Tuesday, April 20, 2010

Pakistan Eyes Thar Coal For Cheap, Abundant Power

Coal is the cheapest and the most common fuel used directly or indirectly to produce electricity and heat in the world today. Global coal consumption was about 6.7 billion tons in 2006 and is expected to increase 48% to 9.98 billion tons by 2030, according to the US Energy Information Administration (EIA). China produced 2.38 billion tons in 2006. India produced about 447.3 million tons and Pakistan mined only about 8 million tons in 2006. 68.7% of China's electricity comes from coal. The United States consumes about 14% of the world total, using 90% of it for generation of electricity. The U.S. coal-fired plants have over 300 GW of capacity.

Thar desert region in Pakistan is endowed with one of the largest coal reserves in the world. Discovered in early 1990s, the Thar coal has not yet been developed to produce usable energy. With the devastating increases in imported oil bill and the growing shortages of gas and electricity in the country, the coal development is finally beginning to get the attention it deserves. Coal contributes about 20% of the worldwide greenhouse gas emissions but it is the cheapest fuel available, according to Pew Center on Global Climate Change. It can provide usable energy at a cost of between $1 and $2 per MMBtu compared to $6 to $12 per MMBtu for oil and natural gas, and coal prices are relatively stable. Coal is inherently higher-polluting and more carbon-intensive than other energy alternatives. However, coal is so inexpensive that one can spend quite a bit on pollution control and still maintain coal’s competitive position.



At the end of the decade of 1990s when the economy was stagnant, Pakistan had about 1200 MW excess capacity. Between 2000 and 2008, the electricity demand from industries and consumers grew dramatically with the rapid economic expansion that more than doubled the nation's GDP from $60 billion to $170 billion. The Musharraf government added about 3500 MW of capacity during this period which still left a gap of over 1500 MW by 2008. The economy has since slowed to a crawl, the electricity demand has decreased, and yet the nation is suffering the worst ever power outages in the history of Pakistan. As discussed in an earlier post, Pakistan's current installed capacity is around 18,500 MW, of which around 20% is hydroelectric. Much of the rest is thermal, fueled primarily by gas and oil. Pakistan Electric Power Company PEPCO blames independent power producers (IPPs) for the electricity crisis, as they have only been able to give PEPCO much less than the 5,800 MW of confirmed capacity. Most of the power plants in the country are operating well below installed capacity because the operators are not being paid enough to buy fuel. Circular debt owed to the power producers and oil companies is currently believed to be largely responsible for severe load shedding affecting most of the nation.

The circular debt has assumed alarming portions since 2008, resulting in the current severe power problems. Former finance minister Saukat Tarin recently told the News that “in real terms the circular debt has swelled to Rs108 billion which mainly includes non-payment of Rs42 billion by KESC, Rs21 billion by the government of Sindh and Rs15-16 billion from commercial consumers to the Pakistan Electric Power Company (Pepco)". Just prior to leaving office, Tarin decided to raise Rs. 25 billion as a small step toward settling the swelling unpaid bills owed to power producers.



Per capita energy consumption in Pakistan is estimated at 14.2 million Btu, which is much higher than Bangladesh's 5 million BTUs per capita but slightly less than India's 15.9 million BTU per capita energy consumption. South Asia's per capita energy consumption is only a fraction of other industrializing economies in Asia region such as China (56.2 million BTU), Thailand (58 million BTU) and Malaysia (104 million BTU), according to the US Dept of Energy 2006 report. To put it in perspective, the world average per capita energy use is about 65 million BTUs and the average American consumes 352 million BTUs. With 40% of the Pakistani households that have yet to receive electricity, and only 18% of the households that have access to pipeline gas, the energy sector is expected to play a critical role in economic and social development. With this growth comes higher energy consumption and stronger pressures on the country’s energy resources. At present, natural gas and oil supply the bulk (80 percent) of Pakistan’s energy needs. However, the consumption of those energy sources vastly exceeds the supply. For instance, Pakistan currently produces only 18.3 percent of the oil it consumes, fostering a dependency on imports that places considerable strain on the country’s financial position. On the other hand, hydro and coal are perhaps underutilized today, as Pakistan has ample potential supplies of both.

The country's creaky and outdated electricity infrastructure loses over 30 percent, some of it due to rampant power theft, of generated power in transit, more than seven times the losses of a well-run system, according to the Asian Development Bank and the World Bank; and a lack of spare high-voltage grid capacity limits the transmission of power from hydroelectric plants in the north to make up for shortfalls in the south.

It does seem that Pakistan is finally getting serious about utilizing its vast coal resources to produce electricity and gas. Talking recently with GeoTV's Hamid Mir, Pepco Managing Director Tahir Basharat Cheema shared the following list of coal projects being launched:

1. The Sind Government has awarded a 1200 MW project to extract Thar coal and produce electricity to Engro Power.

2. A similar 1200 MW project is being undertaken by Pepco in Thar. The Pepco project also includes a 700 Km transmission line to connect Thar plants with the national grid.

3. An experimental project for underground coal gasification is being built by Pakistani nuclear scientist Dr. Mubarakmand to tap underground coal to produce 50 MW.

4. Another experimental 50 MW project using pressure coal gasification is planned by Pepco.

The coal and various renewable energy projects are expected to be online in the next 2 to 5 years. If these projects do succeed and more investors are attracted to the power sector, then Pakistan has the potential to produce about 100,000 MW a year for a century or longer. But these efforts will not help in the short or immediate term. What is urgently needed is decisive action to resolve the circular debt problems and restore power generation to full installed capacity immediately.

Here is a video clip of former president General Musharraf talking about the worst ever load shedding being faced by Pakistanis today:



Related Links:

Pakistan's Twin Energy Crises of Gas and Electricity

Pakistan's Load Shedding and Circular Debt

US Fears Aid Will Feed Graft in Pakistan

Pakistan Swallows IMF's Bitter Medicine

Shaukat Aziz's Economic Legacy

Karachi Tops Mumbai in Stock Performance

Pakistan's Electricity Crisis

Pepco Increases Load Shedding By 5 Hours

Pakistan's Gas Pipeline and Distribution Network

Pakistan's Energy Statistics

US Department of Energy Data

China Signs Power Plant Deals in Pakistan

Pakistan Pursues Hydroelectric Projects

Water Scarcity in Pakistan

Energy from Thorium

Comparing US and Pakistani Tax Evasion

Zardari Corruption Probe

Pakistan's Oil and Gas Report 2010

Circular Electricity Debt Problem

International CNG Vehicles Association

Lessons From IPP Experience in Pakistan

Correlation Between Human Development and Energy Consumption

BMI Energy Forecast Pakistan

30 comments:

Riaz Haq said...

Pakistan govt is planning to sell Islamic bonds or sukuk this year to raise money and resolve circular debt in power sector, according to Dawn:

ISLAMABAD: The finance ministry has finalised plans to issue Rs100 billion Sukuk bonds before the end of current fiscal year to retire the circular debt that has been a major concern for the power generation companies, oil suppliers, refineries and exploration companies.

“The Rs100 billion denominated Sukuk bounds will be floated in May this year and the target investors are religious-minded people with cash in hand,” said a senior official of the finance ministry.

Initially the finance ministry proposed to float Islamic papers with one year maturity period, but the State bank objected saying the central bank had already floated one year Treasury Bills.

“The ministry is now considering other options for the non-interest based bond to be launched on the pattern of Pakistan Investment Bonds (PIBs), the official said. The cut-off yield on the proposed Sukuk bonds would be around 12.7 per cent as is on the PIBs.

“The Government of Pakistan will be the sovereign guarantor of the sukuk bond issue,” the official said and added that the government needed additional liquidity to check further increase in the circular debt. The circular debt has again reached to Rs150 billion mainly due to limited collections by the eight electricity distribution companies.

The official said that the sukuk bond was expected to be heavily oversubscribed due to availability of liquidity in the Islamic banking system.

“As the Islamic banks have limited options to invest in Sharia-compliant modes, these bonds would offer an attraction to them,” he added.

It is estimated that around Rs50 billion are available with the Islamic banks, but their lending ratio is low compared to the deposit ratio.

PIBs and Sukuk bond are permanent debt and this time the government wants to raise money from Islamic banks to settle the circular debt of power sector once for all. Under the IMF conditionality which requires zero borrowing from the State Bank, the government is now heavily borrowing from commercial banks.

The government had shifted Rs85 billion circular debts to the Power Holding Company through issuance of Term Finance Certificates (TFCs) last year, which were bought by the commercial banks.

Riaz Haq said...

