3 imported coal-based IPPs to Thar coal: PPIB seeks details of Chinese Ad hoc Working Group on conversion

ISLAMABAD: The Private Power and Infrastructure Board (PPIB) has sought details of Chinese Ad hoc Working Group constituted to negotiate conversion of three imported coal-fired Chinese power plants established under the China-Pakistan Economic Corridor (CPEC) to local coal i.e. Thar coal, sources close to Managing Director PPIB told Business Recorder.

Sharing the background, the sources said, in a follow-up to the high level visit of Prime Minister Shehbaz Sharif to China from June 4-8, 2024, a delegation of Chinese experts visited Pakistan from July 30 to August 06, 2024, to assess the challenges in Pakistan’s power sector.

The Chinese experts prepared a detailed report of the visit, which was shared by the Embassy of China in Pakistan on 0ctober 7, 2024 with the Ministry of Foreign Affairs (MoFA) and copied to Power Division.

Conversion of power plants to coal: NEA of China seeks to set up working group for talks

The report has recommended addressing both efficiency and management improvements of Pakistan’s power system and conversion of imported coal based IPPs to Thar coal in parallel. Furthermore, the report indicated that the Chinese energy expert team had drafted an outline of research aimed at alleviating the challenges faced by China sponsored, imported coal-based power plants within the CPEC. However, the draft outline of research has not been shared with the Pakistani side.

Regarding conversion of imported coal based IPPs to Thar coal, Minister of Energy (Power Division) during his visit to China on July 24-26 2024, proposed Vice Administrator of National Energy Administration (NEA) to establish an Ad-hoc Joint Working Group to facilitate further discussions on the conversion.

Accordingly, Parep Beijing through an email dated August 20, 2024 noted that NEA has agreed in-principal to establish an Ad-hoc Working Group in which Chinese side would be represented by officials from NEA’s department of International Cooperation, its Planning Department as well as Chinese Enterprises operating IPPs in Pakistan.

On August 26, 2024, Minister of Energy (Power Division) constituted a Committee to coordinate and work with stakeholders on conversion.

According to Shah Jahan Mirza, the Committee after convening meetings with stakeholders now intends to engage with the Chinese Ad-hoc Working Group for further deliberations. However, the Committee on conversion lacks information regarding the status of Ad-hoc Working Group on the Chinese side, including its members, Terms of Reference (ToRs) and any focal person(s) nominated by the NEA.

After explaining the background, PPIB has requested Power Division to approach Embassy of China in Pakistan through Ministry of Foreign Affairs to acquire details regarding the Ad-hoc Working Group, including its members, ToRs, and NEA’s designated local person(s) for the conversion. Furthermore, ‘Outline of research on alleviating the difficulties faced by China -sponsored, imported coal-based power plants within the CPEC’ may also be solicited to facilitate in-depth research on this initiative and to expedite the finalisation of the joint study.

Finance Ministry is also engaged with local banks to convince them to finance the much desired plan, as the government hopes that this step will reduce overall tariff by Rs 3.5 per unit.

Power Division argues that coal conversion is critical to improve generation capacity and reduce fuel payments per unit, and enable scaling up Thar coalfields, reducing cost of coal per ton, while enhancing energy security.

Initial study was conducted by M/s Fichtner of Germany which supported conversion of plants from imported coal to local Thar coal.

Copyright Business Recorder, 2024