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November 19, 2016

Ban on imported coal for IPPs delays 350MW project

Business

November 19, 2016

KARACHI: The government’s ban on use of imported coal for power generation delayed the commercial operation of a 350-megawatt private project around two years, industry officials said on Friday.

“(The investor) Siddiqsons Energy Limited (SEL) agreed to use Thar coal as primary fuel for the project and expected to achieve commercial operation date (COD) by June 2020 after a technical review in line with the government’s desire,” an official said. Earlier, the expected COD was December 2018.

Previously, SEL had planned to set up a 350-megawatt power plant on imported coal at Port Qasim. However, the government imposed a ban on imported coal-fired power plants and advised the company to change primary fuel from imported to Thar coal.

In July, the government slapped a ban on private investment in power projects based on imported fuel.

Analysts said the ban is intended to promote consumption of local coal and discourage new projects given sufficient investment commitments, under the China-Pakistan Economic Corridor, in energy sector.

The Pakistan Power Infrastructure Board had already extended the financial close deadline to August 31, 2017 on a request from the company.

The official said the project was progressing fast and also hired engineering, procurement and construction (EPC) contractor based on imported coal plan. 

“However, it revised the EPC contract and appropriate changes are being made in fuel source and supplier and supply arrangement,” the official said. “The company will be contacting Sindh Engro Coal Mining Company for lignite supply as its open-pit mine is almost halfway to completion.”

A document of the National Electric Power Regulatory Authority said the IPP had ‘unconditionally’ accepted an upfront tariff determined for Thar coal-based generation plants.

It, however, sought modifications in its generation licence to incorporate the changes.

The group planned an investment $760 million to set up various energy generation projects in the country, envisaging more than 400MW electricity addition.

These projects include a Port Qasim’s plant, one $80 million 50MW solar power plant in Chakwal and $80 million 35MW hydropower plant in Azad Kashmir.

Earlier, Lucky Electric Power Company Limited, a subsidiary of Lucky Cement, had announced to convert its proposed 660MW generation facility on local coal.

The power producer expected COD by December 2019.

Likewise, Hub Power Company (Hubco), which earlier planned an imported coal-fired 1320MW power project, slashed the capacity to 660MW, which would use imported coal as the primary fuel. 

Sources said Hubco was not planning to use Thar lignite, and would not reverse its reduction decision.

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