Pakistan plans to add ten new nuclear power plants by 2030, according to a Dawn report:

KARACHI: Ten nuclear power plants will be established in the country by 2030 to help resolve the worsening electricity crisis, said Pakistan Atomic Energy Commission (PAEC) Chairman Dr Ansar Parvez on Tuesday.

He added that the government had assigned to the PAEC a target of generating around 8,800 megawatts by 2030. “We are optimistic about achieving this target within the stipulated period as all the requisite projects and plans are in place for this purpose,” he said.

Dr Parvez expressed these view while speaking as a chief guest at the 11th annual convocation-2011 of the Karachi Institute of Power Engineering in the vicinity of the Karachi Nuclear Power Plant.

He said that the PAEC was striving hard to enhance its role in power generation, while in the area of defence, “we are following a well-defined path that ensures that the country has a strategic capacity which is strong enough to deter and frustrate the evil designs of anyone”. He added that an immense contribution had been made by the graduates of Pakistan Institute of Engineering and Applied Sciences (PIEAS) and Karachi Institute of Power Engineering (KINPOE) to the country’s strategic programme.

In addition to the defence and power sectors, the PAEC had also been contributing to the socio-economic sector, he said. It had 14 medical centres in different cities and four more were being built. “Similarly, our agricultural centres and bio-technology institutes are also making a contribution towards the agriculture sector,” he added.

Dr Parvez, who is also the chairman of the board of governors of the PIEAS, later conferred MSc degrees in nuclear power engineering on 49 graduates along with medal and merit certificates to the position holders. He congratulated all graduating students and hoped that they would play their due role in the country’s development.

Earlier, PIEAS Rector Dr Mohammad Aslam said that the degree-awarding institute being run by the PAEC offered masters and PhD programmes in nuclear power engineering, material engineering, health physics and information technology. He said around 10 students were completing their PhD every year from the institute.

KINPOE Director Najmus Saqib traced the genesis of the institute which started as the Karachi Nuclear Power Training Centre in the early 80s and was upgraded to the masters level in 1993. He said this was KINPOE’s first convocation after its affiliation with the PIEAS.—APP/PPI

Riaz Haq said...

Dr Samar Mubarakmand has been a strong advocate for keeping out foreigners from Thar Coal and Reko Diq projecrs, saying we can do both ourselves and be energy independent and earn billions of dollars.

The News has an Op Ed today by Dr. A.Q.Khan titled "Projects We Cannot Handle" in which he attacks Mubarkmand without mentioning his name:

"...The Thar Coal Project was, until recently, a hot topic. We probably all remember that we were promised 50,000 MW of power for 500 years, plus hundreds of thousands of barrels of diesel. There were claims that we had 185 billion tons of coal reserves, while reliable estimates put this figure at only three billion tons, and that too of low grade. That balloon burst quite quickly....
...
I can say with authority that we do not have experienced and qualified engineers to handle such a complicated, giant project, to say nothing of my having had to cope with those who indulge in self-projection though they don’t have fundamental knowledge or qualifications in the required field.

In my earlier column of Nov 1 I had mentioned the statements made by Dr Ansar Parvez, chairman of the Pakistan Atomic Energy Commission (PAEC) in Vienna in which he claimed that 8,080 MW of power could be produced by 2030. In order for that to be produced, either 29 reactors of 300 MW each or ten reactors of 900 MW each would be required. A 300-MW reactor costs about $1 billion and requires eight to ten years for commissioning. A 900-MW reactor would naturally cost proportionately more and would take the same time, if not longer, to commission. I am at a loss to see how Dr Parvez aims to achieve this.

The PAEC has existed for more than 50 years and employs almost 20,000 people, but it has not been able to make a single power reactor, even of a small size. This is despite the fact that the technology itself is half-a-century old, and India and South Korea are among countries which have been producing reactors for years. The one at Karachi was supplied by Canada and the two at Chashma by China.
...
If important projects like those mentioned above are given to Pakistanis, they will become yet more PIAs and Pakistan Steel Mills. Nepotism, overstaffing with unqualified and inexperienced people, overabundance of persons of official cadre, fleets of land cruisers – you name it, it will be there. We have all heard details about the corruption related to the Agosta Submarine. Not only the fish’s head, but the whole body is rotten.
...


Disregarding the personal rivalry between two men, it's anybody's guess as to who is right.

Riaz Haq said...

Sindh govt allocates Rs. 3.7 billion for Thar coal development in 2011-12 budget, according to Dawn:

KARACHI, June 11: Tormented by the power shortages the Sindh government focuses on developing indigenous coal reserves. In the next Annual Development Plan it has earmarked Rs3710.937 million for Thar coal project.

For energy sector a total of Rs1214.499 million has been kept in the ADP 2011-12. This include Rs1100 million for the coal gasification project.

Sindh Finance Minister Syed Murad Ali Shah while explaining salient features of the budget for 2011-12 said: “Thar coal reserves of 175 billion tons are ample for provision of cost-effective energy for centuries”.

He said that once the reserves were properly exploited they could help in generating 20,000MW by 2020.

Recently, in international competitive bidding, two Chinese companies, an Australian company, and Pakistan Petroleum Limited participated.

As a result, two Chinese companies have been selected to undertake coal exploration, power generation and establishing petro-chemical complex at two blocks of Thar.

He said the bankable feasibility study for joint venture project of the Sindh government and Engro was created to boost the potential in a record period of eight months.

The Sindh government and the federal government have included this project in the list of projects to be taken up with the Pak-China Joint Energy Working Group (JEWG) formed during the last visit of the Chinese prime minister to Pakistan, he said.

Leading Chinese companies have shown strong interest in executing this project. The mining and power generation from this project is expected in 2015-16 depending upon the financing arrangements for the project.

The test burn at Underground Coal Gasification (UCG) is expected during coming financial year. After successful testing, the project will be scaled up to produce 2x50MW electricity.

He said the government has made serious efforts to provide critical infrastructure for development of Thar coal.

A scheme for bringing water to Thar from Makhi Farash has been approved by ECNEC, feasibility studies for effluent disposal and laying of broad-gauge railway line are to be completed in June, 2011.

Work on improvement and widening of road for movement of heavy machinery from Karachi to Mithi-Islamkot is expected to start in next year.

According to rough calculations an amount of $1.20 billion is needed over a period of next five years to develop the required infrastructure for Thar.

Serious efforts are also in place to exploit the Gharo-Keti Bandar wind corridor.

During the Sindh chief minister`s recent visit to South Korea an MoU to generate 2000MW of wind energy was signed with Korea Southern Power Company.

The issue of electric power is of great priority for Sindh. The CCI has given approval to the removal of a limit on the ceiling of 50MW, which was earlier set at which provinces could construct power plants.

The Sindh government has signed a letter of intent with the Three Gorges Project Corporation, China`s premier electricity producer, to help explore the hydro power potential in Sindh.

A team from CWE, a subsidiary of the Three Gorges, recently visited Sukkur Barrage to gauge the potential for constructing a power plant.

Under the village electrification programme 446 villages were provided electricity during 2010-11, while the process for providing power to 350 more villages is underway.

Riaz Haq said...

Here's a Dawn report on progress of goal gasification effort in Pakistan:

KARACHI: National Assembly Standing Committee on Science and Technology has asked the federal and provincial governments to provide the allocated funds to Thar coal gasification project to speed up work on the power generation project.

Chairman of the committee Dr Abdul Kadir Khanzada, while speaking at the presentations of Thar coal and gasification projects here Saturday, said that any delay in Thar coal and gasification trial and pilot projects will further delay the addition of much needed electricity to country’s economy and industrial sector.

Representatives of Sindh Coal Authority, project coordinator Engro, Oracle Coalfield UK, PCSIR and coal gasification project gave presentations to the committee on the progress of their projects.

He said that both federal government and Sindh government should provide the committed share of the allocated funds for these projects. If you want to run the projects you need to fulfil your obligations and provide the necessary support to the on-going projects in Thar coal field.

He also asked the project runners to take media to the site to show the potential for coal gasification and power generation in Thar.

He also urged the federal Minister for Science and Technology Mir Changez Khan Jamali to provide support and funds to Pakistan Council of Industrial and Scientific Research (PCSIR) so that it can upgrade its laboratory test project of coal gasification to a pilot project and then lead to commercial production.

“You need to support them as the entire nation is now looking toward Thar coal projects as the only solution to existing power crisis”, he added.

Dr Khanzada noted that even the allocations for these projects were not sufficient.
He asked PCSIR to hold a meeting next week at its premises to demonstrate the trial production of gas and electricity based on Thar coal.

Other members of the committee Mir Changez Khan Jamali, Mrs Shamsul Sattar Bachani, Justice (rtd) Fakhar-un-Nisa Khoker, Zafar Beg Bhittani and Chaudhry Mahmood Bashir Virk in their remarks also supported the projects and urged the government to extend wholehearted support to scientists so that Thar coal can be utilized for power generation.

