Money Matters

Afghan coal

Money Matters
By Engr. Hussain Ahmad Siddiqui
Mon, 08, 22

It is ironical that Pakistan, having one of the largest coal reserves in the world—of the size of over 185 billion tons—will import coal from Afghanistan, which ranks 62nd globally. Though Afghanistan has potentially significant coal resources, its proven coal reserves are only 73 million tons.

Afghan coal

It is ironical that Pakistan, having one of the largest coal reserves in the world—of the size of over 185 billion tons—will import coal from Afghanistan, which ranks 62nd globally. Though Afghanistan has potentially significant coal resources, its proven coal reserves are only 73 million tons.

Recently, Pakistan and Afghanistan have concluded an agreement in Kabul to facilitate bilateral trade, in particular for import of coal from Afghanistan for use in coal-based power plants operating in Pakistan. According to the agreement, coal imports will start at two custom stations in Kharlachi (Kurram District) and Ghulam Khan border crossing in North Waziristan in Khyber Pakhtunkhwa. Earlier, the two governments had authorized trade of all rupee-dominated goods via land routes through trucks.

Currently, Pakistan imports around 20 million tons of coal annually from different sources, primarily for use in power plants. The government has recently decided to partially divert its existing source of South Africa for imported thermal coal required for power generation to Afghanistan in the wake of recent surge in international coal prices. Seemingly, the decision to import thermal coal from Afghanistan has been made by the government in haste and without looking at viability of the proposal, at least not in detail.

Import of thermal coal from Afghanistan poses numerous issues, problems and risks. These are related to security, reliability, sustainability, logistics, and, most importantly, suitability of Afghan coal for power generation that remain questionable. According to the information available, Afghan coal is being used only for conventional applications in industry as metallurgical coal, and has not been used for generating electricity, except maybe on an experimental basis.

Currently, there is no coal-based power plant in Afghanistan, though it is planned to utilize coal for power generation, in future, to meet country’s growing demand for electricity. Interestingly, the country at present imports bulk electricity from its neighboring countries Uzbekistan, Tajikistan and Turkmenistan. Afghanistan has potentially significant coal resources, to the size ranging from 100 million tons to 440 million tons, but its proven coal reserves are only 73 million tons.

There has been no further exploration, investigation, evaluation, and assessment of Afghan coal reserves since 2008 for various factors, primarily of rough terrain, poor infrastructure and lack of geological expertise. Pakistan intends to import initially 3,000 tons of thermal coal per day, which will subsequently increase to 20,000 tons daily in the second phase, and possibly more in later years. At present Afghanistan extracts less than two million tons coal annually or around 5,500 tons of coal per day, of varied quality and type, which remains static for many years.

Given these conditions, it may not be viable for Afghanistan to supply coal according to the requirements of Pakistani power plants even on a short-term basis. Afghan coal is said to be used initially in two existing power plants being operated on imported coal, namely Sahiwal Coal Power (Sahiwal) and China Power Hub Generation Co (Hub), both of 1,320-MW installed capacity each. Total requirement of coal by these power plants is estimated to be 40,000 tons of coal per day depending on coal quality and characteristics.

The coal reserves are located in various areas of Afghanistan, and vary from anthracite to lignite, but never tested or analyzed for use in power generation. Physical properties and chemical composition of coal are of great importance to ascertain its suitability for use in power generation. Lignite (brown coal) has low heating value (BTU), and contains high amount of water, up to 70% by weight, resulting in large heat loss due to moisture. Bituminous coal has high heating value, while subbituminous coal is less efficient source of heat. Both are suitable for use in power generation. Utilization of coal from different areas of Afghanistan however may not be feasible for power generation due to different characteristics and properties of coal extracted from various locations.

Coal needs to be analyzed with regard to its heating value, quality, characteristics, properties, and contents of its volatile matters, fixed carbon, nitrogen, sulphur, ash and other elements, to determine its suitability and cost effectiveness for power generation. Coal-based power plants are custom-designed, and technology selected depends on coal analysis and characteristics. This means, these power plants will need modifications in their plant configuration to use Afghan coal as fuel.

One hopes that a technical study has been carried out on the subject, covering impact on electricity generation cost. Obviously, environmental issues of burning coal are also to be considered. It is expected of course that the Pakistan authorities would have done their homework regarding suitability of Afghan coal for power generation but there is no information available, and the type or quality of coal being imported from Afghanistan has not been declared by Pakistan side.

Afghanistan has not exported coal to any country in the past, except small deliveries to Pakistan for use in cement industry, and thus has no experience of coal handling in bulk. Logistics for bulk transportation of coal via road and railway networks requires strong rather special infrastructure, in Afghanistan as well as in Pakistan, to handle such cargo of coal, besides the security and safety issues. Therefore, cost calculations have also to be made, besides the parameters described above, taking into account costs of transport, storage, handling, and risks involved.

Coal, especially newly-mined coal, emits methane, an inflammable gas when mixed with air and liable to gas explosion in certain conditions. Coal having high moisture and high sulphur will be liable to create chemical action and not suitable for long-distance movement. Transportation and storage of coal also presents adverse environmental effects. Reportedly, the air in Kharlachi is already full of coal dust since small dispatches of coal started arriving for consumption by cement industry. Thermal coal from Afghanistan will be transported further by rail to the identified locations for which coal transportation stations are being established by Pakistan side.

The government has decided to divert its current source of imported coal to Afghanistan in the wake of recent surge in international coal prices. Pakistan will import coal at $200 per ton compared to current international rate of $376 per ton, presumably of equivalent quality and characteristics, against rupees, thus substantially saving in price, and foreign exchange too. The fact however is that current international coal prices are unprecedented high and are already projected to decline in 2023.


The writer is retired Chairman of the State Engineering Corporation