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Afghanistan lifts coal prices as exports to Pakistan boom

July 7, 2022: Afghanistan's Taliban administration has more than doubled prices for coal, the finance ministry said on Wednesday, as the group seeks to raise revenue from coal exports and shrink its budget deficit after being cut off from international aid.

Customs duties from coal exported to Pakistan are a key source of revenue for cash-strapped Afghanistan. Sanctions on the banking sector and a cut in development aid since the Taliban took control last August have severely hampered its economy.

The Taliban administration last week lifted prices for coal to $200 per tonne from $90 per tonne, according to finance ministry spokesman Ahmad Wali Haqmal. Around 12,000 to 14,000 tonnes are exported, mostly to Pakistan, each day.

Afghanistan's Taliban authorities have said they want to move the country away from dependence on foreign aid.

With customs duties increased to 30% from 20% in May, Afghan authorities will receive $60 per tonne, which Haqmal said was expected to make a significant dent in the country's forecast 44 billion Afghani ($502.11 million) budget deficit this year.

The price hike came just after Pakistani Prime Minister Shehbaz Sharif announced plans last week to import coal from Afghanistan using local currency to save foreign reserves.

“(The timing) was coincidence. Any country would be irresponsible to suddenly lift the price without giving it consideration and study,” Haqmal said.

A Pakistani source said they had received indications weeks ago that the price was being reconsidered.

Pakistan mainly imported coal from South Africa. South African coal prices have been rising in recent weeks due to higher demand from Europe.

Haqmal declined to comment on the decision but had previously said that transactions were between private traders and all customs duties would be collected in Afghanis.

Haqmal added that a team of technical staff had spent weeks studying regional markets, the domestic situation and rising global coal prices in the wake of the war in Ukraine, and settled on the price.

It was calculated with the goal of ensuring Afghan traders could receive as much revenue as possible, while not sparking Pakistani traders to switch to other options, he said.

Authorities were also trying to smooth things over at border crossings – where hundreds of trucks pass each day – so that customs facilities would open 16 hours per day instead of around 12 currently, and to create space for more trucks.

Reuters

Posted on: 2022-07-07T14:35:51+05:00

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