Since when has Engro been working on this project and how much has Engro invested on the project to date?
About eight years now. By the time the project is completed next year, Engro would have equity of 125 million dollars.
How much has the Sindh government spent to date?
In Phase I, the Sindh government spent about 105 million dollars.
When will the first 660 MW coal power plant be fully operational?
The 660 MW coal power plant is being built by two companies: Sindh Engro Coal Mining Company and Engro Powergen Thar Limited. The government of Sindh is only part of the former, it is not part of the power company. In power, Engro’s share is 60 percent and then there are other parties involved. There are eight stakeholders in total, including the government. The commercial operation date has been set for June 3, 2019.
A number of other launch dates have been doing the rounds, can you provide some clarity on the matter?
When we define commercial operation date, we mean that everything has been completed and all kinks have been worked out. The last six months of the project is when we start this process, sometimes the power plant is shut off, at other times there can be some new issues. The last six months of the project is when we keep learning and improving the systems in place. When we talk about a June 3, 2019 launch date, we are talking about a project completion date. But we will produce our first electron, God willing, this year in December.
For the operation of the 660 MW coal power plant, what are the annual water consumption requirements of the CFB boilers [CFB: Circulating Fluidized Bed]?
Our requirement is 17 cusecs per day (about 481 litres). We avoid making annual calculations because the power plant operations are dependent on many factors. Power plants are typically operational about 85 percent of the times, at other times they need to be switched off for maintenance purposes etc. So, if you really need a number, it will be 17 multiplied by 365 multiplied by 0.85, which gives us about 5,275 cusecs. But normally, when we assess a power plant, we look at daily consumption not yearly. We will be drawing about 25 cusecs per day [from the mines]. This is saline water and needs to be screened. About four cusecs will be lost but eventually we are left with 17 cusecs of usable water. And of course there is the LBOD; the two are backups for each other. We’ll be using one and saving the other, as per our requirement.
Where will the water be withdrawn from for the purpose above?
There are two sources of water for the power plant. The first is the LBOD [Left Bank Outfall Drain] and the second is underground water that is available in the system. When we mine coal, we have to extract underground water to completely dry the mine. We will be using this water as well for our power plant operations.
Has your company carried out any assessment about how much depletion this will cause the aquifers?
Thar has three aquifers. The first is at a depth of 70 metres but it is what we call a “discontinuous aquifer.” At some places there is good water, while at others, there is bad water or no water. The other two are both “continuous aquifers” and water is saline. These aquifers are at a depth of 120 metres and 180 metres. We are currently at the second aquifer. When you draw water from the aquifer, it will either be used in the power plant or returned to the soil. In the case of the former, water needs to be treated for use. If this water is not utilized in the power plant, it is dumped into a pond which is lined. If the water has not been used, you can return it to the soil. The pond that we are currently using is not lined, because power plant operations haven’t started as yet.
How much wastewater will be generated from the coal mining and how do you plan to treat and dispose of it?
If we are using LBOD, then about four or five cusecs will be lost per day from the 17 we plan to draw. We will be following the guidelines set in the National Environmental Quality Standards (NEQS). We will treat the wastewater then dump it into a lined pond and then evaporate it.
The regulations for the wastewater dumping are a big issue because there can be massive hidden costs that are eventually slapped on the taxpayer. How do we ensure that no burden is transferred on to the taxpayer?
There are two processes in place, one put in by Engro and the other by the Sindh government. Apart from NEQS standards, Engro has a system in place for all its plants where we follow World Bank and International Finance Corporation (IFC) rules. Whatever the requirements are for liquid or gaseous emissions, we always take these national and international standards into account. At Engro, we have a track record of never having breached any environmental rules nor will we ever go down that route.
Even today, we have to submit a three-monthly report to the Sindh Environmental Protection Agency office in Karachi. A third-party has been involved by the government to check various operations, emissions, underground water and so on. They send their independent report to the government. If we are found in violation of any rule, then we won’t be handed permission to mine.
There is also the associated matter of banks approval that is needed. You need no-objection certificates (NOCs) at the time of construction and another one at the time of commissioning. Banks need an environmental no-objection certificate (NOC) from the government upon completion of a project, else they will not accept the project to have been completed. If permission isn’t granted, then we won’t be able to access our dividend in the project.
