Energy crisis: Pakistan looking to form coal supply chain

Difficulties in arranging huge amounts of loans and regulatory issues have delayed the start of work by at least a year. PHOTO: REUTERS

KARACHI: 

Pakistan has started work on establishing a coal supply chain for various power plants in an attempt to address the country’s electricity shortage and reduce the reliance on expensive furnace oil, said an industry official on Saturday.

Coal, in the millions of tons, would have to be imported for power plants, which the government has been pushing investors to build in Punjab and other parts of the country.

But difficulties in arranging huge amounts of loans and regulatory issues have delayed the start of work by at least a year.

“I don’t know how long it takes but the fact is that circumstances require the addition of at least 10,000 MW based on coal,” said Aasim Siddiqui, managing director at the Marine Group of Companies, in a meeting with a group of journalists.

Marine Group is building a 12-million-tons a year terminal at Port Qasim to handle coal imports. It is also hoping to get into the business of transporting coal through rail.

Siddiqui said that the terminal, which should be completed by mid-2016, will be able to utilise its entire capacity.

“We are hoping to sell 5 million tons a year to cement plants, 3 million tons will be imported for K-Electric and another 5 million for two other power plants,” he said.

There have been concerns that while coal-based power plants are being promoted vigorously, not enough has been done to arrange for the transportation of coal.

But he said that Pakistan Railways has already issued a tender for purchase of 50 locomotives, powerful enough to move large shipments of coal.

Pak-China Economic Corridor

Siddiqui, who is also the All Pakistan Shipping Association (APSA) chairman, sees 7 million more containers passing through Pakistani ports once China starts using Gwadar port and road link via its neighbour. This is an increase of at least three times in existing traffic.

“Cost of doing business in China’s east coast region has gone up in recent years,” he said. “They are moving the industry to the western parts, which are closer to Pakistan.”

Trade traffic from Europe travels 19,000 miles to reach western China. However, the distance can be cut to 9,000 miles if Pakistani ports and roads are used.

China has been in control of Gwadar port for the past few years but it has hardly seen any activity.

“Even ports like Jebel Ali and Port Qasim remained dormant for 10 years. That shouldn’t be a concern. It takes time to woo the shipping lines but once they do then everything changes.”

As the APSA chairman, he said that he wanted to prepare the industry for the opportunities and challenges that lie ahead.

“Imagine the economic activity this amount of cargo will generate. Entire cities will prop up along the routes — there will be hotels, restaurants and petrol pumps. Cargo villages and other affiliated industries will come up,” he said