KARACHI – The Thar Coal Energy Board (TCEB) has approved the Resource Pricing mechanism as the standard coal pricing system in the case of the Thar project in its tenth board meeting held in November last year. However, the board advised the consultant, Ernst and Young, to prepare a long term scenario in which 10-15,000 megawatts of power is generated from Thar Coal instead of merely 12,000 MW so as to develop a sustainable long-term coal project exploiting the economies of scale with pricing based on such large scale mining.
The consultant was tasked by the TCEB to prepare a suitable pricing mechanism based on international best practices. The consultant firm has completed the assigned task and created a mechanism based on three approaches named Resource Pricing, Net Back Pricing and Benchmark Pricing. After detailed discussion with the consultant, the TCEB approved the Resource Pricing mechanism as the standard coal pricing mechanism for Thar Coal. According to the definition of the said mechanism the rationale behind the system entails that resource price is based on the development of a circular economy. Resource price determination from the perspective of circular economy is determined by the value composition of resources. It is pertinent to mention that the lack of resource price mechanism leads to the low prices of natural resources in China, and the unreasonable price parity of recycling resources and makes the resource price system an obstacle for the development of circular economy.
It is essentially used to protect the natural resources from excessive use and to design the pricing in the production process so that the resources are conserved, an economist Saad Khan opined. He added that in the case of Pakistan, one can take the example of water which merely lacking a proper pricing mechanism, is wasted and not consumed rationally.
Due to the lack of such a price mechanism for the determination of the price of water, Pakistan has neglected the establishment of an adequate recycling system. He said it was readily apparent that the enforcement of a proper price mechanism for water will ensure that the consumer would use it carefully and the establishment of recycling practices would also be possible to ensure that the resources are husbanded, he noted.
Thar coal pricing mechanism determined