The Minister Mir Changez Jamali assured the NA committee for removing all the difficulties hindering the projects and said all possible support will be provided to coal gasification projects and also to power generation projects under public-private partnership.

Earlier, Specialist Science and Technology of Planning Commission, Dr M Ashraf Moten in his presentation said that coal has to be declared as a matter of national security and strategic importance to attract investment from donors and multilateral institutions.

He said that total investment requirement for 100 megawatts of electricity through underground coal gasification is $ 115.6 million and added that only 7.48 million have been received so far.

Dr Moten said that 36 holes have been drilled and stuffed through 12” and 24 “ diameters carbon steel piping and cemented and tested for gasification.

Director General PCSIR said that the conversion of coal into diesel will cost only Rs 18 to 19 per litre and cost of power generation from coal gasification will is also lower and sustainable.


http://www.dawn.com/2011/07/03/na-committee-ask-for-funds-to-coal-gasification-projects.html

Riaz Haq said...

Here's an assessment of Pakistan's electricity crisis as published in Dawn:

Renowned Scientist and Member Science and Technology, Planning Commission of Pakistan Dr Samar Mubarakmand on Tuesday said the development of Thar coal was the only viable long-term solution to energy crisis prevailing in the country.

“Only Thar Coal can provide guaranteed long-term energy security to Pakistan,” he said while speaking at Islamabad Chamber of Commerce & Industry (ICCI).

He said that the solution to power shortage had to be found indigenously and in this regard the Thar coal was the best option.

He said the electricity generated through integrated gasification combined cycle (IGCC) plants would cost Rs7 per KWH. He said that coal could also be converted into coal gas above the ground in machines called surface gasifiers, and the efficiency of the conversion of coal gas to electricity is about 40 per cent.

Dr Samar said that Thar Coal reserves could play a pivotal role in meeting energy crises both in long term and short term which would enhance industrial competitiveness due to cost effectiveness.

He said that the industrial sector could not wait for long and the government should present quick solution to fill in the gap between demand and supply of energy

He said that the 41 per cent electricity of the world was being produced from the coal, adding that India was producing 64.6 per cent electricity from the coal, whereas Pakistan was only producing 2.27 per cent electricity from coal. He said that 95 per cent natural wealth was not being utilised, whereas not a single kg of coal was mined.

He said that the current energy crisis was causing loss of Rs230 billion and rendering 400,000 people jobless. Current dependable power supply hovers around 14,000MW in summer though it drops in the winter.

On the other hand power demand in 2030 would be more than 100,000MW, he added.

Meanwhile, Mahfooz Elahi, President ICCI said that energy was the key determinant of economic development of the country as Pakistan has been facing an unprecedented energy crisis for past few years.

The government must look towards building power plants and tap alternative energy resources for overcoming power shortage, he maintained.

ICCI President said that delay in fulfilment of export consignments has become a matter of routine due to power outages.

To meet the growing demands of energy, Government should exploit its domestic energy resources which would make the country self-reliant, he emphasised.


http://www.dawn.com/2011/07/06/solution-to-energy-crisis-lies-in-tapping-thar-coal.html

Riaz Haq said...

Here's an interesting excerpt from a report about Pakistan's power sector published in Miami Herald:

There is no place where the country's energy shortage isn't profound. Rural areas are without electricity for up to 16 hours a day while towns often go without for as many as 12 hours daily, forcing factories to close and plunging homes into darkness.

Natural gas supplies are rationed, with factories in the country's most populous province, Punjab, going without two days a week.

Pakistan's economic output is cut by at least 4 percent because of the shortages, the government estimates, something that hampers the country's hopes to battle extremism by creating more economic opportunities. The outages also feed political discontent, triggering frequent, if local, street protests.

Solving the energy problems is a top priority for the United States' aid program, with a State Department delegation here this week, led by Ambassador Carlos Pascual, the Obama administration's special envoy on international energy affairs.

But Pakistan's plans for a 1,700-mile natural gas pipeline from Iran, which would provide Pakistan with a cheaper source of fuel for electricity generation, is a stumbling block.
-------------------
Despite Pakistan's huge hydroelectric potential, it hasn't built a big dam project since the 1970s. Since the U.S.-backed government of President Asif Zardari was elected in 2008, a mushrooming chain of "circular" debt has enveloped the power sector.

The government has assumed $3.6 billion of the power industry's debt. The government-owned power grid owes another $2.5 billion to private-sector generators, even as the government, according to Finance Ministry figures, spent at least $7.4 billion on electricity subsidies during the 2008-2010 period.

Washington and international lenders such as the International Monetary Fund have repeatedly urged Pakistan to cut subsidies, which anemic government finances cannot afford.

Critics say that the government hasn't added to the electricity infrastructure in its three-and-a-half year term, while sinking billions of dollars into unproductive subsidies and taking on debt.

Of the $3.6 billion debt the government assumed, half were bills the government itself hadn't paid, said Ejaz Rafiq Qureshi, the spokesman of the Pakistan Electric Power Co., the state-owed national electricity grid. The rest is owed by private consumers.

At the end of August, a group of nine private power plants demanded that the government pay them within 30 days $540 million it owed for power generation.

Roughly half of Pakistan's current electricity output of 13,000 megawatts comes from the private generators. But there is more capacity that the government doesn't use. Government-owned equipment that could generate another 2,000 megawatts has been sidelined because of poor maintenance. Private equipment that could generate another 2,500 megawatts has been taken out of service because the government hasn't paid its bills, said Abdullah Yusuf, who represents the private producers. Combined, that amounts roughly to the entire immediate shortfall.

"If you had this capacity available, straight away your problem would be solved," said Yusuf.

A longer-term energy project is Pakistan's proposed $12 billion Diamer Basha dam, which would add 4,500 megawatts to Pakistan's electricity generating capacity. Washington is considering providing significant funding to the project. Separately, the U.S. Agency for International Development is currently working on projects that will add 900 megawatts to the Pakistani grid next year.


Read more: http://www.miamiherald.com/2011/09/16/2410787_p2/pakistan-search-for-energy-could.html#ixzz1YBKY4KxS

Riaz Haq said...

Here's an excerpt of a report in The Nation about an International Coal Conf in Karachi:

The international conference was told that Thar region of Sindh province is endowed with mammoth coal (lignite) reserves estimated to be 175 billion tonnes which can produce 100,000MW of electricity for next 300 years and can be a key to energy security and economic prosperity.
----------
“The government has started working on the policy of retrofitting 5300MW of furnace oil based power plants to coal-based initially on imported coal and then on indigenous coal when available,” he (Minister Naveed Qamar) informed the audience.
-----------
Removing the misconceptions about Thar coal, Dr Marcos Leontidis, mining expert from Greece, said that the stripping ratio in Thar is around 6.6: 1, which is much better than many lignite mines in the world including Greece.
Dr Larry Thomas, coal expert from United Kingdom, said that sulphur content in Thar is acceptable being at 0.7%, which is lower than found in many other lignite resources already being used in the world and its moisture levels are same or even less than found in most of the lignite mines in the world. He further said the coal from Thar although may not be exportable to other countries but can be transported to be used in other parts of the province after drying.
Nigel Pickett from SRK-UK in his presentation said renewable energy cannot provide Pakistan reliable energy supplies due to its seasonal and cyclic nature. It has to be part of our energy mix to meet the peak demands and reduce fossil fuel consumption. Volatility of oil prices in 2007 brought heavy stress on the economy and indigenous coal provides the only option to achieve energy security for the country.
Zubair Motiwala, Chairman Sindh Board of Investment, briefed the forum about investment potential of Thar coal and said many international companies from China, South Korea, Germany, Czech Republic, Australia, UK and Turkey have shown their interest in investment in coal mining and power generation in Thar coal and also in the infrastructure projects. He also informed that the Government of Sindh is conducting 3rd International Competitive Bidding for blocks VIII, IX and X of Thar Coalfield and also blocks in Sonda and Badin for attracting international companies to develop coal mining and power generation projects in Sindh.
Mohammad Younus Dagha, Provincial Secretary Coal and Energy Development Department/MD Thar Coal and Energy Board stressed the need to create an ideal energy mix by replacing imported furnace oil to indigenous coal for power generation.


http://nation.com.pk/pakistan-news-newspaper-daily-english-online/Business/23-Oct-2011/5300MW-plants-will-be-converted-to-coal-Qamar

Riaz Haq said...

Here's a report in The News about $10 billion Chinese investment in energy projects in Pakistan:

China’s state-owned Three Gorges Corp. plans to invest $10 billion by 2018 in Pakistan’s energy sector and a delegation is scheduled to visit Pakistan on February 7, officials said on Friday.

