Degree

Master of Business Administration Executive

Faculty / School

School of Business Studies (SBS)

Year of Award

2024

Advisor/Supervisor

Dr. Hilal Anwar Butt, Professor and Chairperson, Department of Finance

Project Type

MBA Executive Research Project

Access Type

Restricted Access

Keywords

Coal power plant, Capacity Charges, Local Coal, Plant Efficiency, Power tariff

Executive Summary

This report explores critical challenges being faced by a coal-fired power generation company in Pakistan. Given the increasing economic competitiveness from alternate energy sources, the company is at a crossroads where strategic decisions are necessary to ensure its long-term sustainability.

The company faces significant financial pressure due to the fluctuating global coal prices, geopolitical developments, and the devaluation of the Pakistani Rupee (PKR). These factors have raised the cost of imported coal, directly impacting the cost of electricity production.

The company’s reliance on imported coal, primarily from Indonesia and South Africa, has become economically burdensome. Imported coal costs are high, and the company must explore the feasibility of blending it with locally sourced coal from Thar to reduce expenses.

The company must consider technological upgrades to enhance the efficiency of its coal-fired boilers. The report presents a detailed feasibility analysis under various scenarios where different blends of local and imported coal are considered. The analysis shows that incorporating local coal into the fuel mix can reduce costs significantly, though it requires modifications to the plant infrastructure.

The report concludes that blending local Thar coal with imported coal can lead to substantial cost savings, particularly when the local coal content exceeds 20%. The financial analysis indicates that the company could achieve a lower per-unit energy cost by upgrading the plant to handle higher percentages of local coal.

The report recommends a phased approach to increase the use of local coal, supported by necessary plant modifications and technological upgrades. It also emphasizes the need for continuous market analysis and renegotiation of coal supply contracts to maintain cost competitiveness.

Pages

ix, 97

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