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SIXTEEN years ago this month in 1996, the foundation stone for Pakistan’s first major coal-fired power plant was laid by then prime minister Benazir Bhutto at Keti Bandar.
That project was to generate 1,300MW within the first 36 months and then continue adding 1,300MW every year until a total of 5,200MW of electricity was generated from that project by 2002.
Additionally, as part of the project, Pakistan was to get a railway line laid from Islamkot through Badin ending at the project site at Keti Bandar, where a deep-sea port with the capacity to handle ships of 250,000dwt was also to be constructed.
Not a penny was taken from the federal or provincial governments for any of these components. The project was successfully negotiated with investors and was to be funded through their own equity and project financing also at their own responsibility.
Subsequently, when Wapda raised funding issues for transmission lines connecting the powerhouse with the national grid, the investor was persuaded to make advance payments to Wapda for the transmission line to be adjusted after the project came on stream.
Similar advance payment arrangements were also concluded with Pakistan Railways and PTCL for connecting power projects with the main railway line at Jungshahi and providing telecommunication facilities there. The cost of electricity from this project was as low as 4.6 cents/pkh — about one fourth of the cost Pakistan has now been paying for electricity from oil, gas and renewable sources!
Apart from prime minister Benazir Bhutto who provided policy and political support to the project for its expeditious completion, Sindh chief minister Abdullah Shah and minister Agha Rafiq Pathan extended wholehearted support where provincial issues were concerned.
Thus within a record time of 18 months, all stages — from marketing the projects to getting investors, conducting negotiations, concluding power purchase agreements and addressing land and employment issues — were completed and the foundation stone laid.
The investors set up offices, employed staff and started work when the self-destructive politics of the country took its toll on the project.
This coal-fired project was a major feather in the cap of the PPP government. Not only was a technical breakthrough achieved and reliance on the back-breaking expensive and imported fuels averted, the project went a long way in winning popular support as a means of permanently solving Pakistan’s energy problems at cheap rates.
It has therefore been surprising that when all details and documents of the previous project are available, this PPP government is still nowhere near delivering on even one powerhouse of 1,000-1,300MWs of coal-fired power.
This delay and lack of clarity on how to go about marketing, negotiating, financing and actually delivering on the project has opened up space for all kinds of adventures that one has been reading about in the newspapers.
Investors and adventurers are hardboiled sharp-shooters and they seem to have sensed the state of affairs. Accordingly, different schemes and proposals from different sources seem to have been floated without an integrated and holistic programme of delivering affordable energy to the people of Pakistan. Federal and provincial funding has also been going towards different components.
The Sindh government has spent billions of rupees on infrastructure development to support coalmining in Thar.
However, it needs have an integrated approach to project development, and link investment in infrastructure with actualisation of coalmining and power-generation activities, so that this infrastructure expenditure does not deteriorate by the time operations start, thus requiring duplication of cost.
The best way of going about generating power from Thar coal would be for the provincial government to set up a pilot project of 300MW in the public sector with appropriate local and foreign expertise. Such a project would cost about $400m in three years and create all the necessary benchmarks.
This would save cost and time and avert interference by those who would use both coal and the cash resources of Sindh and take the lion’s share of profits without any risks whatsoever. The power that gets delivered through such channels would also be very expensive.
Another worrisome development is the media war between two groups of scientists over Thar coal.
While Dr Samar Mubarakmand of the Planning Commission has been working on an underground coal gasification project on Thar coal for power generation, financed through the public exchequer, a former president of the Pakistan Science Foundation Dr Farid Malik has raised serious issues about the technical and commercial viability of the coal gasification project.
He has talked of ‘misleading claims’ and has questioned allocations of large public funds without audit.
There has been a deafening silence on the part of both the federal and provincial governments. This is not a private tiff between two individuals. At stake is the judicious use of billions of rupees in public funds. One would have thought that either the parliamentary committee on energy or the Thar Coal & Energy Board of Sindh would have taken note of these serious issues to see that scarce financial resources are properly utilised for delivering cheap energy to the people.
Sindh Chief Minister Syed Qaim Ali Shah needs to invite presentations from both gentlemen and some other independent knowledgeable persons to address genuine public concerns on the subject.
A clear direction needs to be settled for a holistic and feasible development of Thar coal. Moving in different directions without technical diligence and financial affordability is never done in any good investment regime in the world and might end up generating problems instead of energy from Thar coal.
The writer, formerly head of the Board of Investment, negotiated concluded agreements for coal-fired power project in 1996.
