis of coal specifications found at the Lakhra site.

LCDC Managing Director Chaudhry Zafar said his company has written a letter to Wapda and the Ministry of Petroleum and Natural Resources and are waiting for directives.

Published in The Express Tribune, February 6^th, 2013.

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