Pakistan to urge Chinese power plants to switch to local coal
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According to the country’s power minister, Pakistan plans to ask Chinese power plants operating in the country to switch to using coal from Pakistan’s Thar region rather than imported coal.
Additionally, Awais Leghari, head of the energy ministry’s Power Division, told Reuters that Islamabad may also begin discussing reprofiling Pakistan’s energy sector debt during its visit to Beijing.
Leghari will be part of the delegation to discuss structural reforms to the power sector proposed by the International Monetary Fund (IMF), which recently agreed on a $7 billion bailout for the heavily indebted South Asian nation.
Neighboring China has established energy projects worth over $20 billion in Pakistan.
Leghari said in an interview, “One of the key purposes of going along is the conversion of our imported coal units to the local coal. That would have a huge impact on the cost of energy and power in the near future. So that is one of the biggest (items on the) agenda.”
He said such a transition would benefit the Chinese-owned plants in Pakistan by easing the pressure on Islamabad’s foreign exchange reserves. This would make it easier to repatriate dividends and provide a better return in dollar terms.
Also read: Report highlights benefits of early retirement of Chinese financed overseas CFPPs
Leghari added that the transition could save Pakistan over 200 billion Pakistani rupees ($700 million) annually on imports, reducing electricity prices by up to 2.5 Pakistani rupees per unit.
The IMF has raised concerns about Pakistan’s power sector, which has been plagued by high rates of power theft and distribution losses, leading to accumulating debt throughout the production chain.
Leghari said, “The government is implementing structural reforms to reduce “circular debt” – public liabilities that build up in the power sector due to subsidies and unpaid bills – by 100 billion Pakistani rupees ($360 million) a year.”
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