Govt mulls plan to use Thar coal for generation of 3,960 megawatts

ISLAMABAD: The government has decided to convert 3,960 MW of electricity generated from imported coal onto local coal of Thar to stop consuming the costly foreign exchange reserves for the import of coal, which is no longer available at low prices. The coal price has shot up to $400 per metric ton, a senior official at the Energy Ministry told The News.

“The average per-unit cost of coal-based electricity used to be at Rs4-5 per unit, which has swelled to over Rs18 per unit, mainly because of an increase in imported coal price up to $400 per metric ton.”

The government has zeroed the subsidy on POL products and may increase the price of Mogas and diesel by imposing a petroleum levy on July 1, 2022, which is also a condition of the Fund. For the restoration $6 billion IMF program, the government would also increase the local gas prices by 45 percent from July 1.

The given situation, the official said, has compelled the government to end reliance on imported coal for power generation and it has decided to convert the Port Qasim Coal Power plant, Sahiwal Coal Power plant, and China Hub Coal Power plant, each having capacity to generate 1,320 MW of electricity. This is how the three power plants, which run on imported coal, have the capacity to generate 3,960 MWs of electricity.

“The Power Division has hired a firm for an assessment report on converting the imported coal-based electricity generation onto Thar Coal as fuel and the additional cost that will be incurred on the conversion, in one year’s time,” the secretary Power Division stated while confirming the development.

Currently, electricity of 660 MWs based on Thar coal is being added to the national grid and one more plant of 660 MW in Karachi, Lucky Power Plant, is being constructed also on Thar Coal as fuel.

The fuel import bill has so far eaten up almost $20 billion in the first 11 months of the outgoing fiscal 2021-22. Coal is an important source of energy and the power sector uses a significant share of coal for generation of electricity. Generally, indigenous coal is consumed in brick kilns and cement factories while imported coal is used for power generation, cement manufacturing, and other industries like steel making, etc. During FY2021, domestic coal production figured at around 9.3 million tons and about 18.9 million tons of coal were imported. During July-Feb FY2022, the import of coal stood at 12.21 million metric tons.

The consumption of coal in cement and other industries has significantly declined from 37.6 percent July-March FY2021 to 24.1 percent during July-March FY2022. The overall consumption of coal has increased from 19.7 percent in July-March FY2021 to 31.4 percent during July-March FY2022. The power sector uses most of the coal and its share has increased to 44.5 percent during July-March FY2022 from 42.7 percent during the corresponding period last year.