LCs for additional mining equipment: SECMC seeks SBP’s approval
KARACHI: Sindh Engro Coal Mining Company (SECMC) has sought State Bank of Pakistan (SBP) approval for establishing LCs for the additional mining equipment.
In a letter to the Secretary of Energy Department, Government of Sindh, the company has asked for support regarding SBP’s approval for LC opening.
“We need approval for the opening of our regular LCs to ensure continuous supply of tyres and spares parts for our mining equipment,” stated in a letter.
Any delay in importing equipment will have a direct impact on the timing and the cost of the Phase-III project.
The letter mentioned that on December 27th last year the SBP had issued a circular to withdraw the restrictions on imports pertaining to HS Code Chapter 84 and 85 and directed the banks to prioritize the imports related to coal for power projects.
However, there was a significant delay in the approval of opening of letter of credits thus mine operations are severely impacted.
“We are also incurring demurrage charges, liquidated damages, and penalties due to delay in approvals which results in reputational damage and additional cost,” the letter stated.
The SECMC is producing the cheapest fuel for power generation in the country and providing 7.6 million tons of local coal per annum to three IPPs based in Thar.
The integrated CPEC project is playing a pivotal role in resolving the crippling foreign exchange challenge being faced by Pakistan.
If mine doesn’t operate for a month, it will increase the net fuel-based import bill of Pakistan by approximately USD 40 million (for three IPPs).
In addition to operations the company is also initiating the mine expansion project so that IPPs currently operating on imported coal can be converted to local coal, hence reducing the forex burden further.
“Our total estimated value of imports (equipment and spares) for the coming year is approximately USD 65 million and services are approximately USD 35 million,” it highlighted.
Copyright Business Recorder, 2023
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