Islamabad: As a steady decline of foreign currency reserves in Pakistan continues, Chinese energy firms in Pakistan have threatened to discontinue the import of Afghan coal in Pakistan if National Electric Power Regulatory Authority (NEPRA) does not approve of decrease in prices within a week to ensure cheap and continuous electricity in the South-Asian country.
The Chinese firms have started threatening Afghan companies after the Taliban increased the price of coal by 30 per cent in July first week of 2022 after Pakistan Prime Minister Shehbaz Sharif approved of importing coal from Afghanistan.
The Ministry of Finance of Afghanistan raised the price of coal from USD 90 per tonne to USD 200 per tonne due to the increase in coal prices in world markets, reported local media.As per Shehbaz Sharif, Pakistan would save more than two billion dollars by importing coal from Taliban-led Afghanistan.
As per the Chinese firm, M/s Huaneng Shandong Ruyi (Pakistan) (HSR) Energy (Private) Limited, the people of Pakistan received electricity at affordable prices earlier, however, due to the ever-increasing USD against PKR has amplified the impact of the increase in fuel on the power tariff in Pakistan.
Company’s Chief Executive Officer (CEO) Dr Li Xin in a letter to Registrar National Electric Power Regulatory Authority (Nepra) to approve the availability of Afghanistan coal at lowered prices, Business Recorder reported.Chinese company HSR has threatened to discontinue the import of Afghan coal if Nepra does not approve the agreed pricing mechanism within one week.
Keeping the aim of reduction in fuel prices and lowering the import bill so that foreign currency is saved, the Company was asked to explore cheaper (compared to the existing coal price) qualified fuel alternatives with payments being made in PKR, the CEO said.
According to Business Recorder, a meeting was held in NEPRA on June 27, 2022, to discuss the operational process in presence of CPPA-G, where it was principally agreed that the Afghan coal price should be cheaper than that of South African coal and the payment is made in PKR.
Another thing that was decided in the meeting was that since the power supply needs to be provided on a priority basis, thus, initially only the top 12 importers as per FBR will be contacted so that the bidding can be completed on an urgent basis.
Moreover, public bidding will be conducted in the month of August to tackle the price issue of Afghanistan coal, Business Recorded added.As the company cannot bear a loss due to a dip in the Pakistani economy, HSR has urged Nepra to approve, including but not limited to the mechanism (including loss rate) the price for Afghanistan coal as the firm is already under a massive grip of the financial crisis.
It is in no position to bear any deduction in its fuel price, the CEO said, adding that if the agreed mechanism is not approved by Nepra within a week, the Company would have no option but to resort to South African coal and stop the import of Afghan coal completely.
The basic electricity tariff was increased by 7.9 per unit in June by NEPRA putting the Pakistani masses under shock who are already under the burden of rising inflation and a deteriorating economy were a shock.
NEPRA cited an increase in fuel prices, capacity cost, and the impact of the devaluation of the Pakistani rupee as reasons behind the increase in power tariff.The decision has been taken in line with the International Monetary Fund’s demands and the power distribution companies’ requests.
Currently, the basic power tariff is Rs 16.91 per unit and with an increase of Rs 7.9078 per unit, it will be more than Rs 24 per unit if the economy of Pakistan deteriorates further.
(Except for the headline, the story has not been edited by Siasat staff and is published from a syndicated feed.)
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