- Coal energy vegetation pledged to utilise coal with 6000 CVs.
- However they’re importing coal with CVs starting from 4500-5500.
- Not a single imported consignment meets required requirements.
ISLAMABAD: The Nationwide Electrical Energy Regulatory Authority (Nepra) has uncovered Chinese language coal-fired energy vegetation for utilizing lower-quality imported coal, regardless of their pledge to make use of coal with a calorific worth of 6,000 (CVs).
Not a single imported consignment meets the required requirements and nonetheless they declare multi-billion rupees of capability funds which might be being collected from the general public.
This revelation got here to gentle throughout a public listening to carried out by Nepra on Thursday to evaluate the prevailing mechanism, final revised in 2016.
The mechanism relies on a hard and fast benchmark weightage of various coal origins and warmth values, initially authorized by Nepra in June 2014 as a part of the willpower of coal upfront tariffs.
Nepra Chairman Waseem Mukhtar headed the proceedings whereas the authority’s members — together with Mathar Niaz Rana (member Balochistan), Maqsood Anwar Khan (KP), Amina Ahmed (Punjab), and Rafique Ahmad Shaikh (Sindh) — have been in presence.
You will need to point out that the coal-based present derated put in capability is 6,777MW (foreign-funded on imported coal), with an excellent capability cost of a considerable Rs643 billion.
Whereas citing paperwork, a Nepra member mentioned: “Your paperwork say that you just imported decrease high quality coal in opposition to what was promised within the agreements.”
Notably, the Sahiwal Coal Energy Undertaking, now generally known as Huaneng Shandong Ruyi (Pakistan) Power (Restricted), disclosed that it had imported multi-thousand tons of coal in July 2022 when costs have been excessive, at a price of Rs70,000 per ton ($380).
In response, a Nepra member remarked: “You declare capability cost, however you don’t use pricey coal.”
The disclosure unveiled that these coal-based energy vegetation had pledged to utilise coal with a calorific worth of 6000 (CVs) however had been importing coal with CVs starting from 4500 to 5500.
Consequently, they have been using substandard coal whereas billing clients for the value of higher-quality coal.
A member mentioned, “The value needs to be of off-specification coal, however they have been demanding the speed for 6000 CVs,” suggesting that the value needs to be decreased because of the high quality of coal in use.”
It was famous that they have been granted numerous reductions primarily based on CVs, sulfur, and moisture, however they have been unwilling to increase reductions to energy shoppers.
Pakistan had been going through points with the trade price and opening of Letter of Credit (LCs) for coal import.
In response, the Energy Division official mentioned that just a few Chinese language banks have been able to open LCs in Chinese language Yuan [RMB], and coal-based unbiased energy vegetation (IPPs), and these vegetation may contemplate and will import coal in RMB.
In addition they mentioned: “Endless Pak-Afghan border points are additionally affecting us.”
Since additionally they import coal from Afghanistan, the closure of the border additionally price them. Usually it takes 7 to 10 days to succeed in Pakistani vegetation.
They mentioned that the demand for Australian coal is excessive, and it was provided to some nations like Japan and Vietnam. Since no reductions can be found on Australian coal, whereas freight expenses are excessive as a result of lengthy distances, we don’t go for it.
Representatives of the coal-based IPPs argued that that they had long-term contracts with coal suppliers and due to this fact negotiated costs accordingly.
Nonetheless, they complained to Nepra concerning the utility of differentials in calculating FCAs (Gas Value Changes) with out revising the mechanism.
Given the specialised nature of the facility sector, notably coal, they burdened the significance of dealing with it with experience and care.
A number of vital facets have been reviewed, together with the justification for coal procurement via tendering and the rationale for procuring 10% to 20% of coal from the spot market. Technical concerns have been additionally examined, such because the introduction of latest indices primarily based on the nation of origin and calorific worth, marine freight calculations primarily based on time constitution charges, and bunker gasoline charges.
Nepra recommended growing the share of importing coal from the spot market from 10% to 20%. It additionally advocated that coal needs to be imported via a bidding course of to get a aggressive value of coal from the native and worldwide markets.
Nonetheless, China Energy Hub Era Firm (CPHGC), which developed a 1.32GW coal-fired thermal energy plant in Hub, Balochistan beneath the China-Pakistan Financial Hall (CPEC), rejected the suggestion to extend the share to 20%.
A CPHGC consultant said that beneath the Energy Buy Settlement (PPA), they have been obligated to take as much as 10 p.c from the spot market and couldn’t exceed this restrict.
Concerning the API four differential, they raised considerations about sudden deductions with out prior discover, affecting 44 ships. They questioned how they may change the contract via a Nepra notification.
The API four value evaluation is the benchmark value reference for six,000 kcal/kg coal exported from South Africa’s Richards Bay Coal Terminal and is utilized in bodily and over-the-counter contracts.
In addition they sought the Nepra’s permission to pay in Pakistani rupees, because the trade price problem has price them over $eight million in loss.
They mentioned that the spot market can not fulfill the necessity for coal. Concerning the tendering technique of coal import, they mentioned that that they had long-term contracts with suppliers and due to this fact, there have been loads of points.
Initially printed in The Information