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ISLAMABAD: Chinese company, CHIC Pak Power Company (Pvt) Limited (CPPCL), has set inflexible conditions to shift the much-talked about 330-MW power plant at Gwadar from imported coal to Thar coal, well informed sources in PPIB told Business Recorder.

The issue of this project is also very much on the agenda of Prime Minister Shehbaz Sharif during his maiden two-day visit to Beijing starting from November 1, 2022 (tomorrow).

Director General (Asia), Chen Song of the Chinese Ministry of Foreign Affairs at a recent meeting with Pakistani Deputy Head of Mission also stated “Gwadar Power Plant, which was originally planned to be established in Gwadar and which was supposed to run on imported coal had now been shifted to Thar area and was proposed to be run on Thar-coal. This had practically made it a new project requiring a fresh feasibility study.”

According to sources, Chairman CPPCL, Zhao Bo maintains that due to unaffordable transportation cost, as well as, the issue of self-ignition, frangibility, fast weathering, high water content and other adverse character of Thar coal, the project company is not in a position to take over the responsibility of coal transportation from Thar coal field to Gwadar project site but, if the Government of Pakistan is willing to transport the coal from Thar coal field to the power plant at Gwadar with the assurance of quality and quantity as per the design and required specification of the plant, the project company wouldn’t have any objection on utilization of local Thar coal.

The Chinese company further demanded that if the mining cost of coal is reduced to less than $20/ MT due to limited room for transportation cost adjustment, it will be feasible economically, adding that in that case, inland transportation might be considered to assure and maintain the coal quality.

Study on Gwadar power project: Chinese firm seeks approval of additional cost

On October 13, 2022, PPIB, through a letter, had conveyed the government’s decision to shift Gwadar power project from imported coal to Thar coal.

Commenting on the proposal to relocate project from Gwadar to the mine mouth at Thar coal field, Chinese Company’s Chairman said, the Government of China has made commitment of not developing any new coal-based power plant; therefore, shifting the power plant to a new location means developing a new coal-based power project which is contrary to the decision made in 2019 by Government of China.

According to him, the project company has not approached any stakeholders regarding the new plant investment or relocation at Thar; however, it will make a study once both governments reached an agreement, accordingly.

He further stated that as per the latest arrangement of the Government of Pakistan, an additional 100MW power shall be imported from Iran through 132kv transmission lines and later on a proposed 500kv line from Hub to Ormara-Makran Division. The project company further argues that pursuing the industrial and economic uplifting of Gwadar these transmission lines cannot assure reliable and un-interrupted power to Gwadar. He maintained that installation of the power plant shall meet the base-load of the city along with alternative supply through transmission lines. In company’s opinion, this line may serve as a part of integrated power solutions but cannot be treated as the primary reliance of power for the Gwadar region.

Commenting on solar power installation in Gwadar, Chairman CPPCL said that generation is intermittent, fluctuating, and random during daytime, seasonal, and climatic changes. Output fluctuates during the day but, more importantly, is absent after sunset. There is a 100 per cent change loss or change in output during 24 hours. Solar is mainly manifested in strong discontinuity, volatility and randomness which leads to an imbalance between the supply and demand of the area grid; naturally the voltage and frequency of the grid is prone to fluctuations without base load contributing to transmission line and equipment breakdown in the grid. A 40MW-50MW solar power plant may be considered by government based on this coal based power plant net capacity.

The Chinese company has further argued that present coal price is high due to geopolitical uncertainty and Corona pandemic; therefore, assumption of 10 years or longer time average coal price before the Corona pandemic should be the input of analysis on operation on imported coal and operation at Thar instead of current coal price. The company has concluded that there is no material difference between imported coal price and local coal price based on the assumption prior to Covid-19 scenario.

Zhao Bo maintains that the project company intends to pay fee for extension in Letter of Support (LoS) but due to the current situation with regard to utilization of local coal and second half of 2023 of Financial Close (FC) based on imported coal, it has requested grant of LoS extension for 4 years or amendment in accordance with latest situation.

Copyright Business Recorder, 2022

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