Coal power tariff increases on delayed cargo handling at PITB

KARACHI: Coal power tariff is increasing because of the delays in handling of the imports at the country’s premier bulk cargo terminal, according to people familiar with the matter – an allegation that was, however, denied as unfounded.

An industry official said delayed handling of imported coal at Pakistan International Bulk Terminal (PIBTL) is causing an increase in energy power price for coal-based power plants by approximately Re0.40/kilowatt-hour (kWh).

The official said strict berthing time and limited capacity at the dedicated terminal for coal exposed users to vessel demurrage cost.

“The delay in cargo clearance within a limited time and risk of congestion at the port has forced authorities to impose additional charges,” said the official. “As per a conservative estimate, the situation may result in a higher cost to IPPs (independent power producers) of around Re0.08 kWh.”

However, a spokesman of PIBTL said all the handling fee including vessel handling tariff, storage facility charges (ancillary) and the facilities given against these charges are as per international standards and as per the terms of the agreement by the Port Qasim Authority (PQA). Under the implementation agreement, PIBT is well within its rights to charge for additional or ancillary services that include but are not limited to storage, customer service, yard facilities, weight and labour charges.

“The impact of coal handling on cement manufacturers is around 2 percent/ bag, which is not significant,” the spokesman said.

“Three coal-fired power projects handle almost 12 million tons of coal at their own jetty but sometimes they use PIBTL facilities when needed without any issue.” PIBTL, working under the Port Qasim Authority, handles 8.5 million tons of coal a year.

Industry officials said under the implementation agreement, tariff under handling charges of imported coal was fixed at $5.49/ton, including royalty charges of $2.27/ton to PQA. However, additional $0.05 to $1.01/ton are charged on account of ancillary charges. This has increased the overall cost to $6 to $6.6/ton, which results in an adverse impact of higher energy power price tariff by 0.14 per kWh, they said.

Limited lay time for the lifting of huge cargo in a short span of five days, which was earlier 20 days, has further toughened the situation. The reduction of 15 days in lay time has drastically increased the cost in terms of high fuel charges and other handling charges such as trucks moving round the clock, which impacts independent power producers with an additional cost of Rs0.18/kWh and generally per vessel cost to $90,000 for users, they said.

The officials said issues have drastically increased the cost of doing business for IPPs, which will eventually affect the end-user.

“Under the current power crisis, the government needs to provide a business-friendly environment and ease of doing business for the IPPs so they can contribute to eradicate the current energy shortfall,” said the official. “Government needs to strengthen the energy sector by taking effective measures to control the unreasonable increase in port charges.”

Karachi Port Trust and PQA have 5 published free days, by and large all terminals follow the same policy. As for the storage facility provided by the terminal, a concession agreement is signed between the terminal management and PQA for the storage services at the yard in accordance with all ports in the country.

“There are, however, some illegal storage facilities in the area which are creating doubts about PIBTL’s storage facility,” said the official. The Environment Protection Agency is already investigating the matter of the illegal storage facilities.