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Sindh voices concern over import of coal for power generation

The Sindh government has expressed its serious concerns over the federal government’s decision to import coal for setting up 600mw power plant in Jamshoro with an expected $900m financial assistance from the Asian Development Bank (ADB).

Chief Minister Sindh Syed Qaim Ali Shah raised this issue before the 22nd meeting of the Council of Common Interests (CCI) held in Islamabad last month. He regretted that instead of utilising the indigenous coal in Thar, the coal was being imported for power generation; it was learnt by The News here on Friday.

However, the ADB representative informed the CCI body that the project could not be launched with the Thar coal due to “stringent environmental conditionalties” prescribed by the ADB and as such the ADB was unable to approve the loan.

He said that in order to use the Thar coal, they had to change the specification of the boiler, which would increase the amount of loan as well.

The plant would use a mix of imported and Thar coal and would be set up with an investment of 900 million US dollars as loan from the ADB.

He said they were providing $900m for increasing “coal-based power generation” and expressed his reservations over the government’s decision to utilise its loan for the development of Thar coal-based power generation. The ADB official observed that setting up of Jamshoro plant based on domestic coal was not “economically viable” as the bank had approved the financing of power plants to be run on imported coal.

However, it was decided to initially run the power plant on imported coal and gradually add Thar coal by up to 50 per cent. The ADB official said that the project would likely be completed in four years.

Prime Minister Raja Pervez Ashraf, who chaired the CCI meeting, observed that the exploration and production of coal from Thar was one of the top priorities of the present government and stressed for removing hindrances in the completion of the project.

Additional Secretary Economic Affairs Division said that no agreement had been reached with the ADB since the government desired that the plant should be based on Thar coal (lignite), whereas owing to their “stringent environmental standards” the ADB was proposing to run the plant with a mix blend of indigenous and imported coal.

The chief minister Sindh also expressed his concerns over the delay in the completion of laying the transmission lines from Thar to Matiari, partly owing to lack of grant of sovereign guarantee for the project by the federal government.

Secretary Inter-Provincial Coordination (IPC) informed that the CCI, while reviewing the implementation status of the transmission lines project, had directed the finance minister on February 9 last year to hold meetings with all the concerned for the early completion of laying the transmission lines and removing other hindrances. The IPC secretary pointed out that the ECNEC, in its meeting on August 16, 2012, had deferred the approval of transmission lines and other project facilities “till the power house based on coal becomes functional”.

However, the secretary water and power informed the participants that the survey of laying transmission lines from Thar to Matiari had been undertaken.

She also pointed out that the Japan International Cooperation Agency (JICA) had also shown its interest in the construction of power plant, besides laying transmission lines from Thar to Matiari as well as intending to finance a composite project including both the items.

Regarding the CM’s concern on the issue of lack of sovereign guarantee, the federal finance secretary said that the sovereign guarantee could be issued with the approval of the Economic Coordination Committee (ECC) of the Cabinet.

The CCI decided that the Ministry of Finance should process the case regarding Thar coal project for processing sovereign guarantee for approval at the next ECC meeting.

The CCI also directed the Ministry of Water and Power to take “necessary measures” to conclude an agreement with the ADB for launching the 600mw project in Jamshoro.

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