niaz
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I was watching TV and the Caretaker Minister for Power said that if the oil fired plants are converted to coal, the cost of electricity will come down from 18 to 8 Rs per unit.
In this sort of a situation, what if the government keeps the price of the unit at around 12-15 for a few months, just to recover some money...the cost of production will be much less than the cost that a consumer has to pay, but it would ensure that the government is getting some extra money.
Is this theory applicable? @niaz...
It is difficult to comment on somebody else’s statement without having full knowledge about exactly what was said and in which context.
I work in the international environment where it is assumed that all coal-fired plants have flue gas desulfurization equipment (scrubbers) or dry sorbent injection systems installed to comply with the Mercury and Air Toxics Standards. Higher coal prices, lower wholesale electricity prices (often tied to natural gas prices), sometimes makes investment in such equipment uneconomical.
Also the efficiency of power generation from gas means it competes with coal even when it costs 1.5 times as much. “When the ratio of natural gas prices to coal prices is approximately 1.5 or lower, a typical natural gas-fired combined-cycle plant has lower generating costs than a typical coal-fired plant.” “In general, combined-cycle (gas) units are considered to be more flexible than steam turbines. They can ramp their output up and down more easily, and their start-up and shutdown procedures involve less time and expense.
It cannot be denied that coal prices have historically been lower and more stable than oil and gas prices. Coal is likely to remain the most affordable fuel for power generation in many developing and industrialised countries for decades. I have no data on imported coal cost into Pakistan. I am aware that coal prices have been falling in recent months. Per last data with me Australian thermal coal price was about $100 per metric ton FOB. Let us assume that its landed price in Karachi is about $120 per metric. As a rough estimate 1870 KWH cost about $120 or 6.5 cents per KWH. Fuel oil is about $100 per bbl. which makes about only 542 KWH or 18.4 cents per KWH. On this basis coal is definitely much cheaper and it ties in with the Minister's statement that it costs about 18 rupees per unit to produce electricity from imported furnace oil.
According to the article quoted by Hon. Zialulislam it would require an investment of about $1.565-billion. Yes GOP could keep the unit price at current levels to recoup the investment.
By the way, nothing was said about the investment required to install scrubbers and other flue cleaning systems on the existing steam turbine power plants. How much will that cost? Or do we think that it is okay to pollute Pakistani air and endanger health of Pakistani citizens for the sake of cheaper electricity?
As I have posted earlier, in my view it is unwise to invest $1.6 billion and still depend upon imported coal? I would rather invest this money on Thar coal development and then convert steam turbine plant boiler into burning Thar brown coal once it becomes available. However it is a must that all new power plants should only use coal or petroleum coke as fuel.
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