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Afghan suppliers: Coal importers making ‘informal’ payments

  • This was disclosed at a public hearing organized by Nepra to address some of the concerns raised by IPPs and coal suppliers
Published December 6, 2022
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ISLAMABAD: Pakistani coal importers are making payments to their Afghan coal suppliers in an informal manner due to non-availability of formal channels.

This was disclosed at a public hearing organized by National Electric Power Regulatory Authority (Nepra) to address some of the concerns raised by Independent Power Producers (IPPs) and coal suppliers in the existing approved guidelines for buying Afghan and non-Afghan coal on spot basis.

The purpose of the hearing was to seek comments from stakeholders on how to optimize the existing spot purchase guidelines and bring in more competition.

The hearing was presided over by Nepra Authority including Chairman NEPRA, Tauseef H Farooqi and Members Nepra, Maqsood Anwar Khan and Mathar Niaz Rana.

It was also attended by large number of representatives of various stakeholders including Ministry of Energy, Central Power Purchasing Agency (CPPA-G), Private Power Infrastructure Board (PPIB), Thar Coal Energy Board, IPPs, Coal experts, Journalists, general public, coal importers and suppliers, etc.

Khalid Mehmood, from Fuel Suppliers Group, stated that the main focus of guidelines is on purchase of Afghan coal, but there is no payment mechanism for this purpose. He said Afghan importers are paying in an unorganized manner, saying there will be issues in future with regard to this mechanism. He suggested that there should be proper payment mechanism to Afghan coal suppliers to ensure smooth import.

“We are unable to import Afghan coal due to non-availability of proper payment mechanism,” he added.

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Another participant said that there is no Central Bank in Afghanistan since regime change, revealing that form A has been suspended. He said this is a grey area as Pakistanis are paying cash at the border.

Chairman Nepra said that the regulator did not take any decision, adding that since there is shortage of dollars in the country due to which the regulator decided to hold a public hearing. Injustice is not done with anyone rather people are fed up with regulators “over justice.”

Rizwana Ghani from China Power Hub Generation Company (CPHGC) raised a question that the plant does not have sufficient inventory and in case no local supplier makes an offer, CPPA-G should exempt the power plant from liability of capacity charges on non-availability, adding that the power plant is not importing any coal for the last four months due to forex issues and the power company is totally replying on local coal.

She contended that the government should give an exemption from implications of guidelines till the formalities are completed. However, Member KR, Maqsood Anwar Khan said that the power company should have continued to implement the guidelines till the issue is sorted out.

The representative of CPHGC responded that the company is not importing coal due to shortage of dollars and verbal instructions from Power Division.

“We are not allowed to open any Letter of Credit (L/C) for import of coal” Ms Ghani added.

CEO CPPA-G, Rehan Akhtar acknowledged that there is issue of availability of foreign exchange and its approvals from the State Bank of Pakistan. However, he suggested that the authority focus on guidelines for coal purchase instead of forex issues.

He said, if spot purchase is not successful, then the power company can import coal under its long-term contract.

During the hearing it was agreed that the minimum eligibility of the paid up capital requirement from the bidders should be slashed to Rs 500 million from Rs 100 million. It was proposed that bidding for spot bidding should be held once or twice month in the presence of all bidders and bid should be accepted on basis of competitive price rate and best quality of coal. Several other suggestions on spot buying were also floated by the stakeholders.

The authority noted the concerns and suggestions of the stakeholders and will accordingly revise the guidelines at the earliest so that purchase from the above sources by the coal-fired power plants commence at the earliest and generation of cheaper electricity is ensured.

Copyright Business Recorder, 2022


Comments are closed.

Ali Bilal Dec 06, 2022 12:22pm
@Rebirth, you make a good point. OPTP is a local franchise that is doing really well and have managed to streamline all their branches to international standards. However not all is lost. At one point Pizza Hut in Karachi was recording the second highest sales if any city in all of Asia. Following that, maybe a 100 odd pizza places have propped up (just check food panda). While Pizza Hut proved the cuisine and model, it's the younger local entrepreneurs who exploited it over the years. In some regards this fragmentation is better than a singly run franchise. It creates an equal opportunity ecosystem, allows new entrants into the market with even a small niche and consumers get a large variety to choose from. I'm not sure if Pizza Hut will get to repatriate their profits, as local sales and income taxes will be applicable. Do you have more info?
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