Mughal Steel plans $137 million coal-fired plant

KARACHI: Mughal Energy Limited (MEL), a subsidiary of Mughal Steel, has planned to setup a 55MW coal-fired power plant with the proposed investment of $137 million in Lahore, an official said on Saturday.

The electricity generated from the plant will be wheeled to different locations of Mughal Steel Limited, he said, adding that the power plant would be operated with a mixture of several types of coal as basic fuel.

The electric power sector of the country has been experiencing reliability issues due to which the utilities are finding it difficult to supply electric power to its consumers on a continuous basis.

To cope with the situation, various industrial groups / units are planning to setup generation facilities using cheaper resources for supplying to their industrial concerns.

Mughal Steel Mills is the second largest steel manufacturing concern in Pakistan; therefore, it has extensive power requirements for which it is currently dependent on the Water and Power Development Authority (WAPDA).

The company has an estimated requirement of 39MW at its peak load production capacity.

“Given the prevailing energy shortages and the ever-increasing cost of electricity, the board of Mughal Group of Industries is assessing and evaluating the proposal of setting up a coal power generation facility,” a document revealed.

There is an increasing demand for power in the domestic, commercial and industrial sectors as Pakistan’s population and its economy continue to expand — with an annual GDP growth forecasts averaging five percent for the medium-term.

Currently, electricity consumption is severely suppressed by supply shortfalls and persistent load-shedding, and there also exists significant levels of latent demand in the country, as rising income levels allow more people to switch to electricity from using traditional fuels.

The validity of the assumption that electricity use in Pakistan remains constrained due to availability — rather than access — issues is borne out by the fact that the penetration of the power network in the country is the highest in the South Asian region at 93.6 percent, compared with 88.7 percent in Sri Lanka, 78.7 percent in India, 76.3 percent in Nepal, and 59.6 percent in Bangladesh.