Focus shifts to coal-fired plants to arrest rising power cost

ADB will provide most of the funds for these plants.

ISLAMABAD:

Upset about the rising power generation cost and an uncontrollable subsidy, the Pakistan Muslim League-Nawaz government has decided to launch four new schemes in its power generation policy that will see two furnace oil or gas-based plants shifting to coal and setting up of two new coal-fired plants.

The schemes, costing Rs252.23 billion, will receive the support and financial assistance from the Asian Development Bank (ADB), say budget documents for fiscal year 2013-14 unveiled on Wednesday.

The ADB will provide Rs77.6 billion, out of the total cost of Rs97 billion, for shifting furnace oil/gas-fired plants to coal. These include units 1-6 of Muzaffargarh thermal power station, which have power generation capacity of 1,350 megawatts (MW), and units 1-2 of Jamshoro thermal power station with 450MW capacity.

In the new budget, the government has allocated Rs2.7 billion for these two schemes.

Apart from these, the government is planning to set up two new coal-fired power plants each of 660MW capacity at a cost of Rs155.23 billion. For these plants, the ADB will give Rs124.1 billion.



Officials of the Ministry of Water and Power believe that if the coal-based plants come on stream the government will be able to save Rs100 billion in inter-corporate debt.

Earlier, the government of Pakistan Peoples Party, which completed its five-year tenure in mid-March, got engaged in a financing row with the ADB, which insisted on running some power plants on imported coal. However, the two sides ended the impasse later and agreed that 20% local and 80% imported coal would be consumed to run the power plants.

In the budget, the government has earmarked Rs169.16 billion for the power sector. Of this, the federal government will provide Rs51.44 billion, the National Transmission and Dispatch Company and Pakistan Electric Power Company will generate Rs86.24 billion from their own resources and Rs33.7 billion will be borrowed from foreign lenders.

An amount of Rs17 billion has been set aside for acquisition of land for 4,500MW Diamer Bhasha hydropower project and for construction of the dam’s Lot 1-5 Rs8.15 billion has been allocated.

For 4,320MW Dasu hydropower project, the government has allocated Rs1.74 billion. Donors including the World Bank are pressing Pakistan to shelve Bhasha Dam project and are offering funds for Dasu project.

Nandipur power project, with capacity of 425MW, will get Rs10 billion next year. The project cost has gone up to Rs57.38 billion against earlier estimates of Rs23 billion.

While presenting the budget, Finance Minister Ishaq Dar said the project cost went higher as machinery, which had been lying at the Karachi port for the last three years, could not be put to use.

Saying that the project would be completed in the next 18 months, he warned that action would be taken against the people involved in negligence.

The country is also working on Chashma 3 and 4 nuclear power plants with Chinese assistance. For next year, the government has earmarked Rs315 million for interconnection of these plants whereas total cost of the project is Rs3.15 billion.

Also, Rs50 million has been earmarked for conducting feasibility study on distribution of 100MW of electricity imported from Iran.

Published in The Express Tribune, June 13^th, 2013.

Like Business on Facebook to stay informed and join in the conversation.