This project is worth two billion rupees, and there are a number of conditionalities imposed on us by banks and insurance companies. It is an international project and check and balances exist at every level. All these need to be satisfied before we can proceed, and we have been meeting all requirements.
How much coal ash will be annually generated from the 660 MW plant and where will it be deposited?
When you use coal, typically about 10-12 percent coal ash is generated. We are using about 3.8 million tonnes coal, so about 380,000 tonnes. For mine mouth power plants [a plant that is built close to a coal mine], usually coal ash is deposited in the same mine from where coal is extracted. Typically clay beds are built in the deep mine. These clay beds are impervious so that the coal ash deposited there doesn’t mix with the underground water. If they aren’t impervious, then the coal ash begins to impact the aquifers.
In cities, whenever coal is imported from elsewhere, they don’t have a place for safe disposal so they tend to make ash ponds for the purpose. We will make ash ponds but on a temporary basis. As soon as we hit bottom of the mine, we’ll deposit the ash there and cover it up with mud. This is the international standard of disposing of coal ash.
If you skip across the border to the Indian side of Thar, it is fascinating to see that despite similar topographies, they are relying heavily on solar. Do you feel the focus and reliance on coal is misplaced?
I think that this isn’t entirely true. Whenever and wherever progress has been made, it has been because of coal. In India, too, more than 50 percent of the power production is based on coal. The same is the case with China. If you look at global statistics, 42 percent of the world is still being run on coal-based energy. When it comes to Pakistan’s reliance on coal, it is only four to five percent. Coal is still the cheapest baseload option to generate electricity and it is indigenous. It is more expensive than renewable, of course, but that is a function of how banks invest in coal. Under the terms drawn for coal projects, banks usually lend money over a 10-year period. For renewable, this changes to 20-25 years.
What would be your response to detractors of the coal power project, who argue that this investment should instead be made on alternate energy?
Alternate should definitely be an option, but we need to realise that the best way forward is to have a healthy mix of energy sources. So, you can have coal, oil, gas, hydel, solar and wind. In today’s world, you cannot have reliance on a single source of energy. Where we are today, we need a stable and cheap supply of base load energy. Even at Engro, we are working on alternate forms of energy. But you have to realise that we need about an 80 percent stable base load.
But hasn’t the baseload argument been contradicted?
Baseload means that we have round-the-clock energy 365 days a year. And baseload is typically drawn from fossil fuel or nuclear power. When it comes to other forms of energy, the issue is one of storage. The great tragedy is that because storage systems are imperfect, we cannot rely on renewable energy for baseload. That said, I want to reiterate that a healthy mix of energy sources is the optimal solution. We hope that technology would have advanced enough in the next 20-25 years to create better storage systems, but till then, we will have to rely on traditional baseload.
Do you feel that coal-based energy will be cheap?
Our project will produce 4,000 MW energy when we complete building power plants — we should reach that point around the year 2024. Once that is done, electricity will be produced at about five cents, which is the cheapest in the country. Our plan to this effect has been submitted, all guarantees are in place, which is why the banks have approved this two billion rupee project.
But haven’t you signed agreements to sell energy at seven cents for 25 years?
A sliding scale tariff has been approved and the price of energy will decrease over time. Mines have different levels, so the more levels that are exploited, the more coal we will have and the greater will be the price reduction.
What are some of the challenges that you foresee?
Most challenges have been overcome, but there are some challenges in commissioning. One of our biggest challenges is to ensure that Thar’s people benefit from the coal that is extracted. We have already launched the Thar Foundation, which puts in focus on health and education of the locals. About 70-75 percent of our hires are from Thar. By the end of the year, we will have 5,000 kids who are being imparted education through school built by the Thar Foundation and The Citizens Foundation. As for potable water, we have already set up five reverse osmosis plants and we have asked the government to hand over the rest to us too. We have experience and we can efficiently run them.
The writer is a member of staff. He tweets @ASYusuf
Published in Dawn, EOS, February 4th, 2018