The Hong Kong-based United Energy Group Limited of China also intends to establish a 2,000 megawatts power project in Sindh as their delegation is also visiting Pakistan next month to hold further talks on setting up the power projects, they said.

Sindh Coal and Energy Department has signed memorandums of understating (MoU) with the two companies, which have shown interest in developing coal-fired power plants in Thar and Badin coal fields, as well, the officials said.

In an attempt to resolve the issue, the government is pinning hopes on Thar Underground Coal Gasification (UCG) pilot project, which contains the country’s largest coal deposits of around 850 trillion cubic feet spanning over 3,800 square miles, they said.

Overall, according to the World Energy Council, Pakistan has slightly more than 2,000 million tons of proven recoverable coal reserves.

Pakistan’s current electricity demand is around 25,000 megawatts per day, but the current electrical production is less than 20,000 megawatts per day, leaving a deficit of slightly more than 5,000 megawatts, and by 2015, domestic demand is projected to rise to 30,000 megawatts per day.

Currently, the country depends on oil and natural gas to generate up to 60 percent of its electricity needs, further impacting the country’s balance of payments as the price of oil rises and the ongoing power shortages are beginning to impact the country’s bottom-line exports, the officials said.

Member of the Science and Technology Planning Commission, Dr Samar Mubarakmand, has said that Thar coal project would be beneficial for common people and free from all defects.

The success of the Thar coal project would lead to investment from leading international companies, he said.

With the completion of coal-fired power generation project, the nation would get cheap and sufficient power supply, which would resolve the current energy crisis, he added.

Mubarakmand said that the country had enough coal reserves through which it could daily produce 50-60 million cubic feet gasifier, which would end gas shortage from the country.

It is for the first time that the coal gasification is being launched on commercial basis, which will help in abundant and cheap electricity.


http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=89763&Cat=3

Riaz Haq said...

Here's an update on Thar coal power plans as reported by Steelguru:

Business Recorder reported that the government will launch Interconnection of Thar Coal based 1200 MW Engro Power Plant with National Transmission & Despatch Company system' project at a cost of PKR 22.04 billion with the objective of providing consistent power supply to industrial, agricultural, commercial and domestic consumers.

The cost includes PKR 14.845 billion Foreign Exchange Component and PKR 7.19 local component. The project is likely to be financed by Japan International Cooperation Agency or through Irish Credit Bureau on buyer's credit basis and sponsored by the NTDC.

The location of the project is District Matiari, Sindh and it is aimed at providing adequate facilities for reliable and stable transmission of electrical power, keeping in view the growing demand of domestic, commercial, industrial and agricultural customers of Discos.

The project would disperse bulk power from 1200 MW Engro Power at Thar to up country by constructing 500kv D/C transmission lines, 250 kilometers long from the power plant at Thar to Matiari with extension at existing 500 KV grid station of Matiari.

Thar Coal Energy Board has been established to promote and facilitate the public and private sector coal industry. Thar coal deposits have been rapidly recognized as a major energy resource with the potential to transform the energy equations in the country. Therefore, initially the intent is to develop Thar coal mine for generation of electricity from two 1200 MW Power Plants one by Engro in private sector and another in public sector by PEPCO.

Ministry of Water and Power had decided in a meeting of Thar Coal Energy Board that NTDC would immediately prepare a work plan for providing the inter connection arrangements for dispersal of power of these power plants.

According to the document the NTDC has planned a transmission scheme for evacuation of power from 1200 MW Engro Power Plant with the following scope: considering that the proposed third 500 KV Jamshoro Moro RY.

Khan Transmission Line and 850 MW Wind Power plant is constructed before its completion. A MoU between PEPCO and Sindh Engro Coal Mining Company for detailed feasibility study had been signed.

Sindh Engro Coal Mining Company has carried out detailed feasibility study for coal mining for both power plants. The expected date of completion of the coal mining project is December 2015 while the two Thar coal based power plants of 1200 MW each is 2015 to 2016.

According to official sources, High Voltage Direct Current transmission lines will be required for evacuation of additional generation at Thar in the year 2015 to 2016 and onward as well as the power generated from the proposed power plant.

They said that in case future generation at Thar does not mature during the next two years while AES imported coal power plant and 1000 MW import of power from Iran does mature then 525km single circuit AC transmission line from Matiari to RY Khan would be required in future for the dispersal of this power.


http://www.steelguru.com/middle_east_news/Pakistan_government_to_launch_interconnection_of_Thar_Coal_with_NTDC/252709.html

Riaz Haq said...

Here's a Reuters' report on coal in Pakistan:

Yet it has one of the biggest, barely-touched, single coal reserves on the planet - the massive Thar coalfield in the northern Sindh province with 175 billion tonnes of extremely high water-content, low energy coal.

This kind of low-grade, watery coal is found in abundance in other countries, such as Indonesia, the world's biggest exporter, but it has not been economic to exploit in the past.

But high oil and gas prices, rising coal prices and new technology to dry out watery, gaseous coal or leave it in the ground but extract the gas from it instead, has prompted projects around the world.

The Pakistan government this year declared the Thar coal fields as a Special Economic Zone, with tax breaks and incentives to lure investors to develop coal gasification and mining as part of its strategy to fill the energy gulf.

"In five years, coal's contribution to the energy mix will reach 10 to 12 percent. It's minor at the moment," said Najib Balagamwala, Chief Executive Officer of Karachi-based trader Seatrade.

"The private sector is considering coal-fired plants very seriously, as there's margin there," he added.

Pakistan's energy mix has changed in recent years from mostly hydro to thermal, consisting of domestic gas and imported fuel oil, according to a report by the Asia Development Bank this month.
----------
"The private sector is considering coal-fired plants very seriously, as there's margin there," he added.

Pakistan's energy mix has changed in recent years from mostly hydro to thermal, consisting of domestic gas and imported fuel oil, according to a report by the Asia Development Bank this month.

The supply-demand power gap at peak hours reached over 5,000 MW in financial year 2011, the ADB report said.

"The need for coal to fuel the rising demand for energy in Pakistan is well understood," said Shahrukh Khan, Chief Executive Officer of Oracle Coalfields PLC, which is developing mines in Sindh.

Of the 10 coal blocks in Thar, four have been drilled and explored by Oracle, Cougar Energy, SECMC and another un-named gasification project company, according to the Sindh province website on Thar.

Two Chinese firms are also looking to build gasification and coal mining projects in Thar, industry sources said.
---------
The high water content of Pakistan's domestic coal makes it tricky to mine and transport long distances economically but mine-mouth power plants and coal gassification projects to capture and extract gas trapped in coal seams without mining it are much more viable, industry sources said.....


http://www.reuters.com/article/2012/04/13/pakistan-coal-idUSL6E8FC45O20120413

Riaz Haq said...

Here's a WSJ report on coal stocks surging again:

Coal stocks are helping lead the way for energy shares, which is the best-performing sector of the S&P 500 today after getting repeatedly creamed amid renewed worries about coal’s future.

Some supporters, it turns out, haven’t fled town.

FBR recently reiterated its view that as cheap as natural gas is, it won’t come close to displacing coal in the U.S. power fleet any time soon. Most of the utilities that have the capacity to switch to gas already have, they argue.

And exports, seen as a potential safety valve for unwanted U.S. power-plant coal, nearly tripled in March from a year earlier, Nomura notes.

Strict federal air pollution regulations likely to limit new U.S. coal-plant construction will do little to cool growing appetites for the fuel in China and India. U.S. miners are scrambling to expand export facilities to take advantage of that.

Plus, some stocks were just starting to look cheap; shares of Patriot Coal and Alpha Natural Resources, each recently up more than 8%, had each sank by more than 70% throughout the last year. Peabody Energy, up 7.4%, and Arch Coal, up 6.8%, also catch the boost.


http://blogs.wsj.com/marketbeat/2012/04/12/bargain-hunters-export-hopes-boost-coal-shares/

Riaz Haq said...

Here's an ET story of a celebrated CEO's departure in Pakistan:

(Asad Umar's) tenure at Engro has certainly been a remarkably successful one. When Umar took over as President and CEO of the company in January 2004, Engro was largely just a fertiliser manufacturer with a small petrochemical subsidiary. Under his leadership, however, the company turned into a diversified industrial conglomerate, with interests ranging from fertilizers, foods, petrochemicals, chemical storage, energy and commodity trading.

Small wonder, then, that Dawood was effusive in his praise of Umar when announcing the departure to the company’s employees, noting that under his leadership, Engro’s revenues had grown from just Rs13 billion in 2004 to Rs114 billion in 2011, growing at an annualised rate of nearly 36.4%. (Inflation during that time averaged 12.6% per year.)

