CHIC Pak Power Company (Pvt) Limited (CPPCL) has set tight conditions to switch the 330-MW Gwadar power plant to Thar coal.
The Chinese power producer claims that negative aspects of Thar coal are preventing the company from eliminating the use of imported coal and only a fresh feasibility study could help determine viability, reported a national daily.
The CPPCL Chairman Zhao Bo maintains that the company is not in a position to take over the responsibility of coal transportation from the Thar coal field to the Gwadar project site due to unaffordable transportation costs, as well as the issue of self-ignition, frangibility, fast weathering, high water content, and other adverse characteristics of Thar coal. However, he mentioned that if the government was willing to transport the Thar coal to the Gwadar plant with the guarantee of quality and quantity and required specifications, the Chinese firm would not object to using local coal.
The top executive maintains that the company intends to pay a fee for the extension of the Letter of Support (LoS), but due to the current situation regarding the utilization of local coal and the second half of 2023 of the Financial Close based on imported coal, it has requested an LoS extension for four years or an amendment in accordance with the most recent situation.
Zhao Bo recalled China’s commitment to not develop any new coal-based power plant because shifting to a new location means developing a new coal-based power project, which is contrary to the decision made by the Government of China in 2019. While there is no clear intention of a transition, the CPPCL chairman said everything depends on if and when both governments are able to reach an agreement.
Sources say the Chinese company could be courted if the mining cost of coal is reduced to less than $20 per MT. Given the limited room for transportation cost adjustments, the rate would be commercially viable, and in that case, inland transportation may be considered to ensure and preserve coal quality.
The Chinese company asserts that there is no significant difference in the prices of imported and domestic coal. However, once both governments reach an agreement, the company would agree to conduct a study.
