CONVERSION OF POWER PLANTS FROM OIL TO COAL

ADB AGREES TO PROVIDE $1.4 BILLION LOAN.

SHAMIM RIZVI
(feedback@pgeconomist.com)

June 4 - 10, 20
12

In a major development last week, the Manila based Asian Development Bank (ADB) has agreed to provide huge funding amount of $1.4 billion for converting the costly diesel-run public sector power plants into coal based power houses, which would result in cutting down the generation cost by about 50 percent from present Rs19/20 to Rs8/9 per unit. According to a senior official of the ministry of water and power, this timely help would enable the government to provide substantial relief to the rightly agitating electricity consumers throughout the country

The huge hike in power tariff since long because of the rising cost diesel or furnace oil led to an unprecedented level of inflation making the lives of poor and lower middle classes miserable. The government despite fully realizing the situation was unable to provide any relief to the people. With this plan of conversion of costly diesel plants into coal fed with the most timely help of ADB, the government would be in a position to provide substantial relief to the people.

The government has planned to convert its all-thermal power plants within two to three years after feasibility gets done with the aim to generate close to 4000 MW electricity.

The government has decided not to further install the diesel run powerhouse in the country rather the existing power plants in the public sector will be converted into imported coal based powerhouses.

The bank has agreed the aid memoir of $400 million for converting of some power plants in the first phase, which will help generate about 1200 MW of coal-based electricity. Under the first phase, the power plants will not only be upgraded, but also be converted into quality-imported coal.

The bank will also extend $740 million funding for installing the new high tech super critical coal fired plant at Jamshoro with the capacity to generate 600MW of electricity. Replying to a question about expected emissions of carbons from the coal based power houses which will be detrimental for the environment, the officials said that power plants will be repaired and up graded in Jamshoro, Guddu, and Muzaffargarh with modern and latest equipment ensuring the zero emission in the environment. In addition to it, the imported coal of high quality will be used in the power plants.

Mentioning about the new 600 MW coal based power plant, the official said that super critical coal fired plant will be purchased and installed at Jamshoro, which will also ensure the zero carbon emissions.

The official claimed that these arrangements would help change the existing energy mix owing to which the monster of $3 billion circular debt has emerged and because of this heavy debt in energy sector, no further investment is trickling down even in the new energy sector program.

Under the existing energy sector mix, 74 per cent electricity is being generated through thermal powerhouses, which use the costly diesel and RFO (residual furnace oil) owing to which the power tariff is incessantly increasing in the wake of hike in the prices of diesel and RFO in the international market.

Since the fuel cost is a pass-through item so the cost of fuel is added almost every month. "So we have decided to convert all the thermal power houses into coal as a fuel to bring down the generation cost of electricity to a reasonable and affordable level and for this we are also grateful to ADB for the timely financial help to undertake this costly project, the official said.