Coal supply to Lucky plant: Leghari moves Murad as SECMC fails to honour commitments

ISLAMABAD: Minister for Power, Sardar Awais Ahmad Khan Leghari has approached Sindh Chief Minister Murad Ali Shah for the supply of coal to the 660 MW power plant of Lucky from Thar Block-1 as Sindh Engro Coal Mining Company (SECMC) has failed to honour commitments to supply coal to the plant from Block-II.

In a letter to the Chief Minister, Sindh, Power Minister, Leghari has reminded the former that he may be aware that Lucky Electric Power Co Ltd’s 660 MW coal power project at Port Qasim Karachi was commissioned in March 2022 and is supplying reliable electricity to the National Grid.

The project was conceived on imported coal in 2015; however to reduce dependence on imported fuels and burden on the national exchequer the project was converted by PPIB to operate on local/Thar coal.

The conversion was based on commitment from Sindh Engro Coal Mining Company, a joint venture of government of Sindh and Engro Corp, for supply of 3.8 MPTA of lignite coal from phase 3 of the Block-II mine, which was originally planned/committed to commencing coal supply to LEPCL by 2020.

According to the Minister, Government of Pakistan (GoP), keeping in view the importance of Thar coal-based projects, and delay in availability of Thar coal, allowed LEPCL to operate on imported coal till Commercial Operations Date (COD) of Phase-3 of SECMC’s mine and directed to set COD of LEPCL project as close as possible to the expected COD of Phase-3 of coal mine, so as to minimize the use of imported coal.

As planned, LEPCL achieved its COD in March 2022. However, SECMC is still unable to complete Phase 3 of coal mine expansion, which was originally planned to be completed in 2020 and later extended up to December 2023. Consequently, LEPCL is constrained to operate on imported coal to meet its contractual dispatch obligations.

According to the Minister, due to delay in coal availability from Phase 3 of Block- II and use of imported coal, LEPCL project stands at No. 18 (with Fuel Cost Component (FCC) of 13.91 Rs/kWh) in NPCC (National Power Control Centre) merit order list compared to Thar coal projects which stand amongst top 6 with FCC of around Rs 4.3/kWh.

Moreover, due to delay in commissioning of SECMC’s coal mine phase-3, almost 4.7 million tons of Indonesian coal has been imported since COD of LEPCL, amounting to approximately $ 350 million of foreign exchange, which is burdening the national exchequer.

PPIB asks SECMC to supply Thar coal to LEPCL

In addition to this, around $ 20 million could have been earned by Government of Sindh on account of royalty in case of operation of LEPCL on Thar coal. Power Minister maintained that notwithstanding the above, due to system constraints in power evacuation, three committed IPPs (660 MW Engro, 330 MW Thar Energy, 330 MW ThalNova) operating on Thar Coal Block-II and one IPP (1,320 MW Shanghai) at Block-l, are not operating at full capacity. Consequently, coal dedicated to these IPPs from Block-II (7.6 MTPA) and Block-I (7.8 MTPA) is underutilized.

CPPA-G has reported that surplus Thar coal (2.43 million tons) has been available since the COD of Phase-2, with capacity payments already made.

After explaining the current scenario, Power Minister recommended to Chief Minister, Sindh to divert the surplus coal to LEPCL. Utilizing the surplus coal from Block-1 mine is also advised in the best interest of the country and its end users, who have already covered the capacity payments.

“Your (CM) personal attention is requested. If required you may convene a meeting of Thar Coal and Energy Board (TCEB) so that genuine issues of coal mining companies can be addressed and resolved for earliest expansion of their existing coalmining capacities for supply of Thar coal to LEPCL,” the minister said in his letter.

Copyright Business Recorder, 2024