If the LCs are not opened, the thar power supply will be “suspended.”
SECMC asks the energy ministry why there are still impediments despite SBP having lifted the prohibition on LCs.
ISLAMABAD: Concerned that the power supply from the Thar plant would be interrupted if necessary machinery and equipment are not cleared, the Sindh Engro Coal Mining Company (SECMC) has urged the energy ministry to open letters of credit (LCs) that have been lingering since April 2022.
The SECMC is having trouble opening LCs for the import of machinery and replacement parts for coal mines and power plants. The company is working with the Sindh government to develop a coal mine in Thar. People worry that production may halt.
The SECMC questioned why barriers were being put in place for the import of plant machinery and equipment for the energy sector after the State Bank of Pakistan relaxed the ban on opening LCs for such purposes.
The Thar Coal Mining and Power Plant’s import and clearance of imported machinery and spare parts are also in the works, which raises the likelihood of a halt of coal output from the Thar coal mine.
The current winter energy crisis will worsen if coal production is stopped since it will stop domestic coal-fired power generation and result in a total power shortfall of 2,500 megawatts.
According to the SECMC, on December 27, 2022, the SBP pre-approved the LC for the import of goods covered by HS Code chapters 84 and 85. These items were moved up the priority list by removing the condition, however despite the SBP’s initiative, the LC paperwork for the spare parts and machinery for the Thar coal power plants are still not being authorised.
The SECMC alerted the Ministry of Energy officials that it is having major difficulties carrying out mining operations and using the imported equipment that is at the port because the LCs for the import of critical parts and equipment have not been opened. Due to the delay, heavy demurrage is also being applied.
According to the letter, the SECMC gave three power plants the cheapest 7.6 million tonnes of coal to produce energy in Pakistan, saving Pakistan a significant amount of foreign currency by displacing imported coal.
The business warned the government that running three power reactors on imported coal would cost Pakistan an additional $40 million if Thar’s coal production were to be halted for a month.
The SECMC requested that the Ministry of Energy promptly grant LCs through the SBP to the appropriate banks for the import of equipment from the Chinese firms China Machinery Engineering Corporation and China Everest Development International Limited, which have had LCs on hold since April 2022. “Approval should be guaranteed, and quick approval of LCs of standard equipment for Thar coal project should be issued without delay so that the mining process can continue uninterrupted.”
