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Chinese energy company threatens to discontinue import of Afghan coal

Gives NEPRA one week to approve pricing mechanism

ISLAMABAD: Chinese company M/s Huaneng Shandong Ruyi (Pakistan) (HSR) Energy (Private) Limited has threatened to discontinue import of Afghan coal if Nepra does not approve agreed pricing mechanism within one week.

This message has been conveyed by the company’s Chief Executive Officer (CEO) Dr Li Xin in a letter to Registrar National Electric Power Regulatory Authority (Nepra).

According to the Chinese company, it has always considered it a responsibility to ensure that the people of Pakistan are provided cheap and continuous electricity. However, the recent turn of events internationally has led to immense increase in international fuel cost which coupled with ever increasing USD against PKR has doubled the impact of increase in fuel on the power tariff in Pakistan.

He maintained that keeping the aim of reduction in fuel prices and lowering the import bill so that foreign currency is saved, in sight the Company was asked to explore cheaper (compared to the existing coal price) qualified fuel alternatives with payments being made in PKR.

Afghanistan raises coal prices as exports to neighbouring Pakistan boom

Although the Company had been working on Afghanistan coal it was asked to speed up the operational process and thus a meeting was held in Nepra, in presence of CPPA-G, on June 27, 2022 whereby a fuel price mechanism was to be decided. In the meeting 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 ensured on a priority basis, thus, initially only top 12 importers as per FBR will be contacted so that the bidding can be completed on urgent basis.

Moreover, it was also agreed that for the next month, i.e., August 2022, a public bidding will be conducted.

CEO HSR has informed that a call to all 12 importers was made to ensure that the response was received on urgent basis. Out of these 12, only 7 suppliers picked up the call. Out of these 7 suppliers 6 were willing to bid, and hence bidding documents were emailed to all these six suppliers. However, response from bidding was received from only 4 suppliers. Upon reviewing these bidding documents, two suppliers were shorted listed as per the bidding result.

The Company has ensured that in time of need it would fulfil its responsibility and ensure cheap and continuous electricity supply and uphold the transparency of the process. However, the Company despite acting in the best interest of the country cannot bear a loss.

Thus through the letter HSR has requested Nepra to approve, including but not limited to the mechanism (including loss rate) the price for Afghanistan coal.

The Company is under serious financial crisis and it is in no position to bear any deduction in its fuel price, he said, adding that if the agreed mechanism is not approved by Nepra within one week, the Company would have no option but to stop import of Afghan coal and rely only on South African coal.

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