According to The News, the cost of producing power in Pakistan is projected to drop by Rs0.5-1.5/kWh as a result of a drop in coal prices globally.
According to estimates, the power sector uses about 9 million tonnes of coal annually compared to a total demand of about 28 million tonnes.
Pakistan relies on coal for 12% to 32% of its electrical production. Given that the cost of producing electricity from coal was higher, it depended on the availability of inexpensive hydropower (third most expensive fuel after furnace oil and LNG).
According to the most recent data from the National Electric Power Regulatory Authority (NEPRA), the cost of producing power from coal in September 2022 was approximately Rs. 18 per kilowatt hour, while the average price of coal was approximately US$310–320 per tonne.
Accordingly, Farhan Mahmood, head of research at Sherman Securities, thought that if coal prices remained at their current level, the cost of producing energy across the board may drop by Rs0.5-Rs1.5/kWh.
He pointed out that the falling price of coal would lower the price of producing power, which would help reduce circular debt.
Recently, coal prices in the international markets fell to their lowest point in eight months, largely as a result of sluggish global demand driven by rising inflation and a slowdown in construction in China, the world’s largest coal consumer. The price of coal and other alternative fuels was also influenced by Europe, which had already secured its energy needs for the next winter through the use of liquefied natural gas (LNG).
The process has been overseen by the Private Power and Infrastructure Board (PPIB). According to preliminary studies, Thar Coal might be used by some imported coal power plants without requiring any modifications to their power plants, according to PPIB. To lessen dependency on imported fuel, it is necessary to promote the greatest use of local coal. The report stated that it is necessary to hurry up the commissioning of the remaining Thar coal-based power projects.
Energy produced from imported coal now costs between Rs4 and Rs4.5 per unit of fuel, while energy produced from indigenous Thar coal still costs between Rs20 and Rs29 per unit.
