Unlike other countries that produce electricity through affordable energy sources, Pakistan has been fulfilling its energy needs from expensive oil and gas-based power plants, said sources.
Due to gas shortages, these plants run mostly on diesel, which is more expensive than fuel oil.The country’s current energy fuel mix is not sustainable and it needs to increase its reliance on coal to reduce the overall cost of power generation. Pakistan has untapped resources of almost 175 billion tons of lignite in Thar. According to Competent Persons Report (CPR) by RWE-Germany, Thar coal’s bloc II (slightly over one percent of the total reserves) contains two billion tons of lignite, of which 1.57 billion tons are exploitable and can produce almost 5,000 MW for 50 years.
Globally, almost 41 percent of electricity is produced from coal, while in Pakistan this figure stands at a meagre 0.1 percent. Further, 41 percent of electricity is produced from coal, 21 percent gas, 16 percent hydro, 13 percent nuclear, five percent oil and three percent through renewable sources across the world.
On the contrary, the country produces 36 percent of its electricity through oil (the most expensive source); 29 percent gas and 29 percent hydel. Meanwhile, in India and China almost 68 percent and 79 percent of electricity is produced through coal.
Zahid Khan, energy expert and a former managing director at OGDCL, said that conversion to coal is the only viable option for the country in the current circumstances.
“Many cement companies have already converted their power generation to coal and several textile mills are also opting for coal-based power generation. This is the long term solution against gas and electricity shortages,” he said. “Alternate energy is not feasible for investors and will take time to materialise.”
He added that the supply of coal was not an issue and the government should prioritise its conversion.
Speaking about the largest coal-based electricity producers, sources said that South Africa tops the list as it produces 93 percent of electricity from coal, Poland 87 percent, China 79 percent, Australia 78 percent, Kazakhstan 75 percent, India 68 percent, Israel 58 percent, the Czech Republic 51 percent, Morocco 51 percent, Greece 54 percent, USA 45 percent and Germany 41 percent.
“Pakistan is currently facing a severe energy crisis of almost 7,000 MW. While the government appears determined to resolve the crisis by paying off the Rs500 billion circular debt, the primary cause of the crisis, which is heavy reliance on expensive furnace oil-based power generation, remains intact,” said an official at IPPs advisory committee.
He added that the country needs to convert its RFO-based power plants to coal for up to 50 percent reduction in the generation cost as well as tariff.
“The recent removal of subsidy on electricity tariff has been criticised by all quarters and stakeholders. However, we don’t have any option but to pass on the real cost of electricity production to the end consumers and try to improve the energy mix to bring down tariff in the longer run.”
He added that China has been producing almost 78 percent of its electricity from coal, which leads to cheap energy generation and low tariff for the general and industrial consumers. “If we want our industries to remain competitive, we must bring down our electricity tariff and provide the much needed support to the industrial sector to ensure jobs,” he said.
Since the start of the 21st century, electricity generation from coal has been witnessing steep growth. It is the second source of primary energy in the world after oil, and the first source of electricity generation.
Coal consumption increased by nearly 60 percent from 4,600 million tons in 2000 to an estimated 7,200 million tons in 2010. The International Energy Agency’s medium-term coal market report 2011 observed that this boost in coal demand corresponds with rising usage, which amounted to almost 720,000 ton every day in 2011. Growth in coal demand varies from country to country, while its consumption has stagnated among the OECD countries since the beginning of this century.