The government of Pakistan has declared to switch to using the locally mined coal of Thar instead of imported coal. This decision was made keeping in view the exchange of foreign reserves.
As the price of coal has skyrocketed at $400 per metric tonne, the coal isn’t cheap to handle now for the government.
“The average per-unit cost of coal-based electricity used to be at Rs 4-5 per unit, which has swelled to over Rs 10 per unit, mainly because of an increase in imported coal prices of up to $400 per metric ton.”
The subsidy has been zeroed on POL products and they may be increasing the prices of Mogas and Diesel by imposing a levy on petroleum by July 1st, 2022, which actually is the condition of the fund from the IMF.
As part of the $6 billion IMF program, the local gas prices are also expected to rise by 45% by July 1st. This given situation has made the government give up on importing coal and prefer to use the local coal to produce energy at Port Qasim Power Plant, Sahiwal Coal Power Plant, and the China Hub Coal Power Plant.
All of these plants have an individual production capacity of 1,320 MW of electricity. Thus, a total output of 3,960 MW would be produced from these three coal power plants, which currently rely on imported coal.
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 on the conversion in one year’s time. This was mentioned by the Secretary Power Division while the development was confirmed.
An additional 660 MW of energy is being added to the national grid, which is from Thar coal, and an additional 660 MW power plant, Lucky Power Plant, is under construction in Karachi, which will produce energy on Thar coal.
The imported fuel from the first 11 months of the fiscal 2021-22 budget has consumed nearly $20 billion. Coal has served as an important fossil fuel for the energy sector of Pakistan.
The generic use of indigenous coal is mostly in brick kilns and cement industries, while the high grade imported coal is used for the generation of energy and steel industries etc.
9.3 million tonnes of coal were produced locally during the fiscal year 2021, while 18.9 tonnes of coal were imported. 12.21 million tonnes were imported during July-February of fiscal year 2022.
Consumption of coal by numerous industries in Pakistan has declined from 37.6 percent to 24.1 percent during the July-March fiscal year 2022. Meanwhile, total coal consumption has risen from 19.7 percent in fiscal year 2021 to 31.4 percent in fiscal year 2022.
Most of this coal is being used by the energy sector, and its consumption has increased from 42.7 percent to 44.5 percent in July-March fiscal year 2022.