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ISLAMABAD: China Power Hub Generation Company (CPHGC) has sought revision in coal price notification of the National Electric Power Regulatory Authority (NEPRA) to reimburse part of local procurement as international coal prices are now less than local coal.

In a letter to Secretary Power, Chairman NEPRA, and other concerned authorities, the company’s CEO has updated them about the procurement of coal from a local supplier for the spot market.

The company has entered into a spot coal supply agreement with local traders with a fixed rate payment in Pak Rupee.

According to the CEO of CPHGC, it is observed that coal prices in the international market especially the AP14 index price have reduced in the past weeks and still showing a lower trend. The current monthly average for Sep 2022 is $302.26 and the trending behavior shows that it will decline to US$ 269 54 in the coming days as September 30 was the last date to determine the monthly average for September 2022.

Furthermore, for the local coal procurement, the dollar Rupee parity is taken as PKR 233.9088 = USD 1, and if the dollar weakens then the local coal procurement will be more expensive.

Purchase of coal: CPHGC seeks Rs167bn from govt

He maintained that there is no delta between the imported coal price and local coal price as of today and the basis of calculation is 5,500 Kcal/Kg NCV. While, as per the notification of NEPRA the local procurement indexation can only be allowed if the price is lower than the imported coal.

After explaining the current scenario, the power generation company has requested Secretary Power Division to get a revised notification issued from NEPRA to allow the company to reimburse the part of local procurement for which the price is higher than imported coal, as the spot coal procurement agreement signed with a term of 45 days, the company may renegotiate the price with local suppliers but there is still a possibility that the local procurement price may remain higher than imported coal.

Furthermore, the company maintains that the imported coal procurement cycle is 45 days from the issuance of coal order to actual delivery.

And to advise an amicable solution in this current scenario as the local coal price is higher than the imported coal price and suspension of the local coal procurement may adversely affect the coal inventory plan.

Copyright Business Recorder, 2022

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