ECC to approve coal based power projects

Islamabad: The Economic Coordination Committee on Wednesday (December 12) is likely to approve upfront tariff for coal-based power projects, official sources told Business Recorder, here on Tuesday. Speaking about upfront tariff for coal-based power projects, the sources said.

Pakistan had coal reserves of more than 185.5 billion tons which remained virtually un-exploited so far owing to a lack of infrastructure, low calorific value, insufficient financing and absence of modern coal mining machinery and technical expertise besides uncertainties behind applicable tariff.

It was observed that these resources, if fully exploited, would be sufficient to produce upto 100,000 MW electricity in the coming years, the sources said, adding that presently the coal-based projects contributed a meagre percentage of hardly one percent of the total generation capacity.

In order to provide benchmark tariff to attract foreign investors in coal exploration and its use for electricity generation, the ministry of water and power has suggested the ECC to approve an indicative/upfront tariff.

According to the ministry, such policy will help sponsors assess risks/benefits and provide them sufficient confidence and incentives that they needed before they undertake feasibility studies of the projects.

The sources said a committee headed by the water and power secretary and comprising representatives from the ministry of petroleum, Wapda, PPIB, Sindh government and Nepra (observer), had finalised its recommendations after extensive deliberations.

The committee is of the view flexibility may also be shown for stand-alone mining and power generation projects in order to facilitate private investors. It suggested that a separate indicative upfront tariff should also be determined for Thar, Lakhra, Badin and Sonda coal fields.

The committee has further recommended that the price of imported Indonesian coal at Karachi, excluding its freight charges, and the factors regarding its relative calorific value of coal would constitute a benchmark of indicative/upfront tariff. The sources said the indicative/upfront tariff is expected to be fixed at 7 cents per unit.

To be presided over by Prime Minister Muhammedmian Soomro, the ECC will also discuss flour crisis in the country especially Karachi and supply of ample quantity of the commodity to flour mills, the sources added.

The sources said that imposition of a 15 percent regulatory duty on export of Gur or 15 percent GST on sale of the commodity are the options, adding the first one is more suitable to the government to be exercised in the current situation. They said such a decision would be taken on the request of NWFP sugar millers which have yet not started crushing due to non-availability of sugarcane.