Even within the core fertiliser business, Umar took Engro from being a local player to a globally competitive one, leading the firm into the $1.1 billion project that set up the world’s largest single-train urea manufacturing plant in Pakistan.

Umar’s 27-year career at Engro began in 1985, when the company was still a subsidiary of ExxonMobil, the global oil giant. “I still remember the exact figure of my first salary: Rs8,170 per month. My boss at the time said ‘Well, frankly they are paying you too much.’” As CEO of Engro Corporation, Umar was paid Rs68.6 million for the year 2011, which comes to a monthly salary of Rs5.7 million.

In addition to his salary, Umar, 50, was also paid in stock and currently owns about 2 million shares of the company, with options to buy another 924,000, according to Engro’s latest available financial statements. At Monday’s closing price of Rs102.47 per share, that puts the value of Umar’s stocks and options at over Rs300 million.

Umar represents the growing class of executives trained by the country’s business schools who made it big by working their way up the corporate ladder rather than being born into privilege. Umar graduated from the Institute of Business Administration in Karachi in 1984, working for a short stint at HSBC Pakistan before moving to what was then Exxon Chemical Pakistan as a business analyst.

He was the only Pakistani employee of Exxon working abroad (in Canada) when the famous management buyout of Engro took place in 1991. Umar came back to Pakistan and in 1997 was appointed the first CEO of Engro Polymer & Chemicals, the group’s petrochemical arm.

When became president of the company in 2004, he immediately made the company take a global perspective, becoming the first Pakistani private sector firm to hire the top (and expensive) US consulting firm McKinsey & Company to help create the Engro’s strategy. Engro changed its corporate structure as a result of that engagement and is now on a global expansion kick, buying out a US-based food company and considering expanding into the fertiliser business in North Africa to supply the European market.


http://tribune.com.pk/story/365621/corporate-titan-after-27-years-at-engro-asad-umar-calls-it-a-day/

Coal said...

The investment into alternative power generating technologies such as nuclear energy may need to be measured against the potential cost when things turn against you as unfortunately happened this year in Japan. Coal prices and coal statistics show developing economies are more likely to increase their investment into & their use of coal mining in coming years because of coal's affordability and ability to quickly meet increasing demands for electricity and steel. www.coalportal.com

Riaz Haq said...

Here's John Daly of OilPrice.com on coal energy plans in Pakistan:

Pakistan has glimpsed its energy future, and it is brown – coal, to be exact.

Sindh Engro Coal Mining Co. is developing the $3 billion Thar Coal mining project in partnership with the government of Sindh. The Thar project is expected to produce 100 megawatts of electricity by 2016 using Underground Coal Gasification (UCG) technology. The Thar UCG pilot project is situated in the Tharparkar desert in Sindh eastern Pakistan.

UCG converts coal to gas while still in the coal seam, where injection wells are drilled and used to supply the oxidants to ignite and fuel the underground combustion process, with separate production wells bringing the resultant gas to the surface. The high pressure combustion is conducted at temperatures of 1,290–1,650 degrees Fahrenheit, but can reach up to 2,730 degrees Fahrenheit. The process produces carbon monoxide and dioxide, hydrogen and methane.

Boosters of the Thar UCG project note that Block Number 5 of Thar Coal Project contains 1.4 billion tons of low-grade lignite coal reserves. Overall the coal reserves at Thar are estimated at 175 billion tons of lignite coal.

The project is being driven by Pakistan’s dire electricity situation. With about 50 percent less electricity generation capability than the actual demand, Pakistan’s National Grid currently faces more than a 5,000-megawatt shortfall in power generation, leading to blackouts in both urban and rural areas of the country. Due to unscheduled shortages by the National Power Control Center, urban areas are now subjected to unscheduled minimum 8-hour power blackouts each day, while in some parts of the country, blackouts can last up to 22 hours.

So, where will the $3 billion financing come from? According to Sindh Engro Coal Mining Co. CEO Shamsuddin A. Shaikh, “The bulk of financing will be arranged from China - we may also seek funds from other places if need be.”

Interestingly, the Thar project may also improve relations with India. When asked about Thar's geographical proximity to India and the possibility of Indian participation in Thar Shaikh replied, “Yes, that's something we have in mind. India is supposed to develop an additional 100,000 megawatts based on coal in the next five years. India currently generates more than 50 percent of their electricity from coal, using about 450 million tons of coal every year. Most of that is indigenous and about 50 million tons is imported coal. They will need to import coal, we can utilize the railway line, which will be serving our own plants as well, to export coal to India. We can also put up a power plant at the mine mouth and export electricity to India. The economics are very much there, but India-Pakistan relations are always more delicate than just the economics. A plus point of working with Indians is that they have immense knowledge and experience of coal. They have been dealing with over 400 million tons of coal per annum for a number of years. It makes more sense for us to use their expertise instead of having experts from China or anywhere else.”..


http://oilprice.com/Energy/Coal/Pakistan-Bets-on-Underground-Coal-Gasification-to-Help-Relieve-Power-Shortages.html

Riaz Haq said...

Here's an ET piece on energy situation in Pakistan:

..Since Pakistan came into being, people have been facing loadshedding due to shortage of power supply, with frequent outages affecting economy in many ways.

Uncountable working hours have been lost, leading to an increase in poverty and economic loss of billions of rupees to the country. Surprisingly, it is happening despite the fact that only about 60% of the population has access to electricity. According to the World Energy Statistics 2011, published by the International Energy Agency (IEA), Pakistan’s per capita electricity consumption is one-sixth of the world average.

World average per capita electricity consumption is 2,730 kilowatt hours (kwh) compared to Pakistan’s per capita electricity consumption of 451 kwh.

According to the Pakistan Energy Year Book 2011, the country’s installed power generation capacity is 22,477 megawatts and demand is approximately the same. The country needs to redesign the electricity portfolio and substitute oil and gas with an abundantly available indigenous fuel source. It must develop indigenous energy resources to meet future electricity needs and can overcome energy crisis by utilising untapped coal reserves.

Fortunately, Pakistan has a very inexpensive source to get energy through coal. Coal is economically viable and a long-term solution to balance the demand and supply chain of electricity in the country, which has the fifth largest coal deposits in the world.

According to last estimates made in 2011, coal deposits in the country are up to 185 billion tons. The largest deposits are in Thar desert, which is about 850 trillion cubic feet spanning over 10,000 square kilometers, surprisingly more than the oil reserves in Saudi Arabia having a collective quantity of approximately 375 billion barrels.

At present, 40.6% of world’s electricity is being generated from coal and it is the single largest contributor to world electricity generation. By looking at the electricity generation mix of the countries that are blessed with coal, it is evident that coal is the largest contributor.

Countries like Poland, South Africa, China, India, Australia, Czech Republic, Kazakhstan, Germany, USA, UK, Turkey, Ukraine and Japan are generating 96%, 88%, 78%, 78%, 77%, 72%, 69.9%, 52.5%, 52%, 37%, 31.3%, 27.5% and 22.9% of electricity from coal respectively. In comparison, Pakistan generates only 2.27% of electricity through coal.

However, coal reserves of only Thar can generate 20,000MW of electricity for the next 40 years without loadshedding and at a rate Rs4 less than the current cost of electricity production. The government has given the task to experts to enhance energy efficiency by focusing on coal and ensure large scale power generation through this resource.

--

At the International Coal Conference 2011, Pakistan had invited investors from around the world, encouraging them to pour money into coal power projects as the country initially requires $1.2 billion to build power generation infrastructure in Thar. Japan is keen to finance transmission lines from the Thar coalfield to the national grid and Chinese companies have expressed interest in developing coal-based power plants in Thar and Badin.


http://tribune.com.pk/story/467668/coal-powered-energy--the-best-substitute/

Riaz Haq said...

Here's ET on ADB not objecting to Thar coal:

ISLAMABAD:

Engro Corporation President and CEO Muhammad Aliuddin Ansari has stated that the Asian Development Bank (ADB) does not object to financing the switchover of thermal power plants to Thar coal.

“The directors of ADB have met me and the chief minister of Sindh and said that they had no objection to the conversion of power plants to Thar coal and are ready to finance [such projects],” he told The Express Tribune.

The revelation comes on the heels of the Ministry of Water and Power’s claim that the ADB is not ready to finance the conversion of power plants to Thar coal, and that the lending authority would finance power plants that run only on imported coal.

Ansari also said he is ready to travel to Manila along with a delegation from the water and power ministry to meet ADB officials and negotiate a financing deal for such projects.

