July 7, 2003	Monday	Jumadi-ul-Awwal 6,1424

Pakistan is a unique country with its rulers given to whimsical ways. Right from 1947 onwards some project or the other gets adopted by the highest of the land and it then attains the position of the best for the poor country of ours.

However, it is the same glorious project that becomes the proverbial albatross around our necks. We must admit, however, that but for such special benevolence, no project can take off.

It was because of this pathetic way of doing things that many a great project simply got relegated whilst only on the drawing boards. As such besides whimsical offerings, the problem can be pinpointed as the implementation stage and nothing else. The great distance between conception and the actual erection at site thus becomes the focal point.

Besides the glorification of these projects at the hands of the carpet baggers, invariably main aspects of the projects remain muddled. It is, sadly, always in the end that the actual truth strikes like a sledge hammer. As a consequence, projects impeccable on paper, get thoroughly mismanaged. Here the yellow cab and the motorway projects readily come to our minds. Mercifully, the nation was somehow spared of the bullet train.

Now, we come to the present such pitfalls in the offing. Alongside would commence study of the steady increase in strength of the coal-lobby in comparison to the all powerful oil one. We would also see that quietly but very surely a particular country too is being touted as the best bet and seemingly the only one which could come up with the technology and the finance needed for the project.

Ali Muhammad Mahr, Sindh’s beleaguered chief minister remains the only important person on record having said that the field was open to all competitors. As Thar coal-fields are geographically located in Sindh, the chief minister’s above assertions can lead to the much needed balance in the present one-sided approach.

Statistical data tells us that the share of coal in the overall commercial energy requirements or production of the country at the time of independence was about 60 per cent but the gas find at Sui in 1952 lead to a gradual reduction of this kind of fuel with the current share in total energy use becoming less than five per cent. Because of the present exorbitant electricity rates, we are once again thinking of a cheaper way to generate electricity and in the process have been smitten by the Thar Coal deposits estimated at about 175 billion tonnes.

According to experts,Thar coal contains high sulphur and water content and is estimated to be generally of low BTU value. As a consequence, its burning entails release of high doses of sulphur dioxide-requiring expensive scrubbing experiment, and a level of residual ash which would quickly turn into huge hills if not put to use. Incidentally, this ash can be of great use and value as it can be converted into low weight partitioning material for buildings etc.

The low quality of Thar coal leads us back to the infamous Gordon Wu from Hong Kong and his ambitious plans of 1993 to setup a 1200 MW plant-proposed to be expanded to as much as 4800 MW subsequently. He was to initially use Thar coal and then quickly but very quietly allowed to import quality Australian coal. We would have been left high and dry had fate not forced Mr Wu to file for bankruptcy. With all this as hindsight, we can easily conclude that choosing the right technology for conversion of Thar coal to electricity would play a major role in the scheme of things. And any mistake now would have serious ramifications in the future-specially when the government now professes to increase the share of coal in the energy mix to as much as 20 per cent in the near future.

In order to do so, a 600 MW coal fire power station is envisaged to be installed, so that it starts producing cheap electricity, latest by 2006. For this, the government of Pakistan and the provincial authorities of Sindh have come up with many variations-specially when the country is on the way to face a 500 MW shortage in the FY 2005-06 and a further 5529 MW crunch by 2009-10. Here ostensibly the first step seems to be the expected release of Rs1 billion funding for the development of infrastructure and roads in the Thar coal area.

The recently announced budget, however, only carries a paltry Rs 250 million under this head. So much for according importance to Thar coal and its utilization for electricity generation. In addition, we also see many agencies concurrently working on the project. On the face of it, the Geological Survey of Pakistan (GSP) and the Pakistan Mineral Development Corporation (PMDC) needs to tasked for the survey and actual mining of coal instead of the nascent Thar Coal Authority-which is still in search of human and technical resource for the job.

Moreover, this is the time to stop ad- hocism and once again let things be taken up in their true perspective. The Planning Commission, promised time and again to be reactivated, needs to be consulted in this case. Regarding possible use of this Commission to act as a watchdog or monitor of projects as suggested recently by the finance Minister — the lesser said the better. The new roles being suggested for the Commission becomes even more ludicrous when we see that it has, as yet, had no role at all in the formulation of any project.

Coming back to the actual project and with only various press reports to fall back upon, we see that the 600 MW power plant would cost US $ 500 million (or is this price only for a 300 MW plant) and will be commissioned within four years after the project’s finalization by the government. As such there are no chances at all for cheap electricity to start flowing by 2006 —when the 500 MW shortage is expected to occur. Besides, this is the level of financial cost of the project, which translates into nearly $0.83 million per MW of installed capacity against the present about $0.5 million per MW prevalent in the world.

However, this is surely less than the $225 million expended by Wapda during mid 1990’s for its flagship and now deeply fledging 150 MW FBC fluidized bed combustion (FBC) power station at Lakra-in the midst of the Thar coal fields. Thus the projected pricing reeks of the Motorway and the IPPs scams, where over-invoicing was the order of the day.

In the present scheme of things-surely to WAPDA’s chagrin, there seems to be very little which this utility is destined to do in the development of Thar coal and its conversion to electricity. However it would for sure end up being at the receiving end by being forced to buy the output at a price which may not be to its liking. The present power policy is very clear about it and would not want Wapda to do anything but for accepting the end product.

Only the private power and Infrastructure Board would provide a one window facility for implementation of projects above 20 MW, with the provinces looking after lesser ones. Whether these are geared up or not to do all what is required needs a separate study. The export processing zones too have been allowed to have their own coal fired power plants with the view to lower the cost of industrial inputs. In this backdrop, Wapda’s obstinacy and resolve not to offer any reduction in its present exorbitant tariff structure is simply deplorable. The utility’s counter proposals to the GOP for withdrawal of GST, withholding tax and some percentage of the petroleum development levy (PDL) ) on furnace oil is thus only an effort to ward off attention towards its own inefficiency and nothing else.

As such there remains a very serious need to ensure that Pakistan is not taken for a ride again. I am of the opinion that we must learn our lessons after having had to accept the heavily over-invoiced Hubco and the IPPs. On the other hand, there is another lesson to be learnt from the problematic Lakra Power Plant. The 50 MW coal fired machines supplied by Dong Feng of China (a great supplier to the Pakistan Railways, Wapda and the Sindh Engineering Ltd these days) were developed as copies of American machines, as this company or for that matter others in China had only successfully built and run plants of up to only 5 MW capacity till then.

This experiment has been a failure and Lakra presently produces only between 20 to 30 MW and that too intermittently. Wapda’s lack of interest and its inability to make the best out of the worst is also partly to blame-but asking the utility with its present non-professional management to improve on itself is also well might impossible.

Thus soliciting only Chinese companies to supply the plant is indeed risky and surely fraught with danger. The Germans, who are also presently surveying the Thar Coal areas, have come up another variation. They suggest setting up three 350 MW power plants at different nearby sites instead of the earlier recommended unified power complex. This furthers the need for a very stringent and cogent study first i.e. before actual work is taken-up in hand.

And if the things go on as usual, we can end up with another dead weight around our now very frail necks. The solution lies in the adoption of international tendering procedures and acceptance of only those proposals which fulfil the laid downs. If this time too, we do not utilize our resources appropriately the goal of cheap electricity would ever remain elusive. Moreover, the best can only accrue out of good governance-sine qua non of which is transparency in both the formulation and execution of any policy.