China lends a helping hand


Nov 03 - 09, 2003




There are strong hopes that the current visit of President Pervez Musharraf to China this week will open a new chapter in the energy sector of Pakistan. An agreement is to be signed for development one of the world's largest coalfields so far neglected in District Thar in the Province of Sindh.

An estimate reveals that Thar coalfields have a proved reserve of over 20 billion tons of coal which can bring a revolution by cutting down the cost of power generation if all the available resources are used productively.

At present the national economy is confronted with two formidable challenges which include the huge import bill on account of POL products which costs over $3 billion per annum and on top of all is the exorbitant price of electricity which is proving a serious irritant in halting the industrial growth in Pakistan. Besides stagnant growth in the manufacturing the unbearable cost of electricity also causing unbearable sufferings to the consumers throughout the country. For bringing down the cost of electricity, the plans are underway to shift the entire power generation sector both in the public as well as the private sector (IPPs) to cheaper fuel i.e. either natural gas or coalfired system. Although it's a long-term policy but there is no option but to go for that. It is unfortunate that the previous governments without considering the adverse impact of the policy under which the then government entered into power purchase agreements with the Independent Power Producers (IPPs). Although the arrival of the IPPs helped in overcoming the problem of load shedding due to power generation support by the private sector, however the cost played havoc both on social and economic fronts. The present government has taken some corrective measures in this respect; however, the costly POL and electricity which are considered as the pivot of the economy are beyond the reach of the common man.



However, the plans for shifting from oil to gas and coal have started producing results as the fuel oil consumption fell by 16 per cent in two months up to August 31 as producers switched over to coal or natural gas because of rising fuel oil prices.

The companies consumed 2.32 million tons of petroleum products in July and August, from 2,77 million tons in the same period a year earlier.

Gas availability has increased to new discoveries in the last fiscal year, thus attracting more power producers to use gas as cheaper mode of fuel. About 78 percent of Pakistan's fuel oil is used to generate electricity and to run cement factories.

The furnace oil consumption fell 21 percent to 898,000 tons down from 1.14 million tons.

The oil bill fell by 4 per cent to $679 in the three months up to September 30, from $708 million.

Sui Southern Gas Company Pakistan second largest natural gas distributors raised its supply capacity by 33 per cent to 1.2 billion cubic feet of gas per day after completing a pipeline expansion project.

Pakistan's gas demand is expected to grow to 5.5 billion cubic feet a day by 2012 from 2.6 billion cubic feet now. The government seeks to have most power plants funning on gas or coal by end of this year.

Oil bill and consumption will fall further in the current fiscal year as most of the power producers and cement makers will also switch to gas. Pakistan's imports of crude oil and oil products in the year to June 30 rose by 9 per cent to $3.06 billion from $2.86 billion.


Currently, world's developed economies such as China, US, Germany as well as India are using coal which is obviously much cheaper fuel for power generation as compared to furnace oil or natural gas.

The agreement on the installation of a 600mw Thar coal power generation plant at Duddar is most likely to be finalized when President Musharraf visits China in the first week of November, 2003.

The relevant authorities in Pakistan have already discussed the pros and cons of the agreement with the Chinese counterparts who had recently visited Pakistan.

In connection with the ground work for enhancing economic cooperation between the two countries, experts and professionals including Director General Petroleum Concession have already proceeded to China prior to the visit of the President Musharraf.

China's leading company Shanhua had already shown keen interest in developing the coal-fired power generation plants adjacent to Thar coalfields. The first phase the Chinese company will start work in about 50-square km of Thar Coal area and install two coal-fired power generation plants each of 300MW capacity.

The Chinese company Shanhua was also actively busy in preparing the feasibility study of Thar coal to ascertain the gasification of the coal and coal bed methane (CBM). China would also help Pakistan in installation of 3000MW power generation plants after the completion of work on these two power plants.




The experts are of the view that the development of Thar coalfields will do a magic to the social development of the remote area of district Thar where people are deprived of the basic needs such as drinking water. The energizing of the area is expected to help turn the deserts of Thar into a Greenland which assures economic glory in the days to come inshallah!