July 16, 2022
ISLAMABAD — Afghanistan’s cash-strapped Taliban government has tripled prices for coal in less than a month to raise revenue from its mining sector amid a lack of direct foreign funding and booming coal exports to neighboring Pakistan.
The spokesman for the Ministry of Mines and Petroleum in Kabul, Esmatullah Burhan, on Saturday told VOA that each ton of coal is priced at $280.
On June 28, the Taliban-led Finance Ministry raised coal prices to $200 per ton from $90 per ton. Customs duties also were raised by 10 percent, totaling 30% on each ton, although Afghan coal is still comparatively cheap — about 40% of the international market value.
Burhan said Afghanistan is exporting about 10,000 tons of coal a day to Pakistan. He asserted that the government is selling coal to private Afghan traders in local currency (known as Afghani) and they are then exporting it, primarily to the neighboring country.
He told VOA that out of Afghanistan’s 80 coal mines, 17 are currently in use.
The repeated Afghan coal price hikes came just after Pakistani Prime Minister Shehbaz Sharif announced plans last month to increase coal imports from Afghanistan using local currency, as opposed to dollars, to save foreign reserves.
Officials in Kabul insist that coal prices have been revised after studying regional markets and rising global prices in the wake of the war in Ukraine to ensure Afghan traders could receive as much revenue as possible and prevent Pakistani importers from switching to other options.
Sharif told a recent cabinet meeting that importing Afghan coal could help Islamabad save more than $2.2 billion annually. His decision comes against a backdrop of rising coal prices on the international market in the wake of Russia’s invasion of Ukraine.
Pakistan, which reportedly imported 70% of its thermal coal from South Africa to run its cement, steel and Chinese-built power plants, is facing an energy crisis. South African coal prices have increased in recent weeks because of higher demand from Europe.
The shortages have forced coal-based facilities in Pakistan to either operate at significantly reduced capacities or to shut down plants temporarily.
Customs duties from coal exported to Pakistan are a key source of revenue for the Taliban. The Islamist group reclaimed control of Afghanistan nearly a year ago, but sanctions on the Afghan banking sector and the suspension of foreign financial aid have severely hampered the war-torn country’s economy.
No country has formally recognized the Taliban government, citing concerns over human rights of Afghans, particularly restrictions placed on women’s rights to work and education.
Islamabad already has eased the visa regime for Afghan nationals and removed duties on all imports from Afghanistan to help facilitate bilateral trade.
Additionally, Taliban authorities, in collaboration with Pakistani counterparts, are said to be working to smooth the transportation of coal exports at border crossings between the two countries.
Hundreds of trucks carrying coal pass daily through three dedicated border crossings, and both sides are planning to add more space for additional trucks and open customs facilities for longer durations per day, instead of 12 hours currently.
A high-level Pakistani delegation, led by top commerce ministry officials, will travel to Afghanistan Sunday to further the discussions. Pakistani officials said Islamabad would discuss the pricing issue, as well as propose to keep border terminals open 24 hours for coal imports and infrastructure-related improvements on the Afghan side.