That shouldn’t be a question as it is clear from the projects under CPEC that coal imports are set to increase from their current level. Right now, Pakistan is importing around five million tons of coal annually, majority of which is being consumed by the cement sector only.

This surge in coal imports will come at a time when international coal prices are relatively higher. And this inflow of imported coal could be significant as not only there will be rising demand from projects under CPEC, the demand for coal from cement sector is also expected to multiply as the sector moves forward with its expansion plans; confident demand forecasts have propelled the industry to expand capacity with several expansions due to come online as soon as the end of 2016.

The increase in coal price also did not stop the cement manufacturers to go easy on their expansion plans due to recent retraction in prices, the hope that the government will reduce import duty on coal, as well as the optimism for spur in activity under CPEC.

Also, the increase in coal imports is warranted as not all power plants are at the mine mouth; those further up north could use imported coal. Earlier this year, the government placed a ban on imported fuel based power plants in the wake of an expected power surplus by 2018, which would have resulted in restricted coal consumption as plants based on coal imports had no option but to let go of their plans.

However, some recent developments in the sector dispel constricted demand anticipations; not only has NEPRA admitted the application of Nishat Energy Limited (NEL) for the grant of generation license for its 660MW imported coal based power plant (which the company abandoned earlier in June 2016), but it has also allowed Hub Power Company to set up its two power plants of 1,320MW (660MW each) on imported coal. As in the case of plants on local coal, it is also thought that these plants could resort to imported coal if the local supply falls or unavailable at any given point.

Estimates from industry sources suggest that with high demand from power sector as well as the cement sector, the coal imports could increase by three times in the next 4-5 years from their existing levels.

And these estimates might not be exaggerated as the coal prices have fallen to $83.5 per ton after reaching a five-year high, and could drop further.