Coal is the easiest source of foreign exchange for a stressed economy under Taliban governance, but all doesn’t seem to go well. The prices have gone through the roof and Pakistan is buying the coal in rupees, not US dollars.

Afghanistan’s significant coal deposits will provide revenue to the country’s Taliban-led government that is finding it hard to tap money. Coal exports have become a key source of revenue for the militant group over the past year.

Increased coal exports fetched about US$40 in million in customs duties for the Taliban government in the first half of 2022.

Most of the black fuel is being transported by road to feed thermal power plants in neighbouring Pakistan which is presently facing an energy crisis. Pakistan imports over 12,000 tonnes of coal daily.

Afghanistan has 80 coal mines, mostly located in central and northern Afghanistan. Of these 17 are operational.

But there are problems in the war-torn country as local warlords have laid siege to some coalmines. Exports are also facing problems because the government has hiked prices after the war between Russia and Ukraine and the ban on coal exports by the world’s top coal exporter, Indonesia.

A huge drop in foreign trade following international sanctions and the near evaporation of foreign aid has left the Taliban with few resources to run the government.

The Taliban has had to rely on tax collection, much of which is being forced and is not transparent. Selling coal is the best source for big money.

Taxes on coal have been hiked to 30 per cent and the price too has been increased steeply from US$ 90 in June to US4 200 in July and further to US$ 300 earlier this week.

Not in Dollars

But not everything is going to plan. Pakistan has negotiated a payment for the coal imports from Afghanistan in Pakistani Rupees because of Pakistan’s own foreign exchange crisis. This has raised the heckles among a section of the Taliban since they want foreign exchange in US dollars.

Chinese energy companies based in Pakistan are now reluctant to buy Afghan coal since its price is far too higher than what they had envisaged at the time of planning their imports.

The payments in Pakistani Rupees instead of US dollars is also reinforcing the image of Pakistan’s puppet regime among Afghans.

But significant amounts of coal are still being smuggled to Pakistan right under the nose of Taliban commanders and these exports are not contributing to the government’s coffers.

This has also led to Taliban infighting over the sway a senior Taliban commander has held in the coal mines of the northern province of Sar-e Pul.