CPHGC to purchase local coal in PKR for power generation

[Luosifen]

By Khalid Aziz | Gwadar Pro Jul 31, 2022



ISLAMABAD, July 31 (Gwadar Pro) - The 1,320 MWs China Power Hub Generation Co. (CPHGC) has invited tenders for the supply of local coal in Pakistani currency.
The company has sought proposals from firms registered in Pakistan for the supply of 40,000 tons of local coal per month at a fixed price in Pakistani rupees.
CPHGC is a joint venture between China Power Int’l Holding and Pakistan’s Hubco under the China-Pakistan Economic Corridor (CPEC) framework. The power plant is situated in Hub, Balochistan.
The plant was operating with South African and Indonesian coals but is now shifting to local coal as per the government’s policy after skyrocketing prices of imported coal.
Masood Khan Nasar, owner of a coal supplier company, welcomed the move and said that it will benefit the country and local coal traders in many ways. The price of Indonesian coal has reached Rs 95,000 per ton while coal imported from Afghanistan reaches Karachi at around Rs 75,000 per ton. However, the local coal is available for Rs 40,000 per ton.
Regarding the availability and quality of the local coal, Masood said that coal mines in the Duki and Harnai districts of Balochistan could produce as many as 6-8 thousand tons of coal per day. “We are already supplying coal to the Sahiwal coal-fired power plant”, he added.
Shifting to local coal will not only save precious foreign reserves but also reduce costs, an energy economist said. Moreover, it will also increase employment and business opportunities for Pakistani workers and traders, he added.

CPHGC to purchase local coal in PKR for power generation

ISLAMABAD, July 31 (Gwadar Pro) - The 1,320 MWs China Power Hub Generation Co. (CPHGC) has invited

gwadarpro.pk

@ghazi52 don't know if you want to copy this into the other stickied threads elsewhere.

 

[MelloryOlephanto]

In some ways using local coal might give birth to a new range of problems, Pakistani coal is of inferior quality with higher water content which leads to a higher sulphur content, this causes inefficiency throughout resulting in lower power production. Since IPP agreements were made on capacity, IPPs will expect payment against capacity ignoring the inefficiencies so in a way you will be getting lesser amount of electricity for the same amount of money and voila that drives up average cost.

The snippet below is from this article.

CEO, Port Qasim Electric Power Company argued that blending of Thar coal will increase the power consumption of ancillary system and decrease boiler efficiency, and such extra cost of ancillary system shall be paid by the government of Pakistan, besides, the capacity payment shall be calculated based on net capacity of 1242.95 MW even if the actual net capacity is less than that after blending of Thar coal.

 

[Luosifen]

The article mentioned using coal mines in Duki and Harnai, which currently don't have the output to meet all demand yet. Are these sites the same as Thar? They currently supply Sahiwal.

 

[MelloryOlephanto]

The article mentioned using coal mines in Duki and Harnai, which currently don't have the output to meet all demand yet. Are these sites the same as Thar? They currently supply Sahiwal.

These sites aren’t the same as Thar but the problems I discussed have more to do with quality than the geography of it all. Imported coal was low ash-low sulfur while local coal really isn’t. This is going to drive up costs.

This does help the current account deficit situation because well import substitution but it also makes electricity more expensive so there is a trade-off of sorts here.

 

[FuturePAF]

In some ways using local coal might give birth to a new range of problems, Pakistani coal is of inferior quality with higher water content which leads to a higher sulphur content, this causes inefficiency throughout resulting in lower power production. Since IPP agreements were made on capacity, IPPs will expect payment against capacity ignoring the inefficiencies so in a way you will be getting lesser amount of electricity for the same amount of money and voila that drives up average cost.

The snippet below is from this article.

When do these agreements expire or what are the terms to exit these agreements?

 

[Bilal.]

These sites aren’t the same as Thar but the problems I discussed have more to do with quality than the geography of it all. Imported coal was low ash-low sulfur while local coal really isn’t. This is going to drive up costs.

This does help the current account deficit situation because well import substitution but it also makes electricity more expensive so there is a trade-off of sorts here.

What’s the cost vs benefit. What efficiency loss quantum would be? Still overall it would be better to use local coal which is half the price, in local currency and the price will be fixed for a year per the article so no volatility.

 

[MelloryOlephanto]

When do these agreements expire or what are the terms to exit these agreements?

to perfectly capture our misery, NEPRA has a wonderfully put together website where you can go and view agreements with each IPP. Where agreements have been renegotiated, do view the updated agreement.

NEPRA | Licences Generation IPPs

nepra.org.pk

I checked a few plants which were agreed upon in 2016 and the expiry of their IPP license was set 30 years from the commercial operation date, which was mostly 2 years so we are looking at 2048 as the expiry date for ones set up under CPEC. Keep in mind this is a money making machine for IPPs so they may renegotiate as they have in the past and extend their deadlines and what options will we have if they threaten to shut down power supply as they did in May and IPPs aren’t just Chinese companies set up under CPEC, they range from Pakistani private sector to plants set up by Fauji Foundation, knowing this you have to realise renegotiating IPPs in Pakistan’s favour wouldnt just hurt Chinese companies or private sector, it will also hurt people who have considerable influence on the government and will therefore use said influence to protect their financial interests so I don’t think we will be out of this rut easily.

What’s the cost vs benefit. What efficiency loss quantum would be? Still overall it would be better to use local coal which is half the price, in local currency and the price will be fixed for a year per the article so no volatility.

oh that would vary as even within Pakistan coal quality varies a little bit and the plants are also adapted to certain qualities, so if you use Thari lignite coal on plants that were meant to receive imported bituminous, it will also cause increased wear and tear driving up maintenance too.

The cost vs benefit all comes down to forex reserves and current account deficit, i.e if we have enough dollars, why wouldn’t we want our plants to run more efficiently.

 

[Luosifen]

Per http://www.pmdc.gov.pk/?p=ShahrigCoalMines

Location	160km north-east of Quetta
Coal Field	Shahrig- Khost- Harnai Coal Field
Geological Horizon	Eocene
Type of Coal	Sub-bituminous-A to high volatile B-bituminous
Caloric Values	4,420 to 7, 000 kcal
Mining System	Long wall system
Leased Area	6, 551.46 acres
Total Cost Reserves	28.97 million tones
Production	264,274 tons (2019-20)
Sales	264,274 tons (2019-20)
Contact	Mr. Kebral Imdad Qazi, Project Manager, PMDC Sharigh Collieries, Distt. Sibi. 0333-2658441 (Off.)

This type is better than Thar but not at the top end in terms of quality. Still, if you could increase output it would help with your current import and power generation problems.

 

[AZADPAKISTAN2009]

Good , should be dealing Rupees-Chinese currency for regional projects