In its bid to fulfill another electoral promise for serving the masses by reducing load-shedding of electricity, Punjab Chief Minister Muhammad Shahbaz Sharif has reserved six appropriate sites for establishing coal power generation plants in the province. Thus Government of Punjab has once again taken the lead in devising the strategy to overcome the acute energy crisis in the country by adopting practical measures and encouraging production of electricity in the province along with efforts to lower its cost of production.
It is very unfortunate that during the past few decades, no concrete steps had been taken. Even any sound planning had also not been made to meet the future energy requirements of 180 million population of the country. Lack of vision at the part of our planners and deficiency of commitment among the executors has been the major reason of this situation that we are facing today.
The prevailing energy crisis in Pakistan has not only decelerated our development but has also generated a number of socio-economic problems like closure of industries, unemployment, disruption in supply of basic amenities of life and other such issues. The situation is so critical that shortfall of electricity rises up to 5000 Mega Watts in the summer season, thus aggravating the already miserable situation.
More than 65 per cent of our total electricity is being produced through thermal generation. As a result of use of expansive furnace oil, the prices of electricity are always on the rise. This phenomenon, along with subsidies, inefficiencies and leakages in the power sector has resulted in inter-corporate circular debt.
Punjab is the major load center of country and consumes about 68% of entire national grid fed electricity. Protracted load-shedding has crippled civic life, agricultural production, industrial output and commercial activities in Punjab. In addition to law and order problem, it has also led to shut-down of cottage industry and shifting of enterprises leading to further unemployment. It is sad to note that power deficit has hampered economic growth leading to poverty and obscuring economic opportunities. High cost of power generation results in consumer-end tariff which is not affordable for the majority of consumers. This has also adverse implications for competitiveness, as Pakistani producers cannot compete in the international market due to higher input costs.
Government of Punjab has decided to earmark the sites for the establishment of coal based power generation plants. These sites would be offered to private sector through open, competitive and transparent process. The intention is to help private sector quickly install power plants thereby minimizing the power deficit. Private Sector would also be eligible to suggest other feasible sites, which would also be earmarked for the purpose, if found to be according to criteria.
Given the prohibitive cost of oil, meeting energy needs, has become a challenge for both developed and developing countries. Every country is obliged to keep this subject on the top of its agenda. Pakistan is endowed with enormous reserves of coal in Thar, Lakhra and other places, but no serious effort had been made in the past to exploit these coal reserves and establish the coal-based power plants.
At the current growth rate, Pakistan will require 26,000MW by 2020 out of which around 10,000MW could be produced from coal. Primary objective of coal development projects is to provide affordable, reliable and sustainable electricity to consumers using indigenous resources. Reliance on indigenous fuel and even imported coal-fired power plants will help save billions of dollars in foreign exchange, which are currently being spent on import of expensive RFO (Refined Furnace Oil). Pakistan is endowed with natural resources and minerals; if explored and utilized properly, it can become a self-reliant country and get rid of dependency syndrome. Weak economy, technical resource constraints coupled with flawed decisions of the inept governments in the past have brought the country to the present scenario.
Pakistan’s power sector is at a development stage and needs massive investment; opportunities exist for foreign direct investment in energy sector. In the past, many a time it was suggested by experts to prepare a plan for gainful exploitation of the huge coal reserves but some ‘vested interests’ were reported to have obstructed the plan.
Government of Pakistan promulgated National Power Policy, 2013 to foster fast track development of electricity generation. The policy also provides guidelines for generating electricity from affordable energy resources. Power generation through coal has also been emphasized in the policy as this would re-balance the energy mix. All the federating units are expected to fast track energy projects in line with this Policy. Punjab has coal reserves which can potentially be used for power generation. Due to high sulphur and ash contents in Punjab’s coal, the choice of technology is limited; however, efforts are being made to harness the potential of these reserves. The coal available in Balochistan is quite suitable for power generation but its regularity and reliability of supply is not assured. The development of Thar coal is also likely to take some time. It is thus obvious that Punjab has to rely on imported coal to meet its growing power requirement.
The energy economics of imported coal has to be viewed in comparison to RFO/LNG. Inland transportation of coal is an additional cost, which more or less is offset by cost of transmission of electricity, if power generation facility is installed at coast. In world’s electricity generation, more than 40% percent comes from coal, whereas in Pakistan, less than 1% existing power is produced from coal. Coal is and will remain, a necessity, a key component in world electricity generating portfolio for the foreseeable future. Its price has remained generally stable as compared to those of oil and gas. Imported coal based power generation initiative provides a framework for establishment of sizeable power plants in Punjab. This initiative is essential for rapid and sustainable economic & social development in Punjab. Growing supply-demand gap where the demand for electricity outstrips the current generation capacity leading to a shortage of more than 4000 MW and 12-20 hours load-shedding in Punjab Province.
Most critical component of imported coal fired power plant is the reliable and regular supply of the specified coal in an uninterrupted manner. This requires long term contracts with the international coal suppliers, infrastructure at the port for handling coal and rail based transportation to the stockyard of the power plant. Pakistan Railways has made commitment for transportation of coal from coast to the project site. The project developing company must ensure sustainable supply of coal through Coal Supply Agreement(s) “CSA” with coal supplier and Coal Transportation Agreement (CTA), with Pakistan Railways or other transportation companies of their choice. The companies shall be pre-qualified and ranked on basis of widely publicized evaluation criteria in an open, competitive and transparent manner. It is hoped that other provinces would also emulate Punjab Chief Minister Shahbaz Sharif and initiate power projects to solve the energy crisis.