Coal-fired power plant: Govt’s about-turn paves way for $900m ADB loan

Published: February 14, 2013
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According to last estimates made in 2011, Thar coal field is estimated to have reserves of 185 billion tons, 68 times higher than Pakistan’s total gas reserves, capable of generating 20,000MW for the next 40 years at a rate of Rs4 per unit. PHOTO: FILE

According to last estimates made in 2011, Thar coal field is estimated to have reserves of 185 billion tons, 68 times higher than Pakistan’s total gas reserves, capable of generating 20,000MW for the next 40 years at a rate of Rs4 per unit. PHOTO: FILE

ISLAMABAD: 

Giving in to the pressure from an international lender, the government has reversed its decision on consuming domestic coal for power generation as the Council of Common Interests has approved using a blend of imported and Thar coal in power plants.

The move will pave the way for an early sanction of a $900 million loan by the Asian Development Bank that will go for the construction of a 600-megawatt coal-fired power plant at Jamshoro and for switching an existing 600MW power plant to coal.

According to sources in the finance ministry, further discussions on the $900 million loan will be held with ADB Director General of Central and West Asia Department Klaus Gerhaeusser, who was due to arrive on Wednesday.

During his two-day visit, Gerhaeusser will meet Finance Minister Dr Abdul Hafeez Shaikh and Water and Power Minister Ahmad Mukhtar. He will also hold meetings to review communication projects.

Prime Minister Raja Pervez Ashraf had placed a ban on imported coal-powered plants in a bid to encourage consumption of Thar coal in such projects. However, the ADB resisted the move and refused to extend loans for Thar coal-based power plants.

The bank was of the view that higher dependence on lignite would increase pollution, which was against the environmental policy of the lending agency.

Following the ADB’s decision, the federal government placed the case in a meeting of the CCI – a constitutional body headed by the prime minister with all chief ministers as members – on January 23. According to official documents, the CCI decided that “instead of using only Thar coal, a blend of imported and Thar coal will be used in the 600MW Jamshoro plant.”

In this meeting, Sindh Chief Minister Syed Qaim Ali Shah, who actively promotes mining and consumption of Thar coal, was also present.

CCI also decided that the Ministry of Water and Power would work out further details in deliberations with representatives of the ADB.

Apart from the ADB, the Japan International Cooperation Agency (JICA) has also expressed interest in constructing power plants in Pakistan, besides laying a power transmission lines from Thar to Matiari.

In the past many years, heavy reliance on furnace oil has disturbed the country’s energy mix. Against a one-third share of thermal power generation earlier, the ratio has increased to three-fourths. The recent emphasis on the shift to coal is aimed at tackling the runaway circular debt that has plagued the entire energy chain, forcing the government to spend billions of rupees every month to prop up the energy system.

According to a government official, it was not yet clear whether Pakistan will again take up the issue of financing the Diamer Basha Dam with the ADB director general.

However, he said these days the dam, costing $11.3 billion, was not the top priority of the government, which has shifted funds meant for the dam to another project, the Neelum Jhelum hydropower plant. An amount of Rs1 billion has also been diverted to the PM’s discretionary funds.

Published in The Express Tribune, February 14th, 2013.

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Reader Comments (8)

  • H. Khan
    Feb 14, 2013 - 8:00AM

    ADB is not helping in sustainability of the country.Sad this government is so in-effective and useless

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  • John B
    Feb 14, 2013 - 10:18AM

    Lignite has a low calorific value and produces more pollutants than the high value black coal. It is a good decision by ADB to suggest a mixed use of brown and dark coal to keep the project moving. Otherwise PAK would be stuck in the carbon emission limit which is coming. May be in the future PAK can also make liquified / gaseous fuel out of it, as well.

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  • KH
    Feb 14, 2013 - 10:42AM

    CCI council of common interest, sad it should have been CNI Council of National Interest, this shows the mentality….

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  • KH
    Feb 14, 2013 - 10:46AM

    @John B:
    Pakistan is a developing country I think controlling pollution should be a priority of economies like US which even being developed are polluting the earth more.

    Mr. John can us tell us what percentage of total world pollution will Pakistan cause????

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  • MHK
    Feb 14, 2013 - 10:57AM

    If the US and China can use coal as the primary energy source for producing electricity, WHY CANT WE?

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  • Feb 14, 2013 - 11:15AM

    @John B: You seem to be a ‘jack of all trades.’ Your comments have a sprinkling of politics, anti-Pakistani venom, science, humor, history and an urge to start kicking. Good. As long as it benefits the common Pakistani and not the lending agencies. Have a nice day. Salams 20132

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  • realist
    Feb 18, 2013 - 9:38AM

    @MHK:
    Because US and China use their own money.

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  • Polpot
    Feb 20, 2013 - 6:48AM

    “he Daimer Bhasha dam, costing $11.3 billion, was not the top priority of the government, which has shifted funds meant for the dam to another project, the Neelum Jhelum hydropower plant. An amount of Rs1 billion has also been diverted to the PM’s discretionary funds.”
    +++++++++++++++++++++++++++++++++++++++++++++++++++
    Sayonara Daimer Bashsa Dam:)

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