The Government of Pakistan has decided to switch 3,960 MW of power generated through imported coal to Thar coal to avoid depleting the country’s foreign exchange reserves.
The price of imported coal has risen to $400 a metric ton. The average per-unit cost of coal-based electricity, which was previously Rs. 4 to Rs. 5, has risen to Rs. 18 per unit as the price of imported coal has increased.
The government has reduced the subsidy on petroleum products to zero as per the conditions of the International Monetary Fund (IMF), and with the commencement of the Budget 2022-23 from 1 July 2022, the petroleum levy will be imposed. This is likely to increase the price of Mogas and diesel. Local gas prices will also potentially go up by 45 percent from 1 July.
Sources revealed that the government has decided to convert the Port Qasim Coal Power plant, the Sahiwal Coal Power plant, and the China Hub Coal Power plant (each with a capacity of generating 1,320 MW of electricity) to Thar coal. For this, the Power Division has hired a firm for an assessment report on converting the imported coal-based electricity generation to Thar coal as fuel and the additional cost that will be incurred within a year.
Presently, 660 MW of electricity based on Thar coal is being added to the national grid and another plant of 660 MW in Karachi, Lucky Power Plant, is being built using Thar coal as fuel.
Pakistan’s power sector uses a significant share of coal for power generation. Domestic coal production in FY 2021 was approximately 9.3 million tons, and nearly 18.9 million tons of coal were imported. Furthermore, 12.21 million metric tons of coal were imported during July-February of the outgoing fiscal year. The power sector uses most of the coal and its share was 44.5 percent between July and March this fiscal year.