Expediting work on coal-based power projects?

The Federal government has decided to expedite work on coal-based power projects in Thar coal field, says a Recorder Report quoting highly placed sources in Sindh Coal Authority. President Musharraf was scheduled to chair a meeting in Islamabad on Friday, to review the pace of work on the projects, besides holding deliberations on security concerns of foreign companies working in Thar, particularly the Chinese firms.
It is expected that the security cover to foreign firms and their personnel will be further bolstered. The Director-General, Sindh Coal Authority, Abbas Ali Shah has meanwhile held a meeting with the Chinese officials in Karachi following the attack on Chinese nationals working on a project in Hub.
A development package for Thar coalfield and other sites in the province, including Sondha, Jherruk, Thatta, Lakhra, Dadu, and Badin, is also said to be on the cards. According to a study conducted by the German firm RWE Power Engineering at Thar coal field, 1,000 megawatt coal-based power plants can be economically operated in this area.
It may also be mentioned here that a Chinese company, Shenhua Corporation, has been working on construction of two 350-megawatt power plants based on Thar coal. (There have been reports also of Shenhua having pulled out of the project over the tariff issue. What is the position now?).
The Sindh government, under a policy decision, is encouraging projects that will use coal as the main input for industrial activities, because this will relieve pressure on more expensive fuels, oil and gas.
After hydropower, coal has a substantial edge over other non-renewable sources as a relatively cheaper mode of electric power generation. And in view of the apprehended shortfall of electricity and other energy resources during the next 10 years, the demand for indigenous coal would considerably grow for purposes of power generation.
Pakistan has, meanwhile, emerged as the seventh among the top 20 countries of the world after the discovery of huge lignite coal deposits in Sindh. Experts have estimated that Pakistan's energy requirements over the next five years are likely to grow at the rate of 7.4 percent per annum, largely because of the ambitious GDP targets set by the government.
This is a big challenge to be faced in the coming years. According to available data, as many as nine companies including Sumitomo of Japan, Siemens and Reinhaul of Germany, AES Corporation of the US, Al-Jumaih Group of Saudi Arabia and Malakoff of Malaysia have so far submitted statements of qualification for setting up a 1000-1200 megawatt power project in Sindh.
But the progress on the ground has been extremely disappointing. Pakistan's current total mine-able coal reserves are estimated at 2 billion tons, which is 60 percent of the measured coal reserves.
Despite the presence of this huge unutilised coal treasure, the share of coal in Pakistan's energy mix stands at only 5.5 percent, with gas, hydropower and nuclear energy accounting for 50 percent, 30 percent, 12.7 percent and 0.8 percent respectively.
However, under a plan, coal's share in Pakistan's energy mix will be gradually increased to 18 percent by the year 2018, which will still be far below that of India's 54.5 percent. (Britain and the US too have historically relied on coal as a major source of energy despite their advanced nuclear energy generation capabilities.)
It is said that Thar coal reserves, estimated at approximately 185 billion tons, can produce energy equivalent to 400 billion barrels of oil or 850 trillion cubic feet of gas! In real terms this is greater than the combined oil reserves of any of the two major oil producing countries. It has also been estimated that by using only two percent of its coal reserves, Pakistan can generate about 20,000 megawatts of electricity for nearly 40 years.
Further, some of the major by-products Pakistan will get include 5.14 million tons of anhydrous ammonia fertiliser, dephenolized creslylic acid pesticides, wire enamel, epoxy resin, krypton/xenon gases, liquid nitrogen etc. But Pakistan needs an investment of about $4 billion for the mining of Thar coal reserves, which has proved elusive so far.
Following its failure to involve any major multinational company in the mining and power generation, the government had decided last year to set up a $500 million Thar Coal Company, which was planned to be operated by the private sector.
The plan envisaged the unbundling of Thar coal project into mining and power generation sectors to bring down the amount of investment required for each of the six identified blocks of Thar coal field, from $1.5 billion to $500 million. We have yet to know what became of the plan.
The government's decision to expedite work on coal-based Thar projects is a move in the right direction. The government should now focus on speedy implementation of the projects. Above all, it should arrange proper security for the foreign personnel working there.