Ahmed Khan Malik 

The non-clearance of dues of Sindh Engro Coal Mining Company (SECMC) by the Independent Power Producers (IPPs) will cost the economy dearly as the halting of mine operations will result in the import of coal worth $50 million each month. It's important to note here that SECMC currently supplies 7.6 million tonnes per annum (MTPA) of indigenous Thar coal to three coal power plants (IPPs) to produce cost-effective energy as validated by the Merit Order List of the National Transmission and Dispatch Company (NTDC). The delay in clearing the outstanding balance of Rs55 billion by the power plants to SECMC has cast a shadow over the company's mine operations, causing severe cash flow issues.

On the other hand, IPPs are awaiting clearance of their outstanding dues by the Central Power Purchasing Agency (CPPA), which seriously limits their ability to pay off entities like SECMC in the energy value chain. According to a letter the company has written to the Sindh energy department, the delayed payments have significantly impacted SECMC's ability to honor payments to Operations and Maintenance (O&M) contractors and procure essential fuel, spares, and equipment for sustainable mine operations. This situation poses a substantial risk to national energy security. Should SECMC operations halt, the government will need to import coal worth $50 million per month for the power sector, explained the letter.

Furthermore, this delay has impeded SECMC's plans for expansion from the current 7.6MTPA to 11.2MTPA for coal production. The expansion will enable SECMC to supply coal to Lucky Electric Power Company Limited (LEPCL), which is currently importing coal worth $20 million. Therefore, the letter added, CPPA should find a way to pay off the outstanding balance in one tranche to the respective power plants, so that they can make timely monthly disbursement to SECMC. Meanwhile, Osama Siddiqui, a microeconomic analyst, stressed the need for Pakistan to use local resources for power generation in view of the costly imported fuels amid the economic crisis. "Any hindrance to smooth operations of IPPs would hurt the national goal of achieving energy security," he warned.

Credit: INP-WealthPk