Pakistan is once again facing a severe energy challenge, with regional geopolitical tensions creating additional uncertainty around the availability and price of imported fuels. The consequences are being felt in two ways: increasing pressure on fuel supply and a sharp rise in the cost of electricity generation. For a country already struggling with high electricity prices and limited fiscal space, continued dependence on imported fuels presents a serious economic and strategic risk.
Recent fuel price adjustment data for July 2026 provides a striking illustration of the problem. The Energy Purchase Price (EPP) attributable to RLNG-based generation was reported at PKR 47.38 per kWh, while the corresponding energy cost of generation from local coal was only PKR 10.42 per kWh during the same period. The difference of almost PKR 37 per kWh is too significant to ignore.
This gap should prompt policymakers to revisit an idea that has been discussed for several years: the potential use of locally available coal in existing underutilized power plants.
The proposal is not to abandon the existing gas-based power generation fleet. Rather, it is to add coal-fired steam generation capability to selected combined-cycle power plants, enabling them to use locally available coal when gas is expensive or unavailable, while retaining the existing gas turbine and combined-cycle modes for periods when gas is economical or additional generation is required.
Punjab has more than ten combined-cycle power plants with an aggregate installed capacity of more than 6,000 MW. Many of these plants are not operating continuously and remain available primarily for peak-hour requirements, system constraints, or periods when electricity generated in southern Pakistan cannot be transmitted sufficiently to central and northern load centers because of transmission limitations.
These plants also have more than 2,000 MW of installed steam-turbine capacity that are integral part of combined cycle plant. The steam turbines are currently supplied with steam through Heat Recovery Steam Generators (HRSG) as part of the combined-cycle configuration.
This existing steam-turbine capacity creates an interesting opportunity.
Instead of constructing entirely new coal-fired power plants, new boilers designed for Thar coal could potentially be installed alongside the existing steam turbines. These boilers would effectively replace the HRSG function when the plant is operated in coal-fired steam mode. The existing HRSGs would remain available, allowing the plant to revert to combined-cycle operation whenever required.
In other words, the proposal is essentially to transform selected existing combined-cycle plants into multi-fuel, flexible-generation assets without sacrificing their existing gas-fired capability.
Based on preliminary estimates, installation of a new Thar-coal-fired boiler and associated auxiliaries could cost approximately USD 0.35 million per MW, or around USD 0.40 million per MW including financing costs and interest during construction.
Compared with the cost and time required to develop completely new generation capacity, this represents a relatively modest investment. More importantly, the proposal could utilize existing turbines, generators, electrical systems, grid connections and other major infrastructure.
If work were initiated now, the boiler projects could potentially be completed in approximately two years. This makes the concept particularly relevant at a time when Pakistan needs relatively quick solutions to reduce its exposure to expensive imported fuels.
The economics become even more compelling when the delivered cost of Thar coal is considered.
The Thar coal price determined by the Thar Coal Energy Board is expected to be approximately USD 38.44 per ton in 2029. After adding an estimated railway transportation cost of approximately PKR 5,000 per ton, the delivered coal cost is estimated at around PKR 15,763 per ton, assuming an exchange rate of PKR 280 per US dollar.
On an LHV basis, this translates to approximately PKR 1,472 per MMBTU.
This is broadly comparable with the lower end of gas prices available to power generation in Pakistan. Consequently, power plants capable of efficiently utilizing Thar coal could potentially move significantly higher in the economic merit order, potentially placing them among the top 15 generating units during periods when imported RLNG is expensive.
The preliminary tariff calculation further strengthens the case. At an assumed 35% steam-cycle efficiency, the estimated total generation cost, including debt repayment, is approximately PKR 21.9 per kWh. Excluding debt repayment, the estimated cost is around PKR 19.6 per kWh. The EPP would be PKR 15.9 per kWh.
For comparison, using a conservative RLNG generation cost of PKR 35 per kWh, rather than the exceptionally high PKR 47.38 per kWh observed in July 2026, the potential saving would still be approximately PKR 15.4 per kWh.
At this level of saving, the additional investment (full project cost including both equity and debt) could potentially be recovered after approximately 8,060 operating hours, equivalent to roughly one year of operation.
The financial argument is only one part of the equation.
Using Thar coal would reduce Pakistan’s dependence on imported fuel and provide greater protection against international commodity-price volatility, geopolitical disruptions, foreign-exchange pressures and supply-chain uncertainty.
It would also make greater use of an indigenous energy resource that Pakistan has already invested in developing.
Most importantly, the proposed approach provides fuel flexibility rather than fuel substitution.
The gas turbines and existing combined-cycle configuration would remain functional. When competitively priced gas is available, the plant could continue operating in combined-cycle mode. During periods of expensive or constrained gas supply, the plant could operate its steam turbine using Thar coal. Where system requirements exceed the steam turbine’s available capacity, the gas turbine could again be brought into service. Such flexibility would be particularly valuable for power plants located close to major load centers.
Pakistan does not necessarily need to make a fleet-wide commitment immediately. The Government should consider undertaking a demonstration project at one suitable existing combined-cycle plant.
A properly selected pilot project could establish the actual technical, commercial, environmental and operational feasibility of integrating a Thar-coal-fired boiler with an existing steam turbine while retaining the plant’s combined-cycle capability.
If the results confirm the expected economics, the concept could subsequently be replicated across other suitable plants.
The July 2026 fuel-cost data should therefore not be viewed merely as another tariff adjustment. It is a warning about the vulnerability created by excessive dependence on imported fuels. At the same time, it presents an opportunity to reconsider how Pakistan utilizes its existing generation assets and indigenous energy resources.
Thar coal may not be the answer to every problem in Pakistan’s power sector. However, using it strategically in existing underutilized combined-cycle plants could provide a relatively fast, affordable and flexible means of reducing generation costs and import dependence.
The Government should give this option serious consideration and, at a minimum, initiate a detailed feasibility study and a pilot project. Pakistan has spent billions of dollars developing its power-generation infrastructure. The next step should be to make those assets more flexible, more competitive and less dependent on imported fuel.
Corresponding Author: Dr. Muhammad Farhan is an engineer by profession with nearly two decades of experience in the energy and power sector.