KARACHI: The Hub Power Company Limited (Hubco) would develop coal-based projects of up to 660MW at a cost of $800-900 million.

Hubco CEO Khalid Mansoor told Dawn that the company had already sought National Transmission and Dispatch Company’s approval for power evacuation and would be shortly seeking Letters of Intent (LoI) from Private Power and Infrastructure Board (PPIB).

The board of directors of Hub Power has already approved the proposal for seeking LoI from PPIB which is a requirement for setting up a power project.

The company is working on the project’s feasibility and it would take 12 to 18 months to achieve the financial closure of the project, he said.

The board of directors of Hubco in its meeting on June 19 also approved equity investment of $20 million in Sindh Engro Coal Mining Company (SECMC).

This investment would be aimed at coal-mining which would revolutionise the power sector. It would also encourage setting up of mine mouth power plants and other coal-based projects.

He said that coal-based Brownfield project at Hub is being developed on a fast track basis.

A team of professionals is working on the technical planning and invitation to bidders (ITB) is being readied for obtaining competitive technical and commercial proposal from prequalified engineering, procurement and construction (EPC) contractors .

The project is already attracting a lot of interest from overseas investors, mostly from China, owing to scalable advantages of its strategic location and commercial negotiations are being held in tandem, he added.

He recalled that Hubco wanted to convert its existing residual furnace oil (RFO) based 1,292MW power plant to coal but in the absence of clear-cut policy guidelines on coal conversion, the board decided to keep the conversion on hold and gave go-ahead for a new coal-based power plant.

“Currently RFO based electricity costs around Rs19 per unit as compared to less than Rs10 per unit power generation on imported coal. Consumers will be the main beneficiary due to almost 50 per cent reduction in power production cost,” Khalid said.

Initially the plant would use imported coal, but as soon as Thar Mines would scale up, local coal would be blended with the imported coal, the Hubco CEO said.

Unfortunately, there is zero per cent coal-based power production in Pakistan right now as compared to average 42pc in the world.

The current use of furnace oil in power generation is 37pc while the share of gas is 29pc.

He said Pakistan needs cheaper and consistent power supply and coal is the only right choice as furnace oil-based power generation is proving too costly.

Published in Dawn, June 20th, 2014