Independent power producers (IPPs) running on imported coal have been found placing an additional burden on electricity consumers through opaque and inefficient coal procurement practices, with the added cost ultimately passed on through monthly fuel price adjustments (FPAs).
While consumer groups have raised concerns over these practices at various forums, including public hearings, the Power Division and the National Electric Power Regulatory Authority (NEPRA) have now separately flagged inefficiencies in coal procurement and their financial impact on consumers.
The issue gained fresh attention after a recent competitive bidding process for coal supply to the 660MW state-owned Jamshoro Power Plant secured a discount of $7.12 per tonne from a Karachi-based supplier, compared to discounts of just 20 to 50 cents per tonne in certain IPP contracts. “The power division has identified significant inefficiencies in the procurement of imported coal by power plants,” an official statement said Tuesday, adding that fresh policy guidelines had been issued for corrective action that could save the national exchequer up to Rs380 million annually.
NEPRA’s Earlier Concerns
In a recent order, NEPRA had already raised concerns over coal procurement by Port Qasim Electric Power Company (PQEPC) under a six-year contract involving discounts of just $0.20 to $0.50 per tonne, based on estimated coal prices. “This type of evaluation has never been observed in any bidding by any other power plant, including PQEPC, and does not seem justified, as it is based on estimated coal prices, which may change in future,” NEPRA said in its judgment.
The regulator also noted that the Port Qasim plant had published its tender notice only in China, rather than reaching a broader pool of potential bidders. “Had discounts been incorporated into the bid evaluation as a major criterion, it may have yielded more competitive and higher discounts from prospective bidders,” NEPRA said. The regulator further observed that the plant had failed to disclose it had already executed a long-term coal supply agreement when the matter was raised with the regulator on two separate occasions, prompting proceedings over alleged misstatement and non-disclosure of information.
NEPRA subsequently directed Port Qasim to conduct fresh bidding for a long-term coal supply agreement within three months of its March 2026 FPA decision. Officials said that following the March 25 order, however, the company procured about 1.2 million tonnes of coal, nearly a full year’s supply, just before the new tender was to take place. That contract again involved a discount of roughly $0.50 per tonne, far below the $7.12 discount secured by the public-sector Jamshoro plant. Officials estimated the difference alone amounts to around $8 million, and said the financial impact could grow substantially if similar procurement practices are found across other IPPs.
Officials Point to Broader Pattern
The Power Division said the procurement inefficiencies were identified during a series of meetings chaired by the power minister, where officials reviewed actual data, contractual arrangements, and prevailing market practices. “Pakistan has a significant fleet of coal-fired power plants with a combined capacity of approximately 5,280 megawatts that rely wholly or partly on imported coal. These include three major 1,320MW plants at Port Qasim, Hub Power and Sahiwal, as well as the Lucky and Jamshoro plants which also have the capability to use imported coal,” the division said.
It added that coal import prices for IPPs are typically linked to internationally recognised benchmarks such as the API-4 index, though the final price paid by any given plant ultimately depends on the discount it negotiates with its supplier.
