Pakistan plans to quadruple domestic coal-fired power, move away from gas

Pakistan plans to quadruple its domestic coal-fired capacity to reduce power generation costs and will not build new gas-fired plants in the coming years, its energy minister told Reuters on Monday, as it seeks to ease a crippling foreign-exchange crisis.

A shortage of natural gas, which accounts for over a third of the country's power output, plunged large areas into hours of darkness last year. A surge in global prices of liquefied natural gas (LNG) after Russia's attack on Ukraine and an onerous economic crisis had made LNG unaffordable for Pakistan.

"LNG is no longer part of the long-term plan," Pakistan Energy Minister Khurram Dastgir Khan told Reuters, adding that the country plans to increase domestic coal-fired power capacity to 10 gigawatts (GW) in the medium-term, from 2.31 GW currently.

Pakistan's plan to switch to coal to provide its citizens reliable electricity underscores challenges in drafting effective decarbonisation strategies, at a time when some developing countries are struggling to keep lights on.

Despite power demand increasing in 2022, Pakistan's annual LNG imports fell to the lowest levels in five years as European buyers elbowed out price-sensitive consumers.

"We have some of the world's most efficient regasified LNG-based power plants. But we don't have the gas to run them," Dastgir said in an interview.

The South Asian nation, which is battling a wrenching economic crisis and is in dire need of funds, is seeking to reduce the value of its fuel imports and protect itself from geopolitical shocks, he said.

Pakistan's foreign exchange reserves held by the central bank have fallen to $2.9 billion, barely enough to cover three weeks of imports.

Financial institutions in China and Japan, which are among the biggest financiers of coal units in developing countries, have been backing out of funding fossil-fuel projects in recent years amid pressure from activists and Western governments.