Sunday October 02, 2022

Import capson coal to aggravate power crisis

By Our Correspondent
July 29, 2022

KARACHI: Recent loss of generation from Guddu power plant and problems with Neelum Jhelum, Independent Power Plants (IPPs) based on imported coal would face further depletion of inventory, which would aggravate the country’s power crisis.

The IPPs have already been facing issues to import coal and now the situation would get worse for them as shrinking import cover and free fall of local currency against the dollar have led to prioritising imports with preference given to oil and other essentials.

This would result in the lower utilisation of the IPP plants. “The solution to this whole worrisome situation is shifting focus to indigenous coal,” said analyst Ali Ather.

Global reliance on coal has increased in the past two years and coal’s massive demand resulted in heavy surge in its prices.

“Hence, importing coal on such high prices just increased the fuel cost of the country, which is already under heavy pressures due to historic currency depreciation against the dollar,” he added.

Also, the Russia-Ukraine war led to a supply shortfall in energy sources, making several countries in Europe including Germany, France, Italy, and Netherlands to opt for re-opening of their coal plants to meet their energy needs.

It should be noted that Pakistan’s grid power generation in FY22 (at 139 billion units) stood 10 percent higher year-on-year.

“It will be quite difficult for the government to keep fuel cost in control due to heavy depreciation in the rupee against the dollar,” Ather reasoned.

He said that 175 billion tonnes of coal deposits in Thar could easily make the country self-sufficient in energy. Phase III expansion of Thar Coal Block II Mine to 12.2 million tonnes per annum was approved last year, with expected time of completion by the end of 2023. After the expansion, the price for Thar Coal would be under $30 per tonne, making it the cheapest baseload fuel for the country.