Power Division Identifies Flaws in Imported Coal Procurement, Eyes Rs380m Annual Savings
ISLAMABAD: The Power Division has identified flaws in the procurement mechanism for imported coal and issued new corrective guidelines to the National Electric Power Regulatory Authority (NEPRA).
According to the Power Division, the new guidelines are expected to save Rs380 million annually at the pre-procurement stage.
Several meetings on coal procurement were held under the chairmanship of Energy Minister Awais Leghari, during which actual procurement data, contracts and prevailing market practices were reviewed.
The Power Division said the government was initiating reforms in the imported coal procurement sector, including improvements in coal import and transportation. It has also decided to introduce the principle of securing the best available discount when purchasing coal.
Under the new approach, coal power plants will not be allowed to purchase coal from a global supplier offering a lower discount when a better discount is available from the same supplier.
The Power Division noted that different power plants had previously received varying discounts from the same coal supplier, ranging from 25 cents to $7.12 per tonne. In some cases, backup supply agreements offered higher discounts than the main supply contracts.
The division said some coal power plants did not purchase coal from suppliers offering higher discounts despite contractual arrangements, resulting in additional procurement costs that were ultimately passed on to electricity consumers.
Energy Minister Awais Leghari said the Power Division was identifying procurement flaws through data and market analysis and addressing them through effective regulatory and policy measures.
He said the savings generated through the reforms would directly benefit electricity consumers.
Leghari clarified that the objective was not to interfere in commercial transactions, but to ensure that fuel procurement for power generation remained efficient and transparent, as fuel costs were ultimately recovered from electricity consumers.
He said the government’s goal was to eliminate unnecessary costs and provide genuine relief to electricity consumers.
