ISLAMABAD: Chief Executive Officer (CEO), Jamshoro Power Company Limited (JPCL) has asked Power Division to take informed decision on conversion of plant from imported coal to Thar coal with specific consideration on environmental impacts, and financial close of the conversion option.
CEO, JPCL, Tanzil Rahim, in a letter to Power Division stated that he has been directed and authorized by Board of Directors (BoD) JPCL in its meeting held on November 22, 2023 to convey the point of view of Board of Directors JPCL that based on the preliminary evaluation of the Indicative Generation Plan (IGP), the committee has recommended ceasing commissioning activities for LOT-1 (660MW) on imported coal and transitioning the project to local Thar coal, in alignment with the Action Plan.
However, both JPCL and GHCL Management are not inconformity with this proposal of suspending the commissioning activities immediately.
Two thermal plants hint at converting to Thar coal
The JPCL BoD was briefed by the management and discussed the Committee’s recommendations in its on November 22, 2023, meeting with the intent to convey its perspective to the Ministry of Energy - Power Division, he added.
According to the CEO, JPCL BoD formulated and approved an exit strategy, submitted to Power Division on October 25, 2023 which suggests the disposal of defunct power generating units and seeks an outline of various options for addressing the proposed conversion solutions as recommended by K-Electric.
Referring to the exit strategy submitted to the Power Division by JPCL, CEO has recommended that the transition from imported sub-bituminous coal to local Thar Lignite coal will extend the Commercial Operation Date (COD) of LOT-1 by approximately 18 months, incurring an additional cost from $ 60 million to $ 105 million, along with a daily interest of $ 115,104 during transitional construction (IDC).
CEO maintained that preliminary discussions with SECMC and Thar Block-1 mining companies indicate that required coal for the 660 MW coal -fired power plant in Jamshoro could be available two years after achieving financial close and increasing mining capacity.
Also, the EPC contractor has no experience in converting this specific type of ultra super critical boiler to lignite coal, and no references have been found for operating this type of boiler on lignite coal. For LOT-1, a simultaneous approach is deemed necessary for securing funding and achieving financial close involving an investment of $ 303 million.
He strongly suggested that the Power Division engages an independent consultant for a comprehensive financial and technical analysis to evaluate the feasibility and economic advantages of the conversion option. The sustainability of LOT-1 under the current model with an 80:20blending ratio of imported and local coal is recommended.
He maintained that Power Division may seek suitable investors, in compliance with applicable law/rules, to establish LOT-II, focusing on utilizing local Thar lignite coal, potentially by the private sector and LOT-1 which is very close to COD shall be sustained under the current model with an 80:20 blending ratio of imported and local coal.
He further urged consideration to be given to request modifications for coal storage facilities in compliance with the environment protection protocols. Consequently, obtaining the No Objection Certificate (NOC) from the Sindh Environmental Protection Agency (SEPA) is essentially required for configuration of the entire complex and is subject to colossal change. Further to it, since the Asian Development Bank (ADB) sponsors LOT-1 and LOT-II, their NOC shall be required for the proposed conversion, and therefore the need for thorough regulatory compliance and environmental assessments must be emphasized.
The company suggested that LOT-1 plant commissioning activities may continue as per existing model (i.e.80-20 ratio of imported & local coal) to achieve COD as per plan. This approach will facilitate debt repayment to stakeholders and make banks more comfortable to extend loans.
The Board proposed that informed decisions regarding the conversion to Thar coal needs to be taken with specific consideration on environmental impacts, financial close of the conversion option (including admissibility by NEPRA for proposed Capex, IDC and EPC contractor’s performance guarantees), availability of coal within the desired timeline, and the proven track record of the adopted technology.
Copyright Business Recorder, 2023
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