KARACHI (April 07 2009): The Sindh government has failed to bring an expected investment of 12 billion dollars in the coal-based power generation project in Tharparkar district due to unavailability of permanent source of water, it is learnt reliably.
According to sources, Shenhua Group Corporation of China was the first to discard the 1.5 billion dollars Thar Coal Project because of a lethargic attitude of the federal and provincial governments. They said the decision was considered to be a major setback for the country, which was at present going through a serious power shortage.
The project, the source said, was expected to add 1,000MW to the national power grid in three years, but factors, like the unavailability of water in Thar coupled with a lower power tariff rate by Islamabad, kept the Chinese firm away from the project.
They said the Sindh government, after conducting a joint roundtable conference with World Bank (WB) in US, was expecting inflow of 12 billion dollars from Germany, Poland, Australia and US in the Thar Coal Power Project. But the said countries are now reluctant to invest for the same reasons.
They said the state-run Chinese company had also sought governments assurance to allow the use of water from underground aquifers.
In view of the rapidly mounting Pakistani energy deficit, there is an urgent need to exploit the countrys huge indigenous coal resources, turning the coal-mining sector into a modern mechanised industry, they opined. Presently, the country is facing a shortfall of 2,200MW and shortfall is likely to increase further in summer season, they pointed out.
To manage and arrange the substantial water for the industrial use and human consumption at Thar coalfield, they said that the Sindh government was now thinking seriously to ensure the availability of water at the site.
They said the provincial government had included the LBOD effluent to Thar coalfield in district Tharparkar in the annual development programme (ADP) 2009-10 with an estimated cost of Rs 7,000 million including Rs 90.625 million for conducting the feasibility study.
The scarcity of water at coalfield is the main hurdle for installation of power generation plants at Thar coalfield with a long 140-km distance. The feasibility report will provide the technical proposal for supplying 50 cusecs water to coalfield. Subsequently, the power generation plants (may be 10) would be installed, which would generate 3,000MW electricity equivalent to the Tarbella Dam.
The Sindh coal authority would supervise the feasibility study, while the same would be implemented through Sindh irrigation and power department. It would be funded by the government of Sindh through ADP 2009-10, they said.
About the financing break up, they said Rs 140 million would be spent in first year, Rs 4,200 million in second year, Rs 1,400 million in third year and Rs 1,260 million in fourth year. However, the sources did not mention years of utilisation of these funds.
The exploration of lignite resources of Thar coalfield area for electricity generation requires sufficient quantity of water resources for long-term sustainability of energy project. The availability of useable water in sufficient quantity is the essence of the development, they said.
Thar, being an arid zone is facing acute shortage of water due to scanty of rainfall. Even water for drinking and domestic use is not frequently available throughout the region, therefore the growth in development is adversely affected. However, the underground water in Thar region is brackish, highly saline and even after treatment that water too is not in plenty to suffice the entire project. Hence, there is a dire need to manage the unusable water at premises of coalfield both for proper power generation and human consumption, they said.
The sources further said the objective of Thar coal development could only be possible, when we can arrange substantial water for industrial use as well as potable water for workers, skilled labours and executors at site. For the purpose, we have to find out the ensured sources of coalfield areas from Naukot, LBOD and underground water, they said.
Furthermore, the WB has extended support for formation of proposed Thar Coal and Power Technical Assistance Project (TCAP) to accelerate the pace of work at Thar coal site.
In a letter, Country Director WB Yusupha Crookes has asked the Sindh government to finalise steps and bring full teams on board in advance appraisal (tentatively scheduled for mid-April, 2009). He said the preparation of the financial management and procurement manuals would need to be completed before the negotiations, scheduled for mid-May 2009.
He said the provincial PC-II will need to be submitted to the Planning Commission (PC) by the end of March 2009. For the project to proceed to negotiations in mid-May, the PC-II would need to be approved by Centre Development Working Party (CDWP) in early May 2009, he said, adding that the tentative date for the board presentation is June 30, 2009.
"We expect to receive Ecnec approval of the PC-II no later then June 8, 2009, as it is a standard condition for distribution of the package to the World Bank Board of Directors", he said.
The sources said that the TCAP would be implemented as a partnership between the province of Sindh (on coal mining side facilitation) and government of Pakistan (on coal-fired power development facilitation). The provincial part of the project is estimated at 25.8 million dollars and federal at 4.2 million dollars, they said.
They said the activities would be implemented with three components including overarching legal, regulatory and institutional strengthening, transaction advice for Thar Block number 11 and project management.
