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March 11, 2017

The cost of coal


March 11, 2017

It is understandable that in times of paucity, the utmost and, perhaps, the prime focus of a state is to explore avenues of output maximisation in the best possible way.

In a country where rural areas receive 90 minutes of uninterrupted power supply during the summers, where the average power shortfall in the country can rise upto 7,000 MWs and people are plunged into unemployment owing to business closures driven by power outages, the public naturally become esurient for energy. An assurance of dragging them out of the situation will naturally be intuited as divine intervention.

It is times like these when the fiduciary responsibility of pulling the nation out of darkness in the best possible way rests heavily on the shoulders of the leadership. Is this what has happened in our country or has the focus only been on output maximisation while other facets have been shrugged off?

The global momentum of energy production is drastically swinging away from coal-based energy. During the 2015 UN Climate Change Conference – COP 21 – around 132 countries inked an agreement to reduce carbon footprint and other emissions. World Bank President Jim Yong Kim calls coal-fired plants a disaster for the planet while similar statements have emanated from the office of the UN’s secretary general.

The UK, in its move towards cleaner energy, has planned to shut down all coal-based power projects by 2025. Finland’s plans to ban coal for energy use by 2030 are similar. China – our friend in the north – has stopped granting new licences for coal-fired project by 2018. Moreover, Brussels has decided to cut subsidies on coal-power projects to comply with the Paris Agreement while just a week ago Australia’s state-owned energy giant CS Energy decided to put an end to coal-fired power stations.

For the much-celebrated CPEC – which apparently is a knight in shining armour for the public – there are certain factors that we either have missed or chosen to ignore in our anticipation of a Pakistan with no loadshedding.

As per the government’s official website for CPEC out of the priority energy projects – which amount to 10,350MWs – 5,940MWs energy projects worth $8.15 billion are coal-fired. In the category of actively promoted projects, 3,300MWs out of 5,820MWs of planned energy projects worth $3.87 billion are coal-powered.

Among others, the Sahiwal Coal Power Project – which is to be run on imported coal with a planned installed capacity of 1,320MW – is expected to cost $1.6 billion. Currently, 95 percent of civil works on the project have been completed as per government figures and commercial operations are likely to commence by the end of this year.

Sahiwal and Okara are home to the dairy farming industry in Pakistan. A significant contribution from this area has ranked Pakistan among the top five milk producers in the world with the country’s milk production in 2015-16, amounting to 54,328 thousand tonnes. The Sahiwal breed cow is among the most widely used breeds in dairy farming.

As per the Economic Survey of Pakistan 2015-16, livestock has contributed around 11.6 percent to the GDP of Pakistan and nearly eight million families in Pakistan are involved in livestock activities. Out of the aforementioned metrics, Sahiwal and Okara collectively contribute significantly to the livestock and dairy farming business. Owing to this, Engro Foods has based its milk production plant in Sahiwal while many other milk processors have a large number of milk collection centres in this region – which are either directly owned or contracted. Most livestock farmers, owing to the fertility of the land, grow fodder and other crops in the area which predominantly forms a source of their animals’ feed and household needs.

As per the results of an Energy Protection Agency survey, it was found that emissions – such as sulphur dioxide and particulate matters (PM 10) –from the construction site of the Sahiwal plant construction site were significantly above the acceptable threshold. These emissions are severely detrimental to the environment, livestock and the dairy farming business which fuels the local economy. The project, on the one hand, is a contributor to the national grid and on the other it poses a significant risk to the local economy and the dairy farming business.

I am partly content with the notion that the energy shortfall is being narrowed due to the project – which, in the foreseeable future, will light up the breadth and width of Pakistan. However, this has also given rise to a dual cognisance and I fail to understand which one is correct.

First, in the perception of the treasury benches, are citizens considered to be doltish human beings who, at the hands of scarcity, have become so feeble and dependent that only the output will matter to them no matter what course of action is taken?

Second, are we really that insensitive and incapable of rational thought that our leaders don’t feel the need to concentrate on other factors because we do not demand them as a deliverable – which keeps their focus only on the output irrespective of the course taken?

Most people, if not a majority of our population, are unaware about the cloud on the horizon. But I’ll leave this for the readers to decide which notion from the aforementioned ideas they find applicable after knowing the facts.


The writer is a chartered accountant and a graduate of Oxford Brookes University.

Email: [email protected]

Twitter: Shahzad_91


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