The energy ministry has been urged by the Sindh Engro Coal Mining Company (SECMC) to open letters of credit (LCs) that have been closed since April 2022, out of concern that the Thar plant’s electricity supply would be interrupted if necessary machinery and equipment are not cleared. Thar power supply to be ‘suspended’ if LCs not opened.
The SECMC is having trouble opening LCs for the import of machinery and replacement parts for coal mines and power plants. The company is working with the Sindh government to develop a coal mine in Thar. People worry that production may halt.
The State Bank of Pakistan eased the ban on opening LCs for the import of plant machinery and equipment for the energy industry, therefore why were there still barriers, the SECMC questioned in a letter to the energy ministry.
The Thar Coal Mining and Power Plant’s import and clearance of imported machinery and spare parts are also in the works, which raises the likelihood of a halt of coal output from the Thar coal mine.
The current winter energy crisis will worsen if coal production is stopped since it will stop domestic coal-fired power generation and result in a total power shortfall of 2,500 megawatts.
According to the SECMC, Thar power supply to be ‘suspended’ if LCs not opened, on December 27, 2022, the SBP pre-approved the LC for the import of goods covered by HS Code chapters 84 and 85. These products were put on the priority list by removing the condition, however, despite the SBP’s initiative, the LC paperwork for the spare parts and other things is not being approved.
The SECMC informed the Ministry of Energy officials that due to non-opening of the LCs for the import of important parts and equipment, it is facing serious difficulties in continuing the mining operations and the imported equipment which is at the port. Heavy demurrage is also being imposed due to delay.
The letter stated that the SECMC provided the cheapest 7.6 million tonnes of coal to three power plants to generate electricity in Pakistan, thereby saving Pakistan a lot of foreign exchange in the form of substitution of imported coal.
The company warned the government that running three power reactors on imported coal would cost Pakistan an additional $40 million if Thar’s coal production were to be halted for a month.
The SECMC requested that the Ministry of Energy promptly grant LCs through the SBP to the appropriate banks for the import of equipment from the Chinese firms China Machinery Engineering Corporation and China Everest Development International Limited, which have had LCs on hold since April 2022, “Approval should be ensured as well as timely approval of LCs of routine equipment for Thar coal project should be given without delay so that the mining process can continue without any interruption.”