Ansari recalled that it had been decided in a special board meeting of the Thar Coal Energy Board (TCEB) on October 3, 2012, chaired by the prime minister of Pakistan, that existing oil-based power plants should be modified and redesigned to Thar coal specifications, and that new coal-based plants should also be designed keeping the same specifications in mind.

It was also decided in the meeting that agreements would be signed between power generation companies and the Sindh Engro Coal Mining Company (SECMC) for the supply of coal for an existing 420 megawatt (MW) power plant in Jamshoro, as well as a new 600MW power plant to be built in the same location. These agreements were to be finalised and signed within a week, but never materialised.

Ansari said that Pakistan was facing a circular debt issue due to the poor energy mix employed by generation companies, and that conversion of power plants to run on Thar coal could address this issue. He claimed that Thar held the future of Pakistan, and reiterated that all future power plants should be designed on Thar coal specifications.

“Not only has the fuel mix shifted from gas to furnace oil, the price of furnace oil has increased four times in the last five years. This has increased the furnace oil bill by 461%, whereas power generation through furnace oil has increased by only 79%,” said a handout provided by Engro Corp as part of the interview.

Ansari said that Indonesia and India both held coal reserves that were similar in specification to the coal available in Thar. He remarked that India is expected to become a major market for coal by 2016: it already imports significant quantities to meet its needs....


http://tribune.com.pk/story/498215/engro-says-adb-has-no-objections-to-thar-coal-project/

Riaz Haq said...

Here's ET on ADB funding of coal power in Pakistan:

ISLAMABAD:

Giving in to the pressure from an international lender, the government has reversed its decision on consuming domestic coal for power generation as the Council of Common Interests has approved using a blend of imported and Thar coal in power plants.

The move will pave the way for an early sanction of a $900 million loan by the Asian Development Bank that will go for the construction of a 600-megawatt coal-fired power plant at Jamshoro and for switching an existing 600MW power plant to coal.

According to sources in the finance ministry, further discussions on the $900 million loan will be held with ADB Director General of Central and West Asia Department Klaus Gerhaeusser, who was due to arrive on Wednesday.

During his two-day visit, Gerhaeusser will meet Finance Minister Dr Abdul Hafeez Shaikh and Water and Power Minister Ahmad Mukhtar. He will also hold meetings to review communication projects.

Prime Minister Raja Pervez Ashraf had placed a ban on imported coal-powered plants in a bid to encourage consumption of Thar coal in such projects. However, the ADB resisted the move and refused to extend loans for Thar coal-based power plants.

The bank was of the view that higher dependence on lignite would increase pollution, which was against the environmental policy of the lending agency.

Following the ADB’s decision, the federal government placed the case in a meeting of the CCI – a constitutional body headed by the prime minister with all chief ministers as members – on January 23. According to official documents, the CCI decided that “instead of using only Thar coal, a blend of imported and Thar coal will be used in the 600MW Jamshoro plant.”

In this meeting, Sindh Chief Minister Syed Qaim Ali Shah, who actively promotes mining and consumption of Thar coal, was also present.

CCI also decided that the Ministry of Water and Power would work out further details in deliberations with representatives of the ADB.

Apart from the ADB, the Japan International Cooperation Agency (JICA) has also expressed interest in constructing power plants in Pakistan, besides laying a power transmission lines from Thar to Matiari.

In the past many years, heavy reliance on furnace oil has disturbed the country’s energy mix. Against a one-third share of thermal power generation earlier, the ratio has increased to three-fourths. The recent emphasis on the shift to coal is aimed at tackling the runaway circular debt that has plagued the entire energy chain, forcing the government to spend billions of rupees every month to prop up the energy system.

According to a government official, it was not yet clear whether Pakistan will again take up the issue of financing the Diamer Basha Dam with the ADB director general.

However, he said these days the dam, costing $11.3 billion, was not the top priority of the government, which has shifted funds meant for the dam to another project, the Neelum Jhelum hydropower plant. An amount of Rs1 billion has also been diverted to the PM’s discretionary funds.


http://tribune.com.pk/story/507021/coal-fired-power-plant-govts-about-turn-paves-way-for-900m-adb-loan/

Riaz Haq said...

Here's a report on new investment in coal-fired power plant in Karachi:

Companies from the United Arab Emerites and China have inked an accord to develop the first phase of 500 (4×125) megawatts (MW) power plant at Port Qasim Karachi.

Burj Power, based in UAE, is a development and advisory firm focused on projects in the Middle East, Asia and Africa. Harbin Electric International Co Ltd out of China is the technical partner.

The first plant is expected to become operational by 2016.

The Express Tribune reports that the total investment will be between $650 million and $700 million.


http://www.mining.com/coal-based-power-plants-in-pakistan-get-700-million-investment-89811/

http://tribune.com.pk/story/510774/planning-ahead-uae-company-to-set-up-coal-based-power-plants-in-karachi/

Riaz Haq said...

Here's a PakistanToday report on Sindh coal plans:

KARACHI - The Sindh Engro Coal Mining Company (SECMC) and Government of Sindh broke ground on Thursday to mark the beginning of coal extraction project at Thar Coal block II.
Sindh Chief Minister Qaim Ali Shah attended the groundbreaking ceremony, along with the other government officials and Senior Management of Engro Corporation, says a statement issued by Engro Corporation. Sindh Engro Coal Mining Company is a joint venture between Engro Corporation and Government of Sindh. The SECMC has completed the feasibility study on Thar Coal project, confirming the technical, commercial and environmental viability of the project.
All the required government approvals have been obtained and the Economic Co-ordination Committee (ECC) has approved $700 million sovereign guarantee for the project. The mining project, which will cost US$ 1.3 billion, is likely to start later this year and is expected to take less than four years for completion. Speaking the occasion, Ali Ansari - President and CEO Engro Corporation said, “For over four decades Engro has been a part of Pakistan’s economic landscape sharing the various challenges and triumphs that the country has offered.
As a good corporate citizen, our investments in Thar Coal project today are a preliminary step towards building the capacity, which will foster a more developed and energy-efficient Pakistan. Investments in Thar Coal are not only the need of the hour but also make sound economic sense.” On the occasion, Shamsuddin A. Shaikh - CEO Sindh Engro Coal Mining Company said, “Thar has an enormous energy potential. SECMC’s Thar Block-2 can produce 4000 MW for next 50 years. Total foreign exchange savings for 4000 MW of Thar coal based power plants are estimated at more than US$ 50 billion for life of the project.
The strategic investment and development of the Thar Coal Block II will not only help alleviate the chronic energy crisis of the country but also usher in a new era of prosperity for the people of Sindh and ultimately the people of Pakistan.
The project will yield 4,000 new direct and indirect job opportunities for the local community. The SECMC applauds the support and efforts of the Sindh Government and reiterates its firm commitment to fulfil all its obligations in a timely manner, which will bring energy security to Pakistan and accelerate the industrial development in the country.
The Engro Corporation Limited is one of Pakistan’s largest conglomerates with businesses ranging from fertilizers to power generation. Currently Engro Corporation’s portfolio consists of seven businesses, which include chemical fertilizers, PVC resin, a bulk liquid chemical terminal, foods, power generation and commodity trade.


http://www.pakistantoday.com.pk/2013/03/15/news/profit/sindh-embarks-on-extracting-thar-coal/

Riaz Haq said...

Here's a National Geographic piece on Thar coal development in Pakistan:

The current acute energy crisis in Pakistan, certainly the worst of all times is heating up an indigenous extractive resource scramble in a remote part of Pakistan with unusual demographics. The Tharparker District or simply the Thar Desert located in the southeastern province of Sindh is under spot light because of a 175 billion tons of estimated coal reserves lying beneath its surface. These reserves have been known for around two decades, but only recently has development gained momentum to generate power in order to propel the country’s ailing economy. The signs of a resource boom are already animating the dull landscape of the region – roads, airports, site offices, power lines, guest houses and rising real estate price are evident. Near the town of Islamkot, an underground coal gassification pilot project represents the scale of possible change where workers sourced from local communities rest their heads after long-hour shifts.

Understanding the quandary faced by the residents of the Thar Desert took me to several villages situated in the vicinity of the coal fields to gather some basic ethnographic data on community perceptions of the project. Tharparker is home to around 1.5 million people stretching its boundaries with Indian Rajasthan and the Great Ran of Kutch salt marsh. The indigenous communities of Menghwar, Kolhi and Bheel make up a large part of the rural human settlement. The land is famous for rippling sand dunes, distinct folklore, rain-starved shrubs, drying wells, bottomed indicators of health, poverty and education and the most food insecure district in the country. One of the villages Mauakharaj of Tharparker, just beside an airport being built to host coal companies, has abject poverty and deprivation. The whole village is culturally and socially crippled because of fluorosis; a disease caused by consumption of excessive fluoride in groundwater, with no remedy and still people compelled to use it.
--------------
The conversation did not lead to consensus on what approach should be dominant but there was a agreement that Thar coal development should not be a first resort but much further down the priority scale for addressing Pakistan’s energy crisis. As Pakistan’s election approaches, energy is a ballot issue and polemics are rife on panacea solutions. It is high time that Pakistanis consider their energy predicament with a multifaceted strategy that transcends petty nationalism so that communal harmony is not compromised for short-term and inefficient power solutions.


http://newswatch.nationalgeographic.com/2013/05/02/pakistan-coal/

Riaz Haq said...

