The government and Independent Power Producers (IPPs) are likely to reach an agreement for using 10 percent indigenous coal in power generation, which will help reduce the electricity generation cost in the country.
Initially, the imported coal-based IPPs have shown readiness to use up to 10 percent indigenous coal for power generation, an official source told ProPakistani.
Indigenous coal is several times cheaper than imported coal and the Private Power and Infrastructure Board (PPIB) is pursuing IPPs to switch over to Thar coal. According to the IPPs using up to 10 percent of Thar Coal for power generation will not require any modification to the existing generations plants, the source said.
Even the use of 10 percent local will have a big impact on the cost of coal-based electricity, the source claimed. When coal prices were hovering above $400 per metric ton, the cost of the local coal was just around $40, the source added.
Currently, coal-fired power plants in Pakistan are importing coal mainly from South Africa and Indonesia. During Fiscal Year 2021-22 the cost of imported coal from South Africa increased from US$ 177/Ton to over $ 400/Ton. Due to the surge in international Coal prices, it has become unaffordable for the consumers of a developing country like Pakistan.
Due to abnormal hikes in coal prices, the cost of imported coal-based electricity enhanced from around Rs. 10/unit to approximately Rs. 29/unit. On the other hand per unit cost of indigenous Coal based electricity was roaming from Rs. 7/unit to Rs. 9/unit.
It is worth mentioning here that to reduce the electricity cost the government had already allowed the import of coal from Afghanistan for power generation. The price of Afghan coal is comparatively lower than the imported coal from other parts of the world.
