African Reserves

Chinese energy companies ‘threaten’ to stop Afghan coal imports

Islamabad: As the steady decline in foreign exchange reserves in Pakistan continues, Chinese energy companies in Pakistan have threatened to halt the import of Afghan coal into Pakistan if the National Electricity Regulatory Authority (NEPRA) n did not approve of lowering prices within a week to ensure a good market. and electricity continues in the South Asian country.

Chinese companies began threatening Afghan businesses after the Taliban raised the price of coal by 30% in the first week of July 2022 after Pakistani Prime Minister Shehbaz Sharif approved the import of coal from Afghanistan .

Afghanistan’s Ministry of Finance has raised the price of coal from USD 90 per ton to USD 200 per ton due to rising coal prices in world markets, local media reported. According to Shehbaz Sharif, Pakistan would save more than two billion dollars by importing coal from Taliban-ruled Afghanistan.

According to the Chinese company, M/s Huaneng Shandong Ruyi (Pakistan) (HSR) Energy (Private) Limited, the people of Pakistan received electricity at affordable prices earlier, however, due to the constant increase in the dollar against PKR amplified the impact of the fuel increase on the electricity tariff in Pakistan.

The company’s Chief Executive Officer (CEO), Dr. Li Xin, in a letter to the Registrar of the National Electric Power Regulatory Authority (Nepra) to approve the availability of Afghan coal at discounted prices, reported Business Recorder. The Chinese company HSR has threatened to stop importing Afghan coal. if Nepra does not approve the agreed pricing mechanism within one week.

Keeping the aim of reducing fuel prices and reducing import bill to save foreign currency, the company was advised to explore cheaper qualified fuel alternatives (compared to current coal price) , with payments being made in PKR, the CEO said.

According to Business Recorder, a meeting was held at NEPRA on June 27, 2022 to discuss the operational process in the presence of CPPA-G, where it was mainly agreed that the price of Afghan coal should be cheaper than that of South-South coal. African and the payment is made in PKR.

Another thing that was decided at the meeting was that since the power supply is to be provided as a priority, only the top 12 importers according to FBR will initially be contacted so that the tender can be completed urgently.

In addition, a public tender will be launched in August to resolve the Afghan coal price issue, Business Recorded added. As the company cannot bear a loss due to a downturn in the Pakistani economy, HSR urged Nepra to approve, including but not limited to the mechanism (including loss rate) of the price of Afghan coal, as the company is already in the massive grip of the financial crisis.

It is unable to afford any deduction from its fuel price, the CEO said, adding that if the agreed mechanism was not approved by Nepra within a week, the company would not have to pay. other choice than to use South African coal and stop importing it. of Afghan coal completely.

The basic electricity tariff was increased by 7.9 per unit in June by NEPRA, shocking the Pakistani masses who are already under the weight of rising inflation and deteriorating economy. economy.

NEPRA cited an increase in fuel prices, the cost of capacity and the impact of the devaluation of the Pakistani rupee as reasons for the electricity tariff increase. The decision was made in accordance with requests from the International Monetary Fund and requests from electricity distribution companies. .

Currently, the basic electricity tariff is Rs 16.91 per unit and with an increase of Rs 7.9078 per unit, it will be higher to Rs 24 per unit if Pakistan’s economy deteriorates further.

(Except for the title, the story has not been edited by Siasat staff and is published from a syndicated feed.)