Under the Pak-China Joint Energy Working Group dialogue held in Beijing during August 01-02, Pakistan has sought Chinese technical and financial assistance to develop various energy projects. The list of 19 identified projects include Thar coal mining and infrastructure development, a 405-mw integrated coal mine and power project and two 1,200-mw power plants based on Thar coal.
This reminds one of the initiatives of Shenhua Corporation, a Chinese investor, to develop Thar coalfields for power generation as early as in 2002. The first project utilising Thar coal, a 600-mw integrated power plant (at the mine-mouth with associated captive coalmines), was scheduled to be completed by the year 2009 and would have generated by now millions of electricity units (kWh).
The case of Shenhua Corporation is not the only one. In fact, Pakistan has missed numerous opportunities to develop its energy sector based on indigenous resources. In 2008, the South Koreans had come to Islamabad with a very attractive offer to participate in power generation projects but our response was lukewarm if not negative. Call it tunnel vision of the government or myopic planning or vested interest, the reality is that the country remains deprived of self-sufficient power and there in no light at the end of the tunnel either.
Coal-fired power plants represent the largest share of global power generation. Coal resource is abundant in Pakistan and relatively inexpensive. The Sixth Plan (1983-88) had envisaged potential of coal development and utilisation, having formulated coal policies. The first Pakistan National Coal Conference was organised on 23rd February 1986, highlighting the need for accelerated exploitation of coal reserves, particularly for thermal power generation. A series of 50-MW power plants, based on Lakhra coal were planned. Wapda constructed a 3x50-MW power plant on the mine-mouth with the assistance of the Chinese that was commissioned during 1995-96. Since then, there has been no further development of Lakhra coal for power generation.
Discovery of Thar coal reserves of over 175-billion tons was made in 1992. The Energy Policy 1994 had thus focused on developing Thar coal mines for power generation. In response, a number of foreign and domestic investors signed MoUs for setting up of 9 power projects, primarily based on Thar coal. Hongpak United Power Generation, a joint venture of American and Italian companies, even arranged groundbreaking ceremony of their 1,320-MW project by the Prime Minister on 19th January 1995. None of these projects however materialised.
A major breakthrough was achieved when, in April 2002, the Shenhua Group Corporation, the largest energy company of China, was asked by the government to develop Thar coalfields, accepting its proposal to establish a 2x300-MW integrated power plant. Six-million tons of Thar coal was required to be extracted annually to run the power plant. The project, to be developed on build, operate, transfer (BOT) basis for a period of 30-years, was to be extended to 900-1,000 MW capacity in the second phase.
The Chinese rolled back their plan on the issue of the upfront power tariff. The Chinese had demanded Cents 5.70 against Cents 5.39 per unit offered by Wapda/Sindh government. Pakistan had re-established contacts with the Chinese in 2006, and again in 2007, offering higher tariffs but the project could not be revived. Earlier, the Chinese had completed a bankable detailed feasibility study after undertaking coal-geological (covering an area of 50 sq km) and hydro-geological (covering an area of 650 sq km) investigations at one of the Thar Blocks, which established techno-economic viability of Thar coal for power generation.
Interestingly, in 2004, the Sindh government engaged German consultants to prepare a similar report at a total cost of ten million dollars. Based on this feasibility report, the government issued letters of interest in 2006-07 to almost a dozen investors to develop power projects using coal from Thar, as well as from Lakhra and Sonda-Jherruk coalfields. None of the projects however could see the light of the day. Ironically, Nepra had offered an upfront tariff of Cents 7.80 per kWh for these coal-based projects.
There is another sad story. A delegation of the consortium of Kepco and the Doosan of Republic of Korea had visited Islamabad during April 22-24, 2008 aiming at developing a long-term strategic partnership in power generation, in particular with optimum indigenisation of resources. Besides meeting the concerned government officials, the delegation visited Wapda, Pepco, the Heavy Mechanical Complex and other installations to firm up their plans for progressive local manufacturing of power plant machinery, under the proposed technology transfer arrangements.
Korea Electric Power Corporation (Kepco) is the single largest utility company in South Korea. It offers standard coal-fired power plants in modules of 500-MW and 800-MW, based on state-of-the-art super critical technology. Its subsidiary Korea Hydro and Nuclear Power Co Ltd is actively engaged in design, engineering and manufacturing of nuclear power plants. On the other hand, Messrs Doosan design, manufacture, supply and construct advanced steam-generation-technology based power plants.
Utilising facilities at the group's energy specialist companies like Doosan Power Systems, Doosan Babcock, Skoda Power, and Doosan Hydro Technology, and manufacturing company Doosan Heavy Industries and Construction, it has supplied more than 140,000-MW of fossil-fuel fired steam generation and claims to having developed some of the cleanest, most efficient coal-based power plants in the world. Currently, Doosan is constructing a 4,000-MW plant in India, which will be the world's largest coal-fired power plant on completion.
The Korean delegation offered a 2,800-MW (4x700-MW) Thar coal-based plant. The delegation had demonstrated strong commitment to participating in the economic development of Pakistan and agreed to invest in setting-up large coal-based power plants utilising Thar coal, as well as developing hydropower plants. The mechanism for implementation of the identified projects were to be finalised jointly, with option for a public-private partnership and participation of domestic engineering industry in design, engineering, manufacturing, construction, installation, operation etc.
Somehow, the delegation was not offered an opportunity to call either on the President or the Prime Minister or Chairman Board of Investment. There has been no follow-up on the Pakistan side that was to make a formal proposal offering, initially, a coal-fired power project to the South Koreans. After three years, Doosan and Kepco, in consortium with other Korean investors, have renewed their offer in a meeting with Prime Minister Yousuf Raza Gilani on 21st January 2011. They have proposed coal-based power project of 1,000-MW, each using Thar and Sonda-Jherruk coal, but now they do not talk about indigenisation of plant machinery.
Currently, Pakistan faces an acute power crisis that has hampered economic development and it may not be feasible to achieve growth targets for 2011-12 both because of energy imbalance and consequent high oil imports. National Energy Security Plan 2005-2030 has already gone haywire as none of its targets are close to having being met. It has projected generating 14,500-MW power from indigenous coal by 2030, enhancing its share in the overall energy mix from the present negligible to 19%. By 2010, it was targeted to add 900-mw coal-based power generation, but not a single megawatt has been added till now.
It is imperative therefore for the government to earnestly review, evaluate and determine the policies, institutional framework and enabling environment for coal exploration, extraction, handling, transportation and utilisation aimed at accelerating development of coal resources as a major future energy supply. Unfortunately, Pakistan is still without a National Coal Policy the formulation of which has been on cards since August 2007.
(The writer is retired Chairman of State Engineering Corporation)