GADANI, PAKISTAN – After years of rolling blackouts that have wreaked havoc on industry and fueled political unrest, energy-starved Pakistan has set its sights on a coal-fired future.
Regarded as the dirtiest of all fossil fuels, recent discoveries of untapped coal fields in southern Pakistan have convinced the government they could be on the cusp of a solution to their energy woes.
Late last month, Prime Minister Nawaz Sharif and his former rival, ex-President Asif Ali Zardari, jointly inaugurated the construction of a $1.6 billion coal plant the southern town of Thar, hailing their shared goal of ending the nation’s power crisis.
The government has also green-lighted the construction of a pilot 660-megawatt coal-fired plant in Gadani, a small, serene town on the Arabian Sea known as Pakistan’s ship-breaking hub.
A 600-megawatt plant has also been given the go-ahead in the southern city of Jamshoro.
The construction of these plants is one plank in an ambitious plan to convert many of the country’s existing oil-based thermal plants and upgrade its ports as they begin swapping one black gold for another.
“This is a major and historic fuel-switching plan, as we generate zero from coal compared to India, which generates 69 percent of its electricity from coal-fired power plants,” Pakistan’s minister for power and water Khwaja Asif said.
Oil ‘increasingly unaffordable’
Pakistan has struggled with scheduled power cuts for decades. But the problems have been particularly acute since 2008, with regular outages of up to 22 hours a day for many domestic users and even longer for industries — costing about 2 percent of GDP per year.
In the hot summer, when temperatures soar to 50 degrees Celsius in the country’s center, Pakistan produces around 18,000 megawatts of power, with an average deficit of 4,000 megawatts.
A lack of capacity together with huge debt cycles exacerbated by poor rates of tax collection are seen as some of the major factors contributing to the country’s dismal power shortages.
The issue was also a central campaign theme in last year’s general elections, which saw Nawaz Sharif elected to the top post.
Faced with a growing bill for imported oil that currently stands at $14 billion and a rapidly depleting supply of natural gas, the country’s private and public plants are switching their oil-plants over to coal.
“Pakistan has been facing rising oil prices and declining gas reserves as well as tight foreign account situation, rendering the reliance on the import of oil to fuel power plants increasingly unaffordable,” the Asian Development Bank said in a statement.
Pakistan’s largest private power utility, Karachi Electric Supply Co. (KESC), which provides electricity to the country’s biggest city, has taken the lead in plans for the coal switch.
The company has recently granted engineering, procurement and construction contracts to Chinese company Harbin Electric International to convert two units of the Bin Qasim thermal power stations with 420-megawatt capacity.
The $400 million project is expected to be completed by 2016.
Alongside the conversions, Pakistan is also upgrading its port facilities to increase its ability to import coal.
“Ports are the lifeline of the country,” said Haleem Siddiqui, a veteran seaman who pioneered the first state-of-the art container terminal at Karachi Port and whose company is building a “dirty cargo terminal” at Port Qasim along Arabian Sea.
The fully mechanized terminal would be able to handle 4 million to 8 million tons of coal in the first phase to be completed by 2015, growing to 20 million tons in the extended phase in 2020, at a cost of $200 million.
But merely raising the amount of imported coal would strain the country’s already dwindling foreign exchange reserves and adverse balance of payment, which fell to 13-year low of $2.8 billion in February — which is why Pakistan is determined to find some of its energy needs under its own soil.
Some experts have pointed to the Thar Desert in southern Sindh province, which sits on top a vast potential source of 175 billion tons of coal.
“It is very huge reserve and is equivalent to combined oil reserves of Iran and Saudi Arab in terms of heating value,” said Agha Wasif, chief of the provincial energy department .
Engro Powergen Ltd., a joint venture of public and private sectors, is developing a block of the Thar coal field with $800 million investment, which is set to open by 2016.
But not everyone is pleased. Some residents inside the Gadani Energy Park have been forced to leave their homes.
“We are living here for seven generations and we have the graves of our ancestors here; how could we leave our place?” said 25-year-old Umaid Ali from the village of Qadir Goth.
The power minister said no widespread displacements would take place, saying the land purchased for the Energy Park had been purchased long ago, “and if there is any (residential) disturbance, that would be duly taken care of.”
Pervez Hoodbhoy, a nuclear scientist and energy commentator, said that despite its dirty reputation — coal produced 44 percent of global emissions of carbon dioxide in 2011 — Pakistan has few other options to keep the lights on.
“I’m aware of the fact that there are serious CO2 issues, but the amount Pakistan is producing would be insignificant on the global scale. The alternative is nuclear power plants being imported from China, and those have the potential for disaster, given Pakistan’s safety record. Given the choice, this seems to be the lesser of two evils.”