MM News

BEIJING: China Pakistan Economic Corridor (CPEC) energy projects have improved the power industry in Pakistan and contributed to economic growth by increasing power supply with high efficiency at lower cost, Tauseef H. Farooqi, Chairman National Electric Power Regulatory Authority (NEPRA) said.

In an interview with China Economic Net (CEN), the Chairman said, the total installed capacity of CPEC energy projects, including that of coal, wind, solar and hydropower, stands at 6570 MW. They generated 28549.94 Gwh and 25772.48 Gwh power respectively in FY2020-21 and FY2021-22, accounting for 22.03% and 18.37% of the total generation in Pakistan.

The average 20% annual addition to the national grid has alleviated rampant cases of load shedding within the country and especially powered the export-oriented industries in Pakistan.
Pakistan’s energy sector is mainly dependent on imported fuel (oil and LNG), which has caused a heavy burden on foreign reserves and confined the industrial development of the country.

“As the CPEC energy projects replaced the costlier energy production from furnace oil and diesel to coal and renewable energy resources in the last five years, the energy needs of Pakistan has been fulfilled at lower prices, driving growth in the export-oriented industries”, the Chairman revealed.

Regarding the power generation cost, in October 2021, CPEC projects based on imported coal produced electricity at Rs.8.0/kWh. While the cost of domestic projects based on FO and RLNG were Rs.21.5/kWh and Rs.20.0/kWh respectively, twice more expensive than CPEC projects, data provided by KASB Trade shows.

The cost has been rising over the last year due to surged fuel prices in the international market. Nevertheless, the CPEC projects still provide competitive rates. In October this year, the power generation cost of CPEC projects based on imported coal was Rs.18.5/kWh, and that of domestic projects based on FO and RLNG was Rs.34.0/kWh, Rs.31.0/kWh.

When it comes to electricity rate, the chairman told the CPEC projects (EPP) based on coal is Rs.22.13/kWh on average, and that of non-CPEC projects based on oil is Rs.36.61/kWh. This shows the CPEC energy projects, utilizing fuel with higher efficiency, are providing affordable electricity to millions of Pakistani households.

Rising fuel prices and a new energy landscape after the Ukraine war necessitate Pakistan to avail of its indigenous resources, and at the time being, the most efficient solution is Thar coal.

Data provided by NEPRA shows that proven coal reserves in Thar are approximately 175 billion tons. After the commissioning of phase II of Block II, the daily coal production is approximately 24,000 tons, sufficient to fire 1320 MWs. Based on current coal prices of South African Coal, the fuel saving is approximately Rs. 13.46/kWh and the annual fuel savings for 1320 MW will be approximately Rs. 121 billion from Thar coal.

CPEC projects have enabled Pakistan to utilize the Thar coal and produce electricity at around Rs.7-7.5/kWh, the report says. Currently, the 660 MW Engro Power Thar Limited, Lucky Electric, Engro Powergen Thar and Thar Energy are completely or partially running on Thar coal.

On top of that, another 1,320 MW Shanghai Electric coal power plant, together with an open-pit coal mine of 7.8m tons capacity in Thar Coal Block-1, has been completed recently and is in the process of synchronizing with the national grid. Once put into commercial operation, it will help double electricity generation based on Thar coal to 2640 MW and lower average electricity costs in Pakistan.