Pakistan to import coal from Afghanistan amid increasing global prices

Pakistan on Wednesday said it was set to buy coal from Afghanistan, as cash-strapped Islamabad struggled to meet demand amid a worsening energy crisis.

The deal would represent the first major trade deal for the Taliban since its takeover in Afghanistan in 2021.

In a statement, Pakistani Prime Minister Shehbaz Sharif approved the import of coal from Afghanistan instead of South Africa to cut cost and control a ballooning import bill.

"The government will facilitate private power producers to import coal as per their agreements with the sellers. Import is likely to start in the next two to three weeks," Power Minister Khurram Dastgir told dpa.

Rising energy prices in the global market on top of International Monetary Fund requirements that electricity tariffs be boosted a precondition for a six-billion dollars loan has pushed Sharif's government into a tight spot.

It was estimated that importing fuel for two power plants from Afghanistan would save more than two billion dollars annually, Rabbiya Khalid, a Power Ministry spokesperson told dpa.

Khaqan Najeeb, a former adviser to Finance Ministry said Pakistan could get coal from Afghanistan and make payments in its own currency. However, it was yet to be seen how much coal Afghanistan can supply.

The decision came as Pakistan faced a shortfall of around 6,000 megawatts of electricity a day, resulting in hours long power outages during extremely hot weather conditions.

The situation was predicted to get worse, as the country failed to procure gas at affordable rates for July.

Pakistan's existing energy mix was highly dependent on fossil fuels. Thermal energy made up 59 per cent of electricity generated which included the 12.8 per cent of power derived from coal.

Earlier this month, the government cut the official work week to five days from six, to reduce energy and fuel consumption.

Meanwhile, the government relaxed visa policy and issued six-month multiple entry visas for Afghan transporters, to ease bilateral trade.