ISLAMABAD: The federal government aims to push Chinese independent power producers (IPPs) to adopt cost-efficient Pakistani coal instead of importing it at higher rates from other countries to not only ease the burden on consumers but also relieve pressure on the country’s foreign exchange reserves.
“Pakistan this month will ask Chinese power plants operating in the country to shift to using coal from Thar region rather than imported coal,” Federal Minister for Energy (Power Division) AwaisLeghari told Reuters.
He added that the transition could save Pakistan more than Rs200 billion a year in imports, translating to a decrease of as much as Rs2.5 per unit in the price of electricity.“Islamabad may also begin talks on re-profiling Pakistan’s energy sector debt during the visit to Beijing.”
Such a transition would benefit the Chinese-owned plants in Pakistan by reducing pressure on the country’s foreign exchange reserves, he said, making it easier to repatriate dividends and offering a better return in dollar terms.
The power czar will be part of the delegation to discuss structural reforms to the power sector suggested by the International Monetary Fund (IMF), which last week agreed on a $7 billion bailout for the heavily indebted South Asian nation.
Neighbouring China has set up over $20 billion worth of energy projects in Pakistan.
“One of the key purposes of going along is the conversion of our imported coal units to the local coal. That would have a huge impact on the cost of energy, of power in the near future. So that is one of the biggest (items on the) agenda,” Leghari said in an interview.
In April a subsidiary of conglomerate Engro agreed to sell all of its thermal assets, including Pakistan’s leading coal producer, Sindh Engro Coal Mining to Liberty Power.Liberty said the decision stemmed from Pakistan’s foreign exchange crunch and its indigenous coal reserve potential.
The minister declined to elaborate on the possible talks with China over re-profiling energy debt.Pakistan’s power sector has been plagued by high rates of power theft and distribution losses, resulting in accumulating debt across the production chain — a concern raised by the IMF.
The government is implementing structural reforms to reduce circular debt — public liabilities that build up in the power sector due to subsidies and unpaid bills — by Rs100 billion a year, Leghari said.
