When it comes to importing constraints, thar coal is running out of steam.
Could seize power generating if equipment and parts that are held up at ports are not released.
LAHORE:
The oil, petroleum, gas, and mining industries in Pakistan are at a crossroads as a result of import limitations and banks that won’t open Letters of Credit (LCs).
According to insiders, the Thar Coal Mine and associated power projects are under a profound feeling of foreboding as vital replacement parts and equipment required to continue operations are held up at ports, posing a growing threat to the nation’s energy security.
The insider continued, “The machinery and equipment for mining operations are stalled at the port and banks’ are not confirming LCs with the necessary clearances.” The country could experience a shortage of over 2500 MWs of electricity in the upcoming weeks if the equipment is not delivered right away since the mine that supplies domestic coal to the power plants may stop operating.
As roughly 30% of the nation’s overall energy needs are fulfilled off the grid, this will exacerbate the energy problem and cause power shortages. According to them, the opening and clearing of LCs should be prioritised and included on the list of vital imports in order to meet consumer demand and close the energy gap.
According to Syed Saifullah Kazmi, Head of Investment Banking at Intermarket Securities Limited, “this has complicated the operations of the Thar Coal project, which delivers indigenous coal for energy production to the power plants.” Kazmi pleaded with the government to take prompt action.
It should be noted that the Sindh Engro Coal Mining Company (SECMC) has declared the Commercial Operations Date (COD) for the 7.6 million tonnes per annum (MTPA) mine expansion and has successfully completed phase II of its mine expansion on October 10, 2022.
For Pakistan’s much-needed energy security, Kazmi said, “The COD of Phase II of the Mine Expansion is a tremendous success.” He added that the mine’s production output increasing from 3.8 MTPA to 7.6 MTPA will allow an additional 660MW of power generation into the national grid.
“Pakistan is facing enormous foreign exchange issues, and as a result of the Russian-Ukrainian war, the price of imported coal has jumped to $400-450 a tonne,” he said. “If used to its full potential, that coal can provide 5000 MWs of power over the next few years and save the country almost $2.5 billion in import costs. Additionally, it can lower the circular debt of the nation by more than Rs100 billion yearly, resulting in a lower basket price for consumers as a whole, according to Kazmi.
He emphasised that in order to achieve both short- and long-term energy security, the Thar Coal mine and power plants must be enabled on all fronts as a major, game-changing project.
