LAHORE: The Planning Commission of Pakistan has approved two coal-fired power plants of 600 megawatts each at Jamshoro, said official sources.
They said Ahsan Iqbal, Deputy Chairman of the commission, would slash the estimated cost of the project from Rs240bn to Rs157bn. The Asian Development Bank (ADB) would fund the project, they added.
Sources said the ministry of water and power presented the report of the project before the commission for the approval.
They said the ADB has agreed to finance 75 percent, while the government will bear rest of the cost.
The present estimated cost is not feasible, they added.
The Oil and Gas Regulatory Authority has approved an upfront tariff of seven US cents per unit for the power produced by all coal-fired power plants that would be installed in Pakistan.
The deputy chairman of the commission wondered when all other coal-fired projects are viable at this tariff rate, then how the project presented by the power ministry is unviable.
He ordered a thorough scrutiny of the financial feasibility of the project.
Sources said that bureaucracy puffed the project’s cost probably because of some vested interest.
They added it was revealed after the cost reconsideration that the actual cost of the project would be around Rs157bn and not Rs240bn.
The new cost translates into $1.31m per megawatt, which is in line with the cost of other coal projects under consideration in the country.
As per the original cost, a megawatt has an estimated cost of $1.83m. Ahsan Iqbal said, “We will not allow anyone to loot a single penny from national exchequer.”
He added that the project would have to be completed within four years and no cost escalation be allowed in the project.
He said that the commission would not tolerate any compromise in the quality of machines or in the construction.
Iqbal said that constant monitoring of the project would ensure timely completion. Power, he added, is badly needed in the country to revive the high growth process.
He asked the executors of the project to ensure installation of super critical boilers that could tolerate high temperature and pressure.
Sources said the plants would primarily use imported coal but about 20 percent of the local coal would be added if available.
They said the land for the project is available at the existing Jamshoro thermal power plant?s site.
The government is discussing the possibility of converting 1,000-megawatt capacity of furnace-oil based power plant into coal. Iqbal directed the power ministry to present this project after the necessary correction in its cost estimate to the Economic Coordination Committee of the cabinet in its next meeting.
Iqbal also asked it to find out a fast track mechanism so that the project could be completed in three years instead of four.
“When the private sector assures to commission and operate a coal-fired power project in three years, why the public sector can’t do it,” he added.