Cost-plus reflection of transportation: PC asks Nepra to make Thar coal economically viable

ISLAMABAD: Planning Commission (PC) has urged National Electric Power Regulatory Authority (Nepra) to allow cost-plus reflection of transportation cost of Thar coal in the tariff, to make utilization of indigenous coal viable. This was suggested by Planning Commission’s Member Energy during a meeting held on Thar coal convened on the directions of Prime Minister Shehbaz Sharif, who has constituted a committee to ascertain the availability and demand of Thar coal and commercial viability of Thar rail connectivity project.

Presided over by Minister for Planning, Development and Special Initiatives, Ahsan Iqbal, the meeting discussed pros and cons of availability and demand of Thar coal and commercial viability of Thar rail connectivity.

Minister for Planning, Development and Special Initiatives highlighted that as per Prime Minister’s directives the mandate of the committee is to ascertain the supply and demand of Thar coal in power and industrial sectors of the country and its transportation through railways, so that the funds allocation both by the federal and Sindh governments in the PSDP mode could be utilized prudently and effectively.

Member Energy, Planning Commission gave a presentation on the existing utilization of imported, as well as, domestic coal in power and non-power sectors of the country. He told the forum that presently three existing coal power plants, i.e., China Hub, China Power and Sahiwal are operating on imported coal while Lucky Electric and Jamshoro (with 20 per cent substitution) have confirmed utilization of 4.3 million ton of domestic coal.

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Regarding utilization of Thar/ domestic coal by the above-mentioned three existing power plants, operated on imported coal, feasibility study is being conducted by PPIB. He further highlighted the safety issues of Thar coal transportation and storage and fluctuations in the international price of imported coal.

Member Energy apprised the committee that viability of Thar coal utilization depends on its transportation cost in the tariff of the power plant. Nepra should allow cost-plus reflection of transportation cost in the tariff.

On a query from the Chair regarding timeline for transportation of coal, Secretary Railways stated that Pakistan Railway would be able to transport coal by March, 2023. However, the complete scope of the PC-1 which included upgradation of stations, etc., would be completed in 17-month time.

SAPM on Effective Governance also emphasized that since the confirmed coal demand for Lucky Power Plant and Jamshoro (20 per cent substitution) is available; therefore, the agreement with both power plants should be finalized by the Power Division and provision of additional supply of Thar coal along with timeline would be confirmed by the Government of Sindh.

Copyright Business Recorder, 2022