Pakistan and China are likely to establish a joint power corporation, main objective of which is stated to be making arrangements for setting up coal-fired power plants using imported and domestic raw material, sources in Planning Commission told Business Recorder.
The sources said that the issue would be part of the agenda to be discussed during the forthcoming visit of President Pervez Musharraf to Beijing. The project had been proposed by Pakistan's envoy to China Salman Bashir, in a letter to Secretary, Foreign Affairs, a copy of which was also faxed to Deputy Chairman of Planning Commission, Dr Akram Sheikh.
"Main objective of the proposed Pak-China joint power corporation would be to creating 3000 MW power generation capacity in Pakistan, based on imported coal in the short-term ie two to five years and on domestic coal in the medium and long-term, and ultimately by 2030, achieving the target of generating 20,000 MW through coal," the sources added.
The corporation would have a 50:50 equity partnership between the two countries with power supply companies and development financial institutions of the public sector as shareholders.
Being in the public sector, it would provide added security to financing through sovereign guarantees, thereby expediting funds, licensing and regulatory processes, the sources said, adding that fewer propriety issues were expected where exclusive mining right was required.
Pakistan has planned a number of major hydropower projects like Diamer Bhasha dam, Kalabagh dam and Neelum- Jhelum hydropower project in addition to numerous smaller hydroelectric power projects in the Northern Areas, NWFP and Azad Jammu and Kashmir (AJK) to increase its hydel generation capacity from the existing 6460 MW to 32,660 MW by 2030.
However, the time required for the implementation of these projects is too long and capital intensive. For oil-based power generation, the plan was to increase capacity marginally from the current 5400 MW to 7760 MW by 2030 as the rising cost of oil had made it uneconomical for energy production, the sources quoted Pakistan envoy as saying in his letter.
In the coal sector, Pakistan plans to increase its existing capacity of 160 MW to around 20,000 MW by 2030. Similar increases in power generation capacity were envisaged in the gas, nuclear and renewable fields. The total power generation capacity of Pakistan is expected to increase from the present 20,000 MW to more than 160,006 MW by 2030.
Coal-based power generation appears to be the best option for overcoming the energy deficit of Pakistan under the existing circumstances. It has been almost five years since coal reserves of 185 billion tons were estimated at Thar, but the private sector have not been able to make any headway in converting this abundant resource into tangible power generation.
According to the envoy, it appears that to establish coal power plants on a fast track, the projects should be launched in the public sector with equity participation of power companies and development financial institutions from both Pakistan and China.
Initially, coal power plants based on imported coal can be set up in the coastal areas of Pakistan near Karachi in the short-term ie two to three years. "In the intermediate term four to five years, we can set up coal power plants based on domestic coal, like Thar, Sonda Jheruk, Lakhra and Badin," he proposed.
According to him, China has a good experience in coal power generation. In China, more than 75 percent of its energy needs are being met through coal. In 2006 and 2007, China added more than 75,000 MW/year to its national grid.
China is also phasing out its older inefficient coal power plants of capacity 100 MW or less, more than 553 low efficiency plants 50-100mw capacity have been closed in 2007 alone, and instead, it is relying more and more on modem power plants with 300-600 MW capacity based on the latest ultra critical technology as well as advanced coal-fired integrated gasification combined cycle. Chinese companies and financial institutions have also established coal power plants successfully in Indonesia and Bangladesh.
A Chinese company M/s Sinocoal, International Engineering Group (SCIEG), which conducted the technical part of the feasibility study by M/s Shenhua on Thar coal and has recently expressed interest in designing the coal mines.
Chinese companies could generate power from coal by first converting into slurry, they thought that such a process might also prove useful for Thar coal, suggesting that to make Thar coal profitable, Pakistan needed to review not just the power tariffs for coal-based energy, but also the whole policy for coal, including mining, production as well as its import and export.
"They have offered to assist Pakistan review its policy provided they were formally requested through the Chinese government," the sources maintained. The sources said that if the proposal were approved, it would be made part of Pakistan-China Joint five-year programme for economic co-operation between the two countries.