The China Power Hub Generation Company (Pvt.) Ltd. (CPHGC) has revealed that the State Bank of Pakistan (SBP) has stopped various payments relating to its coal trade, the media reported.
According to the details, CEO of CPHGC Ren Lihui told the media that on the directions of the Pakistani government, the company signed an agreement to purchase coal from Afghanistan as it will save Pakistan $2 billion and the coal will be priced in rupees rather than dollars.
However, the supplier is unable to provide the reasonable quantity required to operate the plant without interruptions due to various reasons. Important to note that a Pakistani delegation is currently in Afghanistan to discuss bilateral trade and coal imports. Interestingly, two days ahead of the delegation’s visit, the Taliban government raised coal prices.
Read more: Streamlining coal import and transit trade: Pakistani delegation visits Kabul
Alarm bells for CPHGC
CEO CPHGC said that the coal stock available at the plant site has reduced to 41,000 tons which is equal to four days of stocks at full base load. As a result, CPHGC also suggested purchasing coal from South Africa and Indonesia.
CPHGC further highlighted the fact that due to the non-availability of foreign exchange in the country, the State Bank of Pakistan recently stopped various payments relating to its coal trade which has resulted in default in payments to its suppliers.
Read more: After cheap oil, India to import 157,000 tonnes of coal from Russia
On July 15, the foreign currency reserves held by the SBP were recorded at $9,328.6 million, down $389 million compared with $9,717.5 on July 7, data released by SBP showed.
Foreign exchange reserves held by the State Bank of Pakistan (SBP) declined by $389 million, clocking in at $9.33 billion during the week ended July 15, 2022, a fall attributed "mainly to external debt repayments".https://t.co/fZ37hWvDhq#SBP #foreignexchangereserves #debt pic.twitter.com/puvc2h9drc
— Business Recorder (@brecordernews) July 21, 2022
Due to the coal shortage, CPHGC is alarmed that the company will shut down. Pertinent to mention that under the CPEC framework, CPHGC is supplying uninterrupted electricity to more than 4 million Pakistan households.
As a result of the dire situation, CPHGC has urged Power Secretary to intervene and allow the company to purchase coal from South Africa to avoid shutting down of plant, release funds from the company’s overdue receivables, and make availability of foreign exchange to discharge obligation towards contractors & suppliers.
“If the government of Pakistan fails to fulfill its responsibilities or does not respond in timely manner, any loss, damages or LDs should be borne by the government of Pakistan,” said Ren Lihui.