After rising sharply over the last two months, Pakistan’s thermal coal imports fell 33% month-on-month (m-o-m) to 802,830 t in September, CoalMint’s vessel data reveals.
This came as the country’s power utilities switched back to using more of domestic coal sourced from the Thar region for blending amid depreciating Pakistani currency that has made imported coal expensive. The Pakistani Rupee (PKR) has depreciated by 30% against US Dollar since the start of the year 2022.
Coal usage so far had been limited in the country as the power generating companies were designed for using imported coal. However, elevated global prices compelled utilities to switch back to indigenous coal as power generation on Thar coal renders as one of the cheapest forms in the country.
Power production on Thar coal costs PKR 4.39/kWh(kilowatts per hour) at present, which includes fuel (coal) costs at PKR 3.74 per unit, according to the National Transmission and Dispatch Company (NTDC). The imported coal usage cost stands at around Rs.11.05 per kWh.
Power plants using Thar coal
As per a recent report, Pakistan is currently generating 5,280MW electricity from coal, with Thar coal contributing 1,320MW and imported coal 3,960MW to the overall power generation.
Last month, the government successfully launched a third power plant with a capacity of 330 megawatts that would run on Thar coal. Accordingly, the total installed power production capacity (using Thar coal) increased to 990 megawatts in three-years to date.
Demand from cement sector picking up
Rising construction activity post the monsoon season is expected to increase Pakistan’s cement sales by 22-26% m-o-m to 4.2 mnt, with local dispatches seen jumping 20-24% m-o-m in September.
However, on a y-o-y basis, a slowdown in overall economic activity, higher construction costs, and intense rainfall and floods has weighed on the cement sales last month.
Pakistan’s cement sector was heard sourcing coal from neighbouring Afghanistan since last few months however, elevated prices of Afghan coal capped any major rise in imports from the country.
Interestingly, the country’s imports only from Mozambique recorded a rise in September which is also used in the cement sector.
Outlook
Amid expectation of higher global coal prices in winter amid rising restocking activity, Pakistan’s coal consumers are likely to source fuel from the Thar region or even neighbouring Afghanistan, keeping its imports rangebound. Power production on Thar coal is estimated to increase to 2,600MW by the end of next year (December 2023), as other mine-mouth power projects in the pipeline come online.
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