If the government-elect does not take some tough decisions as soon as it takes charge, the snowballing circular debt would render the country bankrupt in less than a decade; this warning from leading businesses like Engro Corporation is not the first one.
Amongst the proposals for fixing the energy crisis in a recent study by Engro Corp, a major one rests with making the Thar coal happen. And rightly so; with power generation skewed towards expensive oil based thermal generation and hydel generation remaining constant over the years, coal is the best option.
Why is this so? First, one percent of Thar coal in gas comparable terms is 20 trillion cubic feet, which is equal to the current total gas reserves in the country.
Second, as per the study, power generation through Thar coal is one of the cheapest. In comparison to the furnace oil which is costing around Rs26 kilowatt per hour and significantly contributing to the circular debt, the weighted average tariff for coal is peanuts (Rs7.5-11/kwh)
Not only that, as an immediate solution while mining and production from Thar coal continues, imported coal offers much cheaper power generation. However, a prerequisite for it is the conversion of existing oil based thermal units to coal configuration, which is an arduous but doable task.
As far as renewable are concerned, their exorbitant tariffs would just add to the circular debt further, while the cheapest hydro power generation also requires much greater capital investment.
In such precarious times, the idea to develop Thar coal, converting existing units to coal base, and importing coal instead of furnace oil show some promise. However, what keeps the masses wondering, which is unaware of the energy related nitty gritty, is how long it would take to make this switch.
According to Shamsuddin Shaikh, CEO of Sindh Engro Coal Mining Company, it would take around three years for conversions of the existing systems, 2.5 years to set up a coal-based power, and around 3.5 years to mine Thar coal.
The previous generation derived its energy security from the Tarbela and Mangla dams; will coal become the next and will there be any future energy security, it’s a test of government’s determination and stakeholders’ efforts.