660MW Jamshoro Coal Power Project: KE seeks cabinet approval for 100pc Thar coal conversion

ISLAMABAD: K-Electric (KE) has approached Power Division seeking incorporation of a set of proposals in the summary for Federal Cabinet approval for conversion of Unit-1 of the 660-megawatt Jamshoro Coal Power Project to 100 percent indigenous Thar coal.

In a communication to Managing Director PPIB, KE Chief Executive Officer Syed Muhammad Taha proposed that the company be appointed Project Management Consultant (PMC) and power purchaser for the project, offering to perform project management responsibilities without charging any consultancy fee.

KE has also proposed appointment of Harbin Electric International (HEI), which was part of the original engineering, procurement and construction (EPC) consortium and had earlier constructed the boiler, as the EPC contractor for conversion works, arguing that engaging a new contractor could expose the project to execution risks and contractual disputes.

The proposals follow a meeting held on September 23, 2026, at KE’s head office in Karachi under the convenorship of Additional Secretary-II, Power Division, attended by senior representatives of the Central Power Purchasing Agency-Guaranteed (CPPA-G), Jamshoro Power Company Limited (JPCL) and KE.

According to the letter, KE has been leading the conversion initiative since 2023 and has fully financed the cost of the bankable feasibility study (BFS), given its interest in becoming the power purchaser after completion of the conversion.

The company has requested the Power Division to incorporate its proposals into the summary being prepared for submission to the Federal Cabinet.

For project management, KE has proposed its appointment as PMC without any consultancy fee to expedite conversion of the generating unit to 100 percent Thar coal.

For this purpose, the company has sought an exemption under Section 21 of the Public Procurement Regulatory Authority (PPRA) Ordinance, 2002.

Regarding the EPC contract, KE has proposed that Harbin Electric International be appointed under the exemption available under Clause 42(c)(iii) of the PPRA Rules.

The company maintains that JPCL’s existing project was originally constructed by an EPC consortium comprising Harbin Electric International and Siemens. Since HEI had earlier constructed the boiler, its appointment for the conversion work would help avoid risks associated with engaging a new contractor, including possible project failure and contractual disputes.

KE has proposed that HEI should be allowed to engage subcontractors for the conversion work while remaining responsible for guaranteed gross and net project capacities and boiler performance following conversion to 100 percent Thar coal.

The company has suggested that the PMC and JPCL be instructed to negotiate the EPC contract with HEI and ensure that all relevant technical and performance parameters are guaranteed.

The bankable feasibility study has estimated EPC costs at $86.2 million, while the total project cost (TPC) is projected at $116.6 million.

KE has offered to guarantee that the conversion project would remain within the estimated total project cost of $116.6 million and be completed within 18 months of achieving financial close.

The company has further committed to bear any cost overruns resulting from delays.

This proposed undertaking is intended to provide financial and execution certainty to the government while moving the conversion project towards implementation.

On project financing, KE has proposed that instead of following the conventional PC-I route, financing should be arranged through domestic and/or international financial markets.

The company argues that, in its proposed capacity as PMC, it can facilitate financing from financial institutions in a shorter timeframe than the PC-I process.

KE has also requested that the State Bank of Pakistan be directed to facilitate foreign exchange payments arising from EPC-related procurements.

However, the company has pointed out that achieving financial close would require completion of all relevant regulatory and legal formalities, including necessary no-objection certificates from the Asian Development Bank (ADB), PPRA approvals and determination of the post-conversion electricity tariff by the National Electric Power Regulatory Authority (NEPRA).

It has requested the Power Division to direct relevant government institutions, including PPRA, NEPRA, the Ministry of Finance, SBP and the JPCL Board of Directors, to extend the necessary cooperation for securing approvals and regulatory determinations.

KE has also proposed that it and JPCL jointly negotiate a long-term Coal Supply Agreement (CSA) with coal suppliers covering both indigenous Thar coal and imported coal.

The two companies would coordinate with the Thar Coal Energy Board (TCEB) and NEPRA for determination of coal prices and their incorporation into the electricity tariff.

The proposal envisages a long-term fuel supply arrangement to support uninterrupted operation of the converted generating unit and provide clarity regarding fuel costs.

Another significant proposal relates to transfer of the existing Power Purchase Agreement (PPA) of JPCL to KE.

The company has proposed that JPCL’s PPA should be novated in favour of KE on the Commercial Operation Date (COD) of the unit following its conversion to 100 percent Thar coal.

However, in case of a delay in achieving COD, KE has proposed that the PPA should be novated at the end of 18 months from financial close.

This arrangement is central to KE’s proposed role as the power purchaser following conversion of the generating unit.

KE has also proposed construction of a new transmission grid of the required capacity to facilitate delivery of electricity generated by JPCL to its network.

Two options have been proposed: direct transmission of electricity from JPCL to KE’s network or a power swap arrangement involving equivalent generation capacity in the southern region.

The proposed power-swap arrangement could involve electricity generated by KANUPP-2 and KANUPP-3, Lucky Electric Power Company Limited, Port Qasim Electric Power Company Limited and China Power Hub Generation Company.

KE has further proposed that if the new transmission grid is not ready by the time the converted unit achieves commercial operation, the electricity generated could temporarily be adjusted against power being supplied from the national grid to KE’s network.

In its communication, KE has described conversion of Jamshoro Unit-1 to indigenous Thar coal as an initiative of national importance, arguing that it would improve utilisation of domestic energy resources, reduce reliance on imported fuels and strengthen Pakistan’s energy security.

The company has reiterated its commitment to fulfil the proposed obligations and expressed willingness to work closely with the Power Division and other stakeholders to advance the project.

Copyright Business Recorder, 2026