Tuesday August 09, 2022

Coal-fired plant relocated to cut transportation cost

August 15, 2017

KARACHI: Siddiqsons Energy Limited (SEL), intending to become the first coal independent power producer, decided to relocate its supercritical coal-fired power plant to Thar – the commodity’s hotbed in Sindh – from a previously planned location of Port Qasim to curtail transportation cost. 

A document, citing a transportation study undertaken pursuant to the requirements of the local coal tariff, said transporting one million tonnes of coal each year from Thar to Port Qasim is “not only impractical and wasteful, but also hazardous.”

Therefore, SEL decided to relocate the plant from Port Qasim to Thar Block-II in order to comply with the government requirement to keep transportation cost as low as possible. The relocation’s decision would, however, suppress the plant’s production capacity.

The change in location from Port Qasim to Thar would reduce it to 330 megawatts from 350MW. The original project was initially being developed on imported coal and was on track to achieve its contemplated targets. However, government imposed a moratorium on the development of power projects on local financing.

SEL switched to foreign financing sources and made the necessary arrangements in order to meet the requirements. But, government imposed a ban on power projects to be set up on imported coal and SEL decided to comply with the new policy.

In 2016, government imposed ban on new power plants based on imported coal, liquefied natural gas and fuel, giving an exemption to the projects that are finalised under the China-Pakistan Economic Corridor or mutually-agreed between the governments of Pakistan and China.

The company has so far invested more than Rs2 billion in developing the
project. Its aim is to bridge the gap between the demand and supply of electricity in the country and thereby, contributing to economic growth and employment generation.

SEL has already filed an application seeking generation licence for its generation facility at Thar Block II after the power regulator directed the company to seek fresh generation licence for the new site.

“SEL had not failed in its compliance with the law and regulatory approvals and had been actively pursuing the development of the project, but only suffered undue delays in reaching financial closing as a result of change of policy and subsequent directions of the government of Pakistan,” said the document.

Siddiqsons Energy Limited also obtained a firm commitment for the allocation of coal from the Sindh Engro Coal Mining Company. Siddiqsons Energy Limited was formed in September 2014, with a mandate to enter into the business of power generation.