ADB to loan $433m: Guddu, Jamshoro thermal plants to be run on coal

September 8, 2012

ISLAMABAD: The government has decided to convert two inefficient thermal power plants in Sindh — Guddu and Jamshoro plants — to coal with $433 million financing to be provided by the Asian Development Bank.

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 loadshedding 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.

The current energy crisis has been contributed largely by slower addition in domestic power generation capacity than demand, financial mismanagement leading to a chronic circular debt problem and management crisis.

The rehabilitation and expansion of Jamshoro power plant would also require acquisition of about 80 acres of additional land in the vicinity of the existing plant for ash pond.

The government plans to convert about 4,200MW of thermal power plants to coal under medium-term programme while maintaining a complete ban on new thermal power plants as electricity tariffs have gone beyond affordability limits for consumers.

Mismanagement, poor maintenance and substandard quality of fuel have been some of the key reasons for low capacity and inefficient generation, resulting in the malfunctioning of the Wapda-run power stations.

Apparently, resolution of problems at these power plants alone could significantly bridge the demand and supply gap, which if synchronised with improvements in the distribution network, could further overcome power shortages.

Wapda has three major generation companies — Jamshoro, Muzaffargarh and Guddu. All steam units of thermal power station at Jamshoro and Muzaffargarh are dual-fuel plants having gas and residual fuel oil (RFO) firing facilities except one Jamshoro unit which has only fuel oil-firing capability. However, these plants are operating on furnace oil due to shortage of natural gas.

The thermal station at Guddu uses medium-calorific raw gas from Mari and Kandhkot.

Due to poor maintenance of the power stations, Gencos have lost nearly one-third of their capacity and nearly 17 per cent of their thermal efficiency due to plant degradation.

The average capacity degradation at Jamshoro has been found to be 32 per cent compared to a maximum degradation of 40 per cent and a minimum degradation of 23 per cent. The average drop in the net efficiency at this station was about 20 per cent from the designed capacity efficiency.

At Guddu, the average availability of units was in excess to 95 per cent but if this availability is corrected for lost output of the plant owing to degradation, the availability factor would drop by about 30 per cent, quite low by industry standards.

The thermal station at Muzaffargarh is operating with an overall capacity degradation of around 40 per cent. The power station faced an overall degradation of around 18 per cent in its net efficiency.