Testing of Thar-blended coal: CPPA-G agrees to support PQEPCL

Central Power Purchasing Agency –Guaranteed (CPPA-G) has shown willingness to renegotiate forced outage during conversion of imported coal-fired power plant of Port Qasim Electric Power Co. Ltd (PQEPCL) on ten percent blending of Thar coal, sources in PPIB told Business Recorder.

CPPA-G conveyed this stance to PPIB, seeking amendment in the minutes of PPIB meeting held on early this month.

According to the PPIB, a technical feasibility study was conducted by M/s Fitchner GmbH & Co. KG on conversion of three imported coal power plants, which was shared with all three IPPs including Port Qasim Electric Power Co. Ltd. In response to that study Port Qasim Electric Power Co. Ltd (PQEPCL) conducted an independent in-house study by their design institute, which suggested/ proposed to start on-site testing of 10% Thar coal blending with imported coal as a first step.

In order to discuss the timelines for implementation of PQEPCL’s proposal, a meeting was held at PPIB on October 5, 2022, under the chairmanship of Managing Director, PPIB with the participation of representatives from PPIB, NEPRA, CPPAG, PQEPCL, TCEB, SECMC, SSRL and Fichtner.

Managing Director noted that Ministry of Energy (Power Division) has provided its concurrence for PQEPCL’s suggestion regarding on-site testing of 10% Thar coal blended with imported coal, as a first step. Representative of PQEPCL noted that they are ready to perform on-site testing with up to 10% blending of Thar coal with imported coal; however, due to ongoing scheduled maintenance till December 19, 2022, they are not in a position to immediately start testing. Furthermore, PQEPCL highlighted issues affecting the plant operation such as coal bunker chocking and spontaneous combustion of Thar coal; and requested necessary support from all government entities, regarding compensation in forced outages, in case of any foreseen events which may cause load reduction due to blending. PPIB, in its minutes, quoted representative of CPPA-G supported PQEPCL’s proposal of blending 10% Thar coal with imported coal.

On the issue of plant shut down/ load reduction in case of use of Thar coal during testing, it was highlighted that such events can be adjusted in forced outages covered under FPA; however if required, they may renegotiate with PQEPCL for increasing forced outages hours in the PPA. NEPRA’s representative also acknowledged PQEPCL’s concerns and agreed on full support required. PQEPCL was advised to take all precautionary measures to avoid spontaneous combustion.

Representative of SECMC noted that they can provide up to 50,000 tons per month for testing on 10 days’ notice at mine mouth; however, transportation of coal to project site will be the responsibility of PQEPCL.

PQEPCL was advised to approach Lucky Electric for guidance on coal transportation as they are currently handling coal from mine mouth to the projects site. On a query of long-term coal supply for PQEPCL’s project, SECMC stated that firm coal supply commitment for long- term can only be assessed after COD of phase-3 of Block-l (expected by end of 2023), which is dedicated for Lucky Electric Power Plant. Regarding coal supply for 10% blending with imported coal for PQEPCL’s plant, representative of SSRL apprised that their 7.8 MTPA mine is dedicated to 1320 MW TCB-1project which is planned to be commissioned by December 25, 2022 and testing commissioning will start in November; hence, coal supply to PQEPCL’s plant is not possible at this stage. For long term coal supply SSRL informed that due to Chinese Government policy on coal, it is difficult for them to convince lenders for financing further expansion of mine. However, if both Chinese and Pakistani governments agree for further development of Thar coalfields, it will be easy for them to approach lenders for mine expansion.

After detailed discussions, it was decided that: (i) PQEPCL will start testing up to 10% blending of Thar coal with imported coal, after major overhauling, as the first step; (ii) SECMC will provide coal at mine mouth and PQEPCL will arrange transportation to project site; and (iii) PQEPCL to start stocking Thar coal at site to immediately start testing after scheduled maintenance.

However, CPPA-G has clarified that its representative supported blending of 10 percent Thar coal with imported coal in PQEPCL project. In response to a reservation from PQEPCL regarding outages/ shutdowns during testing phase, he highlighted that such events will be adjusted in existing Forced Outage allowance under the PPA. However, if required, the parties may renegotiate for increasing the Forced Outage allowance subject to approval of NEPRA as this increase in Forced Outage will affect the 85 % project anneal availability as already allowed by NEPRA.

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