The government of Pakistan has decided to convert two inefficient thermal power plants in southern province of Sindh — Guddu and Jamshoro plants — to coal with $433 million financing to be provided by the Asian Development Bank (ADB).
The conversion of the plants would allow the authorities to enhance their production by at least 700MW.
The major overhaul of and supply of spare parts to the Jamshoro and Guddu thermal power plants, besides recovery of lost capacity, is expected to reduce their generation cost from over Rs16 per unit to about Rs9 per unit, according to a power ministry official.
He said the plan now at the bidding stage was part of an overall ADB financing of over $1 billion under which the government intended to convert at least three major power plants, including Muzaffargarh, to imported coal in order to reduce heavy reliance on expensive furnace oil and to scale down average generation cost through improved fuel mix.
About 400MW capacity would be regained through the planned overhaul of and supply of equipment and spares to Jamshoro and Guddu plants while 200MW oil-based boilers of Jamshoro would be expanded and converted into a 400MW coal-fired plant.
The government has already finalised loan agreements with the ADB. The project will also ensure coal and ash handling systems and modification of other auxiliary equipment.
According to the ADB, the conversion to sub-critical coal-fired system is the least expensive method to diversify the fuel mix away from imported fuel oil.
The persistent energy shortage exceeding 5,000MW represents around 30 per cent of the total demand, making the life difficult of all Pakistanis as load shedding in some cases goes beyond 10 hours a day in urban areas and almost 20 hours in rural areas.
The ADB says the manufacturing sector, especially small-and medium-sized enterprises that usually cannot afford back-up generators, have been hit the hardest while the Planning Commission estimates that losses caused by power and gas shortages reduced gross domestic product (GDP) growth by three per cent and four per cent in financial year 2011 and 2012.