Private Power Infrastructure Board (PPIB), a subsidiary of Water and Power Ministry, said on Wednesday that China is the only hope for financing of coal-fired power projects as no other country or multilateral agency is ready to finance such projects. Ministry of Water and Power has signed a Memorandum of Understanding (MoU) with State Grid China which will invest $4.5 billion on transmission lines from Gaddani Power Park to Lahore, Faisalabad and Quetta.
The Ministry, however, did not publicise the signing of the MoU because the company wanted a low profile. A presentation prepared by the Managing Director, PPIB, (who is ready to become an approver against former Prime Minister, Raja Pevez Ashraf in rental power scam case) maintained that current installed capacity is about 20,000 MW whereas maximum generation is 16,000 MW last year. According to PPIB, estimated shortfalls are 5000-6000 MW, adding that demand based on economic modeling/regression analysis assuming annual GDP growth rate of 5 per cent is estimated as 30-35,000 MW by 2020.
One of the goals set forth is the Power Policy 2013 is to ensure the generation of inexpensive and affordable electricity for domestic, commercial and industrial use. PPIB argues that the most economically viable solution to bridge the existing demand- supply gap on a fast track basis lies in the development of coal-based power projects. Therefore the government has initiated several projects based on local as well as imported coal.
The mainstay of imported coal projects is Pakistan Power Park at Gaddani, which consists of: (i) dedicated deep sea jetty; (ii) 10x 660 MW power plants; (iii) transmission network for evacuation of power; and (iv) infrastructure facilities of coal conveyer system, cooling water, switchyard, ash disposal and residential facilities etc. Prime Minister Nawaz Sharif has also inaugurated a 1,320 MW coal-fired project at Port Qasim.
Two projects of 330 MW are being set up by Sindh Engro Coal Mining Company (Joint Venture of Government of Sindh and Engro Powergen Limited). Two coal-fired projects of 660 MW each will be established by Sino Sindh Resources. According to PPIB, financing of coal based power or allied infrastructure projects is nearly impossible from Western countries or multilateral agencies like the World Bank.
The only option for 'financing' coal-based power generation projects' is from China. Securing financing from China especially in private sector mode, has its own complications. In order to surmount those complications the government has decided to give due importance to coal-fired power plants in China - Pakistan Economic Corridor.
The first meeting of the Energy Planning Working Group (EPWG) was held on April 15, 2014. The meeting was co-chaired by Zhang Yuqing, Vice Administrator of National Energy Administration (NEA) of China and Khawaja Asif, Federal Minister for Water and Power. During the meeting, Ministry of Water and Power shared a list of relatively mature power generation projects to be commissioned by December 2017.
It was agreed by the two governments that the following projects be treated as 'early harvest projects' and commissioned by December 2017: (i) Sinohydro Resources Limited & Mirqab Capital 2x 600 MW plants; (ii) China Gezhouba Group company Limited 4x6000( 2400 MW) at Power Park, Gaddsani Balochistan; (iii) ANC Holdings LLC Dubai( recently blacklisted by USA) 2x660 MW; (iv) China Machinery Engineering Corporation 2x600 MW; (v) Sinohydro Resources Limited & Al Mirqab Capital 2x 600 (1200 MW) at Port Qasim; (vi) Sindh Engro Coal Mining Company 2x330(660 MW) at Thar Block-II and Sino Sindh Resources 2x600( 1200 MW) in Thar Block-1. Pre-qualification for ANC Holding LLC Dubai is under process. Notice to proceed for LoI may be issued by May 30, 2014.
According to documents available with Business Recorder notice to proceed has been issued to Sinohydro resources Limited & Al Mirqab Capital for two coal-fired power plants of 600 MW each to be established at Port Qasim; an LoI has also been issued. Submission of applications to Nepra for tariff determination, grant of generation licence are under process. Land has been allocated and a bank guarantee is awaited for the issuance of a LoI. However, no progress is mentioned with regard to China Gezhouba Group co Limited and China Machinery Engineering Corporation.
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