Here's an Express Tribune report on Engro-KESC deal for coal electricty:

KARACHI:
Karachi Electric Supply Company and Sindh Engro Coal Mining Company (SECMC) inked a memorandum of understanding to construct a power generation project capable of producing 600 megawatts (MW) at Thar coal field.
According to the agreement, SECMC – a joint-venture between Engro Powergen and the Government of Sindh – will develop a 600MW Mine Mouth Power Plant in Thar field’s block 2, whereas KESC will purchase power from the plant to meet the rising power demand in Karachi and adjoining areas of Sindh and Balochistan, according to a press statement on Wednesday.
Both the parties believe that the agreement will serve as the base for a mutually beneficial partnership for future progress and development of one of largest coal reserves of Pakistan.
The two companies acknowledged that coal from Thar had the potential to address the country’s severe power shortages and bring energy security which is indispensable for economic growth.
The Thar Coal Power Project aims to provide affordable and sustainable electricity to consumers using domestic resources. Reliance on indigenous fuel is likely to save billions of dollars in foreign exchange currently spent on import of the expensive alternative furnace oil, cutting the overall cost of power generation.
---------
After the signing ceremony, Sheikh said, “Thar coal is a project of national security as it will bring much-needed energy security to propel the nation into an era of prosperity and development. SECMC’s Thar block 2 alone can produce 5,000MW for the next 50 years, amounting to an estimated foreign exchange savings of $50 billion throughout the life of the project. This project will demonstrate maturity and capability of corporate sector to join hands and synergise on national level.”


http://tribune.com.pk/story/546207/kesc-engro-team-up-to-build-600mw-power-plant-at-thar/

Riaz Haq said...

Here's a GlobalPost report on coal conversion of gas-oil-fired power plants in Pakistan:

Pakistan has asked the Manila-based Asian Development Bank to help finance two coal-fired power units at the Jamshoro thermal power station in Sindh, a senior official of Pakistan's Water and Power Development Authority told Kyodo News this week.

Zafar Umar Farooqi, chief engineer at the authority, said Pakistan had initially sought a $433 million ADB loan for one 600-megawatt unit but the bank has now been asked to consider a loan for two units.

He said the size of ADB loan will be decided after consultations with the bank, but he indicated the total cost of Jamshoro project would be around $1.5 billion.

The government-owned WAPDA operates an 850-MW oil-gas fired thermal power plant at Jamshoro at less than 40 percent of its capacity because of a shortage of fuel oil and gas.

The ADB loan will be used to convert the existing plant to coal and set up an additional coal-fired plant at the site, increasing installed capacity at Jamshoro to 2,050 MW.

The government has already invited expressions of interest from consultants to oversee construction at Jamshoro, which is about 150 kilometers northeast of Karachi and uses water from the Indus River for cooling.

Pakistan has long examined setting up coal-fired power plants to use its own lignite coal, but efforts have been unsuccessful because of the high ash content in the coal.

Ismail Khan, senior external relations officer for the ADB for Pakistan, said the new units at Jamshoro would be designed to use mixed local and imported coal, most probably from Indonesia.

Farooqi said separate tenders will be invited for conversion of existing Jamshoro plant from oil-gas to coal.

Pakistan has an acute power shortage and the new government of Pakistan Muslim League (N) has given top priority to increasing power generation.


http://www.globalpost.com/dispatch/news/kyodo-news-international/130620/pakistan-seeks-adb-loans-coal-fired-power-plants

Riaz Haq said...

APP reports that Asian Development Bank has agreed to finance coal-fired power generation plant in Pakistan in spite of strong opposition from the environmental lobby:

The Asian Development Bank (ADB) is providing a $900 million loan for a new supercritical coal power generation unit in Pakistan that will deliver reliable and cost effective electricity to hundreds of thousands of energy-starved households and businesses.
The coal-fired generation unit, the first in the country to use supercritical boiler technology, will be built at an existing power plant in the town of Jamshoro in Sindh province, about 150 kilometres east of the provincial capital, Karachi.
It will employ state-of-the-art emission control equipment resulting in cleaner emissions than the existing heavy fuel oil-fired generators and subcritical boiler technology, which is more commonly used, according to ADB statement issued on Monday.
Pakistan only has 19 percent of the global average for carbon dioxide emissions per person and has only one coal-fired power plant in operation generating 0.7 percent of the generation mix.
Recycling ash from the plant will also save about 115,000 tons of carbon dioxide equivalents per year, the statement said adding the electricity generated from the plant will alleviate some of the power shortages and replace generation from small individual oil and diesel generators which is expected to save a further 503,000 tons of carbon dioxide per year.
The new plant will generate electricity at a lower cost saving about $535 million per year on its fuel import bill compared with oil fired generation.
The new unit is a part of broader government efforts to decrease electricity tariff.
Coal-fired power plants, using cleaner technology, provide an environmentally sound and cost-effective medium-term energy solution at a time when the country's natural gas reserves are dwindling.
Resolving the energy crisis is a priority for the country and the government is pursuing all options including large hydropower plants, renewable energy, energy efficiency, increasing domestic gas production, and importing electricity and natural gas.
Pakistan has substantial potential for large hydropower which will be developed to meet long-term energy needs because of the longer construction period involved.
Small and medium sized hydropower will be developed to meet medium-term needs, it said adding the stable base-load power provided by this project will enable the fluctuating power from solar and wind power to be used without disruption to the grid.
ADB's assistance, which includes $870 million from ordinary capital resources and $30 million from its concessional Asian Development Fund, will be complemented by cofinancing of $150 million from the Islamic Development Bank and counterpart funds of $450 million from the government.
The project is expected to be completed by December 2018. ADB's assistance will also provide 5 years of operation and maintenance support after its completion.


http://www.brecorder.com/top-news/1-front-top-news/147932-adb-providing-$900mn-to-support-pakistan-end-energy-crisis.html

http://www.businessweek.com/news/2013-12-09/adb-to-lend-900-million-for-coal-plant-unit-in-pakistan

http://www.huffingtonpost.com/jake-schmidt/important-test-of-the-ove_b_4395835.html

Riaz Haq said...

Here's an ET report on ADB financing for Jamshoro coal-fired 1200 MW power plant:

Despite opposition by the United States (US), the Asian Development Bank (ADB) has approved a $900-million loan for converting the Jamshoro Power Plant to a coal-fired one, giving a boost to the government’s efforts to improve the energy mix.
According to sources, hectic diplomatic efforts, launched by Finance Minister Ishaq Dar, saved the day for Pakistan after the US had indicated its opposition to the deal to the ADB’s Board of Directors. The US cast its vote against Pakistan, the sources said.
However, Canada, Germany, Australia, New Zealand and Japan cast their votes in favour of Pakistan.
The loan was approved by the ADB Board of Directors, according to Ministry of Finance. The project will have an installed capacity of 1,320 megawatts (MW) and will add 1,200 to the national grid.
The new plant will generate electricity at a lower cost, saving about $535 million per year on fuel imports compared to oil-fired power plants.

Three-fourth of the board voted in favour of the loan, the finance ministry said. Dar also thanked the ADB and countries that supported Pakistan’s proposal, it added.
The previous government had initiated the process of converting and running the power plant on imported coal.
However, the PML-N government plans to construct coal power plants at Gadani with a total capacity of 6,600 MW as part of its policy of producing electricity on cheaper fuels like coal, Dar stated.
According to the ADB, out of the total sum of $900 million, an amount of $870 million will be at a higher interest rate while $30 million will be at a concessional one. The Islamic Development Bank will also provide $150 million, while $450 million will be arranged by the government, to meet the total estimated project cost of $1.5 billion. The ADB said that project is expected to be completed by December 2018.
While the ADB approves the loan, the Pakistani authorities have yet to sort out the actual price. After the Ministry of Water and Power overestimated it at $2 billion (Rs220 billion), the federal government had constituted a committee to review the cost, which had originally been estimated at $1.5 billion (Rs165 billion).
The ADB said that in order to address environmental concerns, it will employ state-of-the-art emission control equipment resulting in cleaner emissions than the existing heavy fuel oil-fired generators and subcritical boiler technology which is more commonly used.
Before approving the loan, the ADB had pressed Pakistan to agree to using imported bituminous coal for 80% of the plants fuel requirement, and Thar coal which is lignite and has a low heating capacity for the remaining 20%.


http://tribune.com.pk/story/643373/power-through-adb-approves-funds-for-jamshoro-plant/

Riaz Haq said...

