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Monday, May 20, 2024

Coal makes up for 32pc of total power generation in January

Coal-based power generation accounted for 32pc of total power generation in January.

Total generation from different fuels increased by 3.7 per cent to 8,079 GWh from 7,794 GWh a year ago and by 2.5 per cent from 7,880 GWh from the previous month with coal-based power generation in January jumping to the seven-month high of 2,560 gigawatt hours (GWh).

Coal based power generation in Pakistan reached its highest point in July last year before coming down to 1,095 GWh in November. Since the start of 2018, the share of coal power rose to its highest of just below 32pc in January 2021 as a part of total generation in any given month in the last three years.

Data suggests that the proportion of coal generation in the country’s total electricity output plunged to 9.2pc in September 2018.

In a bid to achieve energy security, PM Khan’s government is aggressively working out strategies to exploit the country’s coal resources for power generation. Though coal is a recent player in the energy domain in Pakistan, it is already a significant part of the energy generation mix. China is Pakistan’s largest investor and contractor of energy projects under the multi-billion-dollar China-Pakistan Economic Corridor (CPEC) initiative, majority of which are coal-burning power plants. All these efforts are bearing fruit as the coal-based capacity has reached 4,620 megawatts.

With around seven other coal-based projects in making, the country aims to increase the capacity to 4,590 megawatts till 2026.

Coal- A major player in Pakistan

Coal power has increased by above 62pc to 15,262 GWh during the first seven months of the current fiscal year from 9,395 GWh when compared to the corresponding period in FY19, highlighting its growth in capacity and utilization due to fuel price considerations.

In overall generation during the period July-January, coal’s share rose from 12.9pc in FY19 to around 20pc this year despite an 8.7pc increase in the cost of coal-based generation year-on-year to Rs6.47 per KWh last month on global coal prices.

According to analysts, reduction in hydel generation and closure of gas-based plants due to the shortage of the fuel is what results in an increase in the share of coal power during winters. It is also believed that coal-based power generation would double in the near future as new plants come online over the next six years to end 2026.

Read More: Coal Power: Can we have a carbon free world after the virus crisis?

However, there was, and still is, a heavy reliance on imported fuels which leads to constant depletion of foreign exchange and insufficient control over the fuels supply chain. This inappropriate fuel-mix results energy losses at each level of the value chain and inadequate recoveries leads to power outages, unaffordable electricity and the circular debt.

It was, therefore, important for Pakistan to develop its own indigenous fuel sources which would allow the country to produce economical, abundant, affordable and reliable energy – thus the case for funding coal projects came into the context of the country’s energy scenario.

Addressing Pakistan’s energy crisis

To provide incentives for the development of local coal and encourage mining and power projects in the country, the Govt. of Pakistan through the ECC approved a number of incentives for such projects in October 2010. These included declaring Thar Coalfield a Special Economic Zone & approving the provision of sovereign guarantee for the debt portion of the mining project of up to USD 700m with the condition that GoS shall hold the majority shareholding in the project.

The Thar mining project is categorized amongst the ‘early harvest’ projects under CPEC to generate electricity utilizing Thar’s untapped coal reserves. The mining project completed all tests, inspection and declared commercial operations date on July 10, 2019. The total planned mining capacity of the project will be 20.6 MT/annum with a capacity to scale it to 30.4 MT/annum while the power generation capacity is projected to be 3,960 MW at full capacity.

The mining work would be completed by the end of 2021 and the first unit of power plant would also start working from 2022. The entire project would hopefully be completed by 2023.

It is expected that this project would reduce the country’s dependency on imported coal and contribute towards closing the gap between energy demand and supply.