Pakistan’s plan to import cheaper coal backfires, as Afghanistan prices rise

The Taliban attempted to raise the coal price in Afghanistan after Pakistan’s prime Minister announced that he would be importing coal from Afghanistan with local currency. This was to preserve foreign reserves.

Coal prices in Afghanistan were raised from $90 per tonne to $200 per tonne last week as the Taliban seeks to generate revenue from its mining sector amid a lack of direct foreign funding.

The Taliban made the announcement just hours after Shehbaz Sharif, Pakistan’s Prime Minister approved imports from Afghanistan of coal using rupees instead of dollars in order to preserve foreign reserves.

Sharif took the decision in light of the rising prices for coal on the international market. According to him, Pakistan could save over $2.2 billion each year by importing coal from Afghanistan.

” This will generate electricity cheaply and also save precious foreign currency,” he stated, according to his bureau.

In response, the Taliban raised Afghanistan’s customs duties from 20 percent to 30 percent, a move that Finance Ministry spokesman Ahmad Wali Haqmal described as a “coincidence” with Pakistan’s decision.

“[ The timing was accidental. Haqmal stated that any country could not suddenly raise the price, without taking it into consideration.

Haqmal stated that the Taliban’s technical team had spent several weeks researching regional markets and the national situation before they decided on the price.

The coal price was set with the intent of maximising profits for Afghan traders and preventing Pakistani trader from seeking other options, he said.

Pakistan was forced to reconsider its plans to buy fuel from Afghanistan after the rise in prices for coal. It stated that they will not proceed unless there is a deal in place to guarantee fuel costs, The News quoted top officials.

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” The prices for Afghan coal rose more than twice in the past few days. The unnamed official stated that Islamabad would have to investigate all options before it moves forward.

Pakistan imports mainly coal from South Africa, but prices for South African coal have increased in recent weeks because of higher European demand.

Afghanistan exported 12,000 to 14,000 tonnes of coal per day, the majority of which went to Pakistan.

Customs duties on coal exports to Pakistan provide a major source of income for Afghanistan’s cash-strapped. Its economy has been severely affected by sanctions on its banking sector, and cuts in development assistance since August when the Taliban took power.

Reuters also contributed to this article.


Aldgra Frederickly is a freelance journalist based in Malaysia. He covers Asia Pacific news for The Epoch Times.

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