Here's a News story on US support and funding for Central Asia-South Asia (CASA) transnational grid:

WASHINGTON: The United States has committed $15 million in financing towards the Central Asia-South Asia electricity transmission project (CASA-1000) that on completion would help bring electricity to Afghanistan and Pakistan.

While announcing the funding the State Department expressed the hope that the US financial support for CASA-1000 would help leverage other donors to support the project and encourage the World Bank to present the project to its Board of Directors for final approval next year.

“We believe CASA-1000 can be a potentially transformative project, helping create a regional energy grid that connects Central and South Asia for the first time,” a statement released by the Office of the Spokesperson said.

When completed, CASA-1000 will allow Tajikistan and Kyrgyzstan to profit from existing, unused summer generation capacity by selling electricity to Afghanistan and Pakistan. Afghanistan would doubly benefit from the project as a consumer (300 MW) and as transit country generating revenue.

“Pakistan would add 1,000MW to its national grid during the summer months when it experiences its peak demand period and have access to a reliable, clean, and cheaper energy supply.”

According to the State Department, CASA-1000 is entirely dependent on existing hydropower generation so it will not affect water-sharing agreements for other Central Asian countries. It also complements ongoing efforts by the Asian Development Bank and others to support a regional energy grid.

“These types of projects can enhance economic interdependence and support peace and stability in the region for years to come. That is why the United States has been supporting the CASA-1000 Secretariat for several years, and is now committing an equity stake in the project.”

“US support for CASA-1000 is representative of our long-term commitment to peace, stability and prosperity for Afghanistan and its neighbours. CASA-1000 is a practical example of a project that supports regional economic connectivity and our New Silk Road vision. The United States looks forward to working with the World Bank, the Islamic Development Bank, and other development partners to support CASA-1000 and other projects which connect Central and South Asia.”


http://www.thenews.com.pk/Todays-News-13-27249-US-pledges-$15-million-to-bring-electricity-to-Pakistan-Afghanistan

Riaz Haq said...

Here's an Australian proposal to convert coal into diesel in Pakistan:

Australian mining billionaire and philanthropist, Andrew Forrest, has made an informal deal with Pakistan to free about 2.5 million slaves in return for allowing his firm to convert billions of tonnes of cheap coal into much-needed energy.

The CEO of Fortescue Metals Group (ASX:FMG), who made the announcement at the World Economic Forum in the Swiss resort of Davos, said the agreement would give the Pakistani state of Punjab access to Australian technology that converts lignite coal into diesel.

In return, he said Pakistan has agreed to bring in laws that will tackle the problem of slavery, or bonded labour, in the Punjab province, home to more than 100 million people, reported The Australian.

Forrest says the technology, developed by Curtin University, has the potential to be cost-effective.

"Turning lignite to diesel is proved – so we have no doubt it's going to happen," he was quoted as saying.

The deal earned the approval of former British Prime Minister Tony Blair, who sung its praises during a brief chance meeting with Australian Prime Minister Tony Abbott in Davos.

According to the Global Slavery Index, compiled by Forrest's Walk Free Foundation, about 16 million people are held in slave-like conditions through debt and forced labour in Pakistan and India.


http://www.mining.com/aussie-mining-billionaire-forrest-signs-coal-deal-to-end-pakistan-slavery-41098/

Riaz Haq said...

Here's an AFP story on coal power for Pakistan:

....Late last month, Prime Minister Nawaz Sharif and his former rival, ex-president Asif Ali Zardari jointly inaugurated the construction of a $1.6 billion coal plant the southern town of Thar, hailing their shared goal of ending the nation’s power crisis. The government has also green-lighted the construction of a pilot 660 megawatt coal-fired plant in Gadani, a small, serene town on the Arabian Sea known as Pakistan’s ship-breaking hub. A 600 megawatt plant has also been given the go-ahead in the southern city of Jamshoro......
“This is a major and historic fuel switching plan as we generate zero from coal compared to India which generates 69 percent of its electricity from coal-fired power plants,” Pakistan’s minister for power and water Khwaja Asif told AFP.

Pakistan has struggled with scheduled power cuts for decades. But the problems have been particularly acute since 2008, with regular outages of up to 22 hours a day for many domestic users and even longer for industries — costing about two percent of GDP per year.
In the hot summer, when temperatures soar to 50C in the country’s centre, Pakistan produces around 18,000 MW of power, with an average deficit of 4,000 MW. A lack of capacity together with huge debt cycles exacerbated by poor rates of tax collection are seen as some of the major factors contributing to the country’s dismal power shortages.
The issue was also a central campaign theme in last year’s general elections, which saw Nawaz Sharif elected to the top post. Faced with a growing bill for imported oil that currently stands at $14 billion and a rapidly depleting supply of natural gas, the country’s private and public plants are switching their oil-plants over to coal. “Pakistan has been facing rising oil prices and declining gas reserves as well as tight foreign account situation, rendering the reliance on the import of oil to fuel power plants increasingly unaffordable,” the Asian Development Bank said in a statement. Pakistan’s largest private sector power utility Karachi Electric Supply Company (KESC), which provides electricity to the country’s biggest city, has taken the lead in plans for the coal switch.
The company has recently granted engineering, procurement and construction contracts to Chinese company Harbin Electric International to convert two units of the Bin Qasim thermal power stations with 420 megawatt capacity.
The $400 million project is expected to be completed by 2016. Alongside the conversions, Pakistan is also upgrading its port facilities to increase its ability to import coal.
“Ports are the lifeline of the country,” says Haleem Siddiqui, a veteran seaman who pioneered the first state-of-the art container terminal at Karachi Port and whose company is building a “dirty cargo terminal” at Port Qasim along Arabian Sea.
The fully-mechanised terminal would be able to handle four to eight million tons of coal in the first phase to be completed by 2015, growing to 20 million tons in the extended phase in 2020, at a cost of $200 million.

----- Which is why Pakistan is determined to find some of its energy needs under its own soil. Some experts have pointed to the Thar Desert in southern Sindh province, which sits on top a vast potential source of 175 billion tons of coal.
“It is very huge reserve and is equivalent to combined oil reserves of Iran and Saudi Arab in terms of heating value,” Agha Wasif, chief of the provincial energy department told AFP. Engro Powergen Limited, a joint venture of public and private sectors, is developing a block of the Thar coal field with $800 million dollars investment which is set to open by 2016....


http://www.nation.com.pk/business/20-Feb-2014/energy-starved-pakistan-sets-sights-on-coal

Riaz Haq said...

Post-2000, the awkward, inconvenient truth is that, particularly during the regime of retired General Pervez Musharraf and former chief minister Arbab Ghulam Rahim, the physical infrastructure of Tharparkar reached an unprecedented level of progress.

Where, for example, in previous times, only about two kilometres of metalled road was built in a whole year, roads of the same length and more were built every month, and in even less time, for several years.

Grid electricity to main towns, water pipelines to large settlements, preparatory infrastructure for exploitation of coal reserves including work by the post-2008 PPP government, rapid proliferation of telecommunication and mobile phones have vastly enhanced mobility, access and information flow. http://www.dawn.com/news/1091961/tharparkar-a-famine-of-facts

Riaz Haq said...

Sindh experts say the area is virtually ruled by the Makhdoom family and four sons of Makhdoom Amin Fahim, the senior PPP leader, are directly involved and responsible. In the Sindh government, all the four sons hold key positions.

Makhdoom Jamil Zaman is the provincial minister for relief and revenue. Makhdoom Aqil Zaman held the post of Tharparkar deputy commissioner until two days ago. Before him, six months ago, it was Makhdoom Shakil, another son, who held the position of district management for three consecutive years. Amin Fahim’s another son, Makhdoom Khalil Zaman, is a member of the Sindh Assembly (MPA) from the same district.

It is also a fact that the Makhdoom family holds widespread spiritual following in most parts of Tharparkar. But they have been found negligent and the latest crisis has proved that. Makhdoom Aqil was transferred only after the tragic death of children came to the light.

Makhdoom Jamil, the Relief and Revenue minister, is responsible for supplying relief to the affected areas. He reportedly does not take interest in the affairs of his ministry and has never even attended his office, insiders told The News. Also when the news of Tharparkar broke out, he did not take any action for any measure for relief.

http://www.thenews.com.pk/Todays-News-13-29029-Zardari-summons-Qaim-to-Dubai-over-Thar