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Punjab’s 200 megawatts coal-based power project


The planners have put in a spanner, as it appears, in the whole process of utilising Punjab’s indigenous large coal reserves for power generation that was launched last year on a fast-track basis. In a major policy shift, the government of Punjab has now announced to develop a 200-MW capacity power project based on “imported” coal.

It is planned to establish the first-ever coal-based power plant of the province at Ghazi Ghat in DG Khan district for which Balochistan would supply coal. The Punjab government has invited international consultants to pre-qualify themselves for conducting techno-economic feasibility of establishing the 200-MW project. The detailed study will include geo-technical and hydrological investigations, availability of requisite infrastructure, suitable technology to be adopted, required plant machinery and other basic parameters of the project, besides conducting an independent environmental impact assessment (EIA) report. To facilitate the potential investors, the feasibility report is required to be bankable and of international standard.

Earlier, the Punjab government has planned to establish a series of integrated power generation units, of 700-MW cumulative capacity, to be located in different parts of the province utilising its own coal resources.

In the first phase, three power plants, each of 50-MW capacity, were to be installed on mine-mouths in the coalfield areas of Dandot (district Jhelum), Khushab (district Sargodha) and Makerwal (district Mianwali). Negotiations with foreign investors were in advanced stage last year for developing these projects. Apparently, this plan has been shelved as the Power Purchase Agreement (PPA) with the Pakistan Electric Power Company (PEPCO), scheduled for signing in March this year, has not yet been concluded.

On the face of it, the proposed 200-MW power project is a non-starter for a number of reasons. First, because of its size, as according to the Power Policy in vogue, the provinces are allowed to construct power plants only of the capacity up to 50-MW, whereas the projects of above 50-MW rests with the federal government, through the Private Power and Infrastructure Board (PPIB).

Of late, however, the provinces, having invoked Article-157 (2) of the Constitution, claim that they could install power plants of any size if the power generated was to be utilised within the respective province. The government of Khyber Pakhtunkhwa has already commissioned Malakand-III hydropower project of 81-MW capacity under the provisions of the said Article.

Even if this interpretation can be accepted by the federal government in this case, the same understandably applies to the projects using their own energy resources and only to be developed in public sector. The proposed project does not meet either of the criteria as it is based on Balochistan coal and plan to be developed with the participation of the private sector. If the Punjab government goes ahead with the scheme, the investors of other IPPs (independent power producers), who have followed the policies of the federal government, would agitate on the grounds of violation of Power Policy 2002 and discrimination as the fiscal and financial regimes for the two projects would vary.

Interestingly, the said Article also allows determination of tariff by the provinces. Currently, there are three coal-based IPP projects being developed under Power Policy 2002, utilising Thar, Lakhra and Sonda-Jhurrek coal reserves in Sindh, and obviously, progress of these on-going projects will hamper. The Punjab project could thus run into snags even before its take-off.

Second, availability of the actual quantity of coal, required over the entire 30-years’ life of power pant, is not ensured. The initial agreement has been concluded between the two provincial governments for supply of coal to the project from Chamalang (District Loralai) coalfields. Chamalang coal, with a potential of 11 million tonnes in total, has proven reserves of 1.5 million tonnes, indicated 1.5 million tonnes and inferred 8 million tonnes. The project is planned to meet its entire requirement of coal from Chamalang coalfield, to the extent of 2,400 tonnes of coal per day. This is translated into total coal requirement of about 26 million tonnes for designed plant life that far exceeds total Chamalang reserves.

It may be noted that normally a power plant is designed especially on the characteristics and specifications of the coal it would use. Third, it will not be cost effective as the capital cost of power plant based on coal from Chamalang will be higher as compared to mine-mouth projects. There will be additional costs for transportation of coal and facility for its storage etc. The higher project cost will impact on energy tariff.

Another striking feature of the plan is that the terms of reference (TOR) of the consultants also include review of coal resources of Punjab, including analysis of coal specifications. It involves duplication of work, as it was only last year that the government had engaged mining specialists, Snowden of Australia, for the purpose. Snowden have submitted techno-economic feasibility report of the Punjab coal reserves in June 2010.

Punjab has the required quantum and quality of coal for power generation, with total proven coal reserves of medium and high grade to the extent of 236 million tonnes, larger than that of Balochistan. The Punjab coal, which has heat value (energy content) ranging between 9,472 BTU/lb and 15,801 BTU/lb, has low ash and high sulphur. In comparison, heat value of Chamalang coal ranges from 12,500 to 14,357 BTU/lb. Coal mines in Punjab are well-developed for sometime, though on small scale, and provide long term fuel security for power generation. A 50-MW coal-based power plant would annually consume 0.22 million tons of Salt Range coal or 0.13 million tonnes of better quality Makerwal coal.

In view of the foregoing, the proposed 200-MW coal-based project is not economically viable, and demands review of the scheme by the government of Punjab on priority. In any case, the project would be delayed since the recent floods have badly damaged infrastructure at DG Khan district, in particular at Ghazi Ghat. There is no denying the fact, however that in future, coal will be the main energy resource, which is world-wide known for generating cheaper electricity and higher availability.

(The writer is retired Chairman of State Engineering Corporation, is Vice President of the Institution of Engineers, Pakistan)

Copyright Business Recorder, 2010

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