ISLAMABAD, JULY21: Power minister said that, the Pakistan would ask Chinese power plants operating there to switch from using imported coal to coal from Pakistan’s Thar region starting this month.
Awais Leghari, the director of the Power Division of the energy ministry, told Reuters that during the visit to Beijing, Islamabad would also start discussions on re-profiling Pakistan’s debt in the energy industry.
Leghari is a member of the team that will talk about the structural changes to the power industry that the International Monetary Fund (IMF) has recommended. The IMF and the deeply indebted South Asian country agreed last week to a $7 billion bailout. Pakistan has seen the establishment of energy projects worth over $20 billion by neighboring China.
Converting our imported coal units to local coal is one of the main goals of moving forward. In the near future, that would have a significant effect on the price of energy and power. Thus, that ranks among the top priorities on the agenda, Leghari stated in a conversation.
According to him, such a shift would help the Chinese-owned plants in Pakistan by relieving pressure on Islamabad’s foreign exchange reserves, facilitating dividend repatriation, and providing a higher return in terms of dollars.
According to Leghari, the switch could save Pakistan more than Rs200 billion ($700 million) in imports annually, resulting in a drop in the price of energy of up to 2.5 Pakistani rupees per unit.
Conglomerate Engro’s subsidiary agreed to sell Pakistan’s Liberty Power all of its thermal assets in April, including Sindh Engro Coal Mining, the country’s top coal producer. According to Liberty, the decision was made because of Pakistan’s potential internal coal reserves and its current financial crisis.
Regarding potential negotiations with China regarding re-profiling energy debt, the minister refrained from providing further details.The IMF expressed concern about Pakistan’s power sector due to high rates of power theft and distribution losses, which have led to an accumulation of debt throughout the production chain.
According to Leghari, the government is putting structural changes into place to cut “circular debt,” or public liabilities that accumulate in the power sector as a result of subsidies and unpaid bills, by 100 billion Pakistani rupees ($360 million) year.
A previous IMF bailout obtained last year that included increasing power bills as part of the financial arrangement that ended in April had an impact on households in the poor and middle classes.
Despite summer temperatures reaching near-record highs, Pakistan’s annual electricity consumption is predicted to decline for the first time in 16 years as higher charges restrain residential usage.It usually increases the need of fans and air conditioning. Leghari stated that the government’s main task was to get demand to stop declining. “We have seen a shrinking demand trend in the past year or year and a half, and we are expecting this to continue unless we rationalize the price of power,” Leghari added.
He claimed that because power is now more expensive per unit, households in both urban and rural areas are turning to solar energy and other options. As of right present, the grid itself has about 1,000 megawatts in the form of net metering systems and other devices. Leghari stated, “That’s a very conservative estimate that there could be five to six times more solar than that on the grid right now.”
