KARACHI: Following the fall in international coal prices, the cost of power generation in Pakistan is likely to come down by Rs 0.5-1.5/kWh.
According to analysts, the power sector consumes 9 million tonnes of coal annually against a total requirement of around 28 million tonnes.
Pakistan depends on coal power generation from maximum 12% to 32%. This depended on the availability of cheap hydropower, as the cost of generating electricity from coal was high (the third most expensive fuel after furnace oil and LNG).
According to the latest data from the National Electric Power Regulatory Authority (Nepra), the cost of power generation from coal during September 2022 was around Rs 18 per kilowatt when coal averaged US$ 310-320 per tonne.
“Thus, if coal prices remain at current levels, the cost of power generation in the country could come down by Rs0.5-Rs1.5/kWh,” believes Farhan Mehmood, head of research at Sherman Securities.
He said that the falling price of coal will reduce the cost of power generation, which will also reduce the revolving credit.
Coal prices in international markets recently touched an eight-month low, mainly due to weak global demand due to slowing construction activity in China, the world’s largest coal consumer, and rising inflation. . In addition, Europe, which had already met its energy needs for power generation through liquefied natural gas (LNG) ahead of winter, is another factor affecting the prices of alternative fuels, including coal. was the element.
Pakistan’s coal-fired power plants import coal from South Africa and Indonesia, while Nepra has also approved the import of Afghan coal.
However, the current coal market capacity in Afghanistan was not sufficient to meet the continuous demand and supply of power plants in Pakistan.
According to the State of Industry Report 2022 released by Nepra, no price index has been published for Afghan coal, which is liquid, transparent and market-reflective. It should be noted that power plants in the country are looking for alternative cheaper sources of coal in view of the increase in the price of imported coal and lack of foreign exchange.
This is why Nepra has approved the import of coal from Afghanistan, provided the delivery price of Afghan coal per MMBTU is lower than its current coal imports and payment is made in Rs.
Considering the issues related to Afghan coal, Nepra’s proposal to convert imported coal-based power plants to indigenous coal was also being considered, as some were already installed in the country by Thar Coal. .
The Private Power and Infrastructure Board (PPIB) is leading the process. According to initial findings, imported coal power plants can use Thar coal for some percentage without any modification in their power plant, PPIB said. “Hence, greater use of indigenous coal needs to be encouraged to reduce dependence on imported fuel. Further commissioning of Thar’s coal-based power plants needs to be accelerated.
The per unit cost of power generated from imported coal increased to Rs 29.12 per kilowatt hour from around Rs 20.17 per kilowatt hour while the per unit cost of power generated from local Thar coal was Rs 4-4.5 per kilowatt hour. Stayed around Watt.
