Ahmed Mukhtar Naqshbandi
ISLAMABAD: Pakistan is planning to quadruple its domestic coal-fired capacity to overcome power generation costs and will not build new gas-fired plants in the coming years.
Pakistan Energy Minister Khurram Dastgir told media on Monday.
A shortage of natural gas accounts for over a third of the country’s power output, which plunges large areas into hours of darkness, especially during the summer.
A spike in global prices of liquefied natural gas (LNG) after Russia’s invasion of Ukraine and an onerous economic crisis has made LNG almost unaffordable for Pakistan.
“LNG is no longer part of the long-term plan,” Dastgir Khan told Reuters, adding that the country plans to increase domestic coal-fired power capacity to 10 gigawatts (GW) in the medium term from 2.31 GW currently.
Pakistan’s plan to switch to coal to provide its citizens with reliable electricity underscores challenges in drafting effective decarbonization strategies when some developing countries need help to keep lights on.
Coal Fired Power
Despite increasing demand for [power in 2022, Pakistan’s annual LNG imports plummeted to the lowest levels in almost five years as European buyers elbowed out price-sensitive consumers.
“We have some of the world’s most efficient regasified LNG-based power plants, but we don’t have the gas to run them,” Dastgir said.
The South Asian nation, battling a wrenching economic crisis and is badly in need of cash, is seeking to reduce cost of its fuel imports and protect itself from geopolitical shocks.
Pakistan’s foreign exchange reserves held by the State Bank of Pakistan have recently fallen to $2.9 billion, barely enough to back three weeks of imports.
“It’s this question of not just being able to generate energy cheaply, but also with domestic sources, that is very important,” Dastgir said.
The Shanghai Electric (601727.SS) Thar plant, a 1.32 GW capacity plant that runs on domestic coal and is funded under the China-Pakistan Economic Corridor (CPEC), started producing power last week. The CPEC is part of Beijing’s global Belt and Road Initiative.
In addition to the coal-fired plants, Pakistan plans to enhance its solar, hydro and nuclear power generation capacity, Dastgir said.
If the proposed plants were constructed, it could widen the gap between the power demand and installed power generation capacity, potentially forcing the country to idle plants.
The maximum power demand met by the country during June 2022 was 28.25 GW, more than 35 per cent lower than the power generation capacity of 43.77 GW.
How Pakistan would finance the proposed coal fleet needed to be made clear. Still, Dastgir said setting up new plants will depend on “investor interest,” which he expects to increase when newly commissioned coal-fired plants are proven viable.
Financial institutions in China and Japan, among the biggest financiers of coal units in developing countries, had been backing out of funding fossil-fuel projects amid pressure from environment activists and Western governments in recent years.
