Independent Power Producers Under Scrutiny for Coal Procurement Practices

Independent power producers (IPPs) utilizing imported coal have come under fire for imposing unwarranted costs on electricity consumers due to inefficient procurement methods. These costs are being passed on to users through monthly fuel price adjustments (FPAs).

Concerns have been raised by consumer groups at public hearings, and now the power division and the National Electric Power Regulatory Authority (Nepra) have recognized the financial repercussions of these procurement inefficiencies. The issue gained traction following a recent coal bidding process for the 660MW Jamshoro Power Plant, which revealed a significant discount of $7.12 per tonne, in stark contrast to the meager discounts of 20 to 50 cents per tonne offered in IPP contracts.

In an official statement, the power division highlighted that reforms could potentially save the national exchequer up to Rs380 million annually. Nepra had already flagged issues with the Port Qasim Electric Power Company's (PQEPC) procurement practices, noting that their evaluation methods lacked justification and did not attract competitive bids.

Moreover, Nepra criticized PQEPC for its limited tender outreach, which only targeted Chinese suppliers. The authority urged the company to re-bid for a long-term coal supply agreement within three months of its March 2026 FPAs decision. Despite this directive, PQEPC recently secured around 1.2 million tonnes of coal, again at a discount significantly lower than that achieved by the state-owned counterpart.

Source: www.dawn.com