ISLAMABAD: Asian Development Bank (ADB) is expected to finance two imported coal-fired power plants in Jamshoro after the Council of Common Interest (CCI) rejected Prime Minister Raja Pervez Ashraf's exhortation to stick to local coal, sources close to Secretary Water and Power told Business Recorder.
The sources said CCI during its meeting in January 2013 had decided that new coal plants and all coal conversions would be designed to use imported coal with Thar coal blending. Based on that decision, Gencos have submitted a concept paper to the Planning Commission for approval through Ministry of Water and Power. The concept papers are for: (i) two 660 MW (gross) each super critical coal units at Jamshoro; (ii) Muzaffargarh Power plant (1370 MW) coal conversion; and (iii) Jamshoro Power plant (880 MW) coal conversion.
The sources said the new 660 MW units would be utilising ADB funding with perhaps some co-financing or export credits. As ADB has already shown strong interest in financing one unit of 660 MW, the Bank will be requested through EAD for full financing of both units. The conversion will be financed through export credits as part of the financing package that will be solicited through international competitive bidding.
Given the background, sources said two thermal power plants ie Muzaffargarh power plant, six conventional steam units, 1,270 MW and Jamshoro power plant, four conventional steam units, 880 MW are being run on furnace oil. These units burn very expensive and environmentally dirty (3.5 percent sulphur - un-scrubbed) residual fuel oil (RFO).
The fuel cost is about $19-20/MMBTU. The electricity cost comes to about 24-26 cents/kWh whereas the recovery from consumers is under 10 cents/kWh. This high cost of power generation forces Government of Pakistan to provide tariff differential subsidy to the consumers through Discos. When government cannot provide the subsidy due to budget constraints, it results in a rise in the circular debt and less generation of electricity. Essentially, generation capacity sits idle due to lack of money to buy expensive fuel.
Ministry of Water and Power argues that the best solution to reduce the circular debt is to improve the fuel mix and add cheaper and cleaner fuel into the mix. This conversion of the above plants can literally resolve 30 percent - 40 percent of the circular debt issue and get the system closer to the sustainable level.
"If Gencos convert the dirty oil fired power plants to cheaper and clean coal technology it will result in number of benefits for the power system," the sources continued. These benefits are (i) reduction in greenhouse gases. As the heat rate (efficiency) will increase from 25 percent- 30 percent range on oil to 38 percent - 39 percent on coal, hence resulting CO2 reduction will be about 30 percent to 35 percent. Lower sulphur results in reduced SOX ie from current 3.5 percent sulphur oil, the conversion will go to less than one percent sulphur environment friendly coal.
This will result in almost 200 percent less acid rain producing SOX emissions. (ii) Imported coal at around $5-$6/MMBTU will result in significant saving for the system and help reduce the circular debt. The payback of conversion is about one year. Same plant that currently runs at 30 percent (because of lack of money) on expensive fuel will be producing 100 percent generation for same amount of money! (iii) Newer boiler and technology will help in significantly higher reliability and availability numbers resulting in producing more MWs. Currently due to lack of resources for maintenance, the units are down half the time. (iv) Currently, these plants with 2,150 MW installed capacity can only produce less than 1,000 MW. With conversion these plants will go back to 2,150 MW.
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