THE government’s decision to set up coal-fired power projects based on imported, instead of indigenous coal, poses numerous issues, problems and risks. It is also not viable.
On October 3 last year, at the special board meeting of the Thar Coal & Energy Board, Prime Minister Raja Ashraf Pervez had decided to utilise Thar coal for planned conversion of existing oil-based power plants to coal-based technology, as well as in all new coal-based power projects.
Pursuant to the PM's landmark decision to use indigenous coal, the government had announced to establish two power plants each of 2,200-2,500-MW capacity, costing around $6 billion each based on Thar coal.
But, the outgoing elected government had a change of heart within few weeks. It has now been decided that Jamshoro power station conversion, as well as two proposed power projects, would be based on imported coal instead.
However, conversion of existing Jamshoro power station, and construction of a new power plant based on imported coals is neither feasible nor in national interest. In this case, the country will remain heavily dependent on imported fuel, and none of the objectives of using indigenous coal, including saving on foreign exchange resources and major reduction in electricity tariff, would be achieved.
A 600-MW gross design capacity power plant will require about four million tonnes of coal per year, or 11,000 tonnes of coal per day, or 450 tonnes of coal per hour. Coal required for a 2,200-2,500 MW plant will be almost four times. Corresponding logistics are required at Karachi port to receive and handle imported coal of this quantity and for onward transportation to Jamshoro. Again, huge infrastructure at Jamshoro site will also be created to receive, handle and store it. For developing in-plant infrastructure, acquisition and use of large land area is required, which involves displacement/resettlement of population.
The project capital cost will escalate and lead-time will be longer, and will not serve the purpose of bridging demand-supply gap in foreseeable future. World over, power plants using imported coal are located near seaport so as to avoid the issues related to coal transportation and environmental impact. Also, such projects require large volumes of water for cooling purposes.
Coal-based power plants are custom-designed and technology selected depends on coal analysis and characteristics. Thus, regular and reliable supply of coal of same specifications could not be guaranteed for 30-40 years of plant life span. On the other hand, coal is projected to surpass oil as the world's top fuel within a decade, and international prices of coal would increase manifold in future.
Due to limitations of design and engineering, it will also not be possible to switch to using indigenous coal at any later stage of operations. It may be recalled that two power plants each of 1,000-MW capacity based on imported coal under Power Policy 2002 could not come up at Gadani (near Karachi) as the foreign developers finally backed out. But, somehow, in this process four integrated mine-mouth power projects based on Lakhra and Sonda-Jherruk coal, which were in advanced stage of implementation, could also not materialise. These four IPP projects of cumulative capacity of 550 MW were scheduled to achieve the COD by June 2012.
Many in the government are keen to serve the larger interests of foreign traders and investors. Or, they simply lack knowledge of the subject, having myopic vision, if any. Surprisingly, Minister for Water and Power Ahmed Mukhtar is not supporting the use of indigenous coal as evident from his statement in September 2012.
The ministry of water and power has not implemented other related decisions of the prime minister discussed at the special board meeting. It was decided that the coal off-take agreement would be signed within few days between power generation companies and Sindh Engro Coal Mining Co. for supply of coal from Thar coalmine to the existing Jamshoro plant. Also, sovereign guarantees valuing $600-700 million were to be provided to this company, which is a joint venture of the Sindh government with the private sector, for financing debt portion of project. There has been no progress on any of the decisions.
It may be pointed out that Sindh Engro Coal Mining Co. is developing Thar Block-II for initial mining of 6.5 million tonnes annual capacity by this year. Mined coal will also enable commissioning in July 2016 of an integrated mine-mouth power plant of 1,200-MW capacity by the joint venture company.History is likely to repeat, and the country will continue to miss opportunities for development of Thar coal. The government should realise that only viable option is to establish mine-mouth coal-fired power plants at Thar.
Thar coal, which is classified as lignite-B and subbituminous-A (ASTM classification) having heating value of 6,244-11,054 BTU/lb, is suitable for power generation. Lignite of similar character and quality is being used for power generation on commercial scale in India, Germany, Hungary and Serbia. Thar coal has already attracted investment, domestic and international, that could now be jeopardised.