Power Division finds flaws in imported coal procurement, to introduce best-available-discount rule

According to the Power Division, several meetings on coal procurement were held under the chairmanship of Minister for Energy Awais Leghari. The meetings reviewed in detail the actual procurement data, the contracts and the practices followed in the market.

The Power Division said the government was starting reforms in the procurement, import and delivery of imported coal. It has decided to introduce a “best available discount” principle for coal purchases. Under it, coal power plants will not be allowed to buy coal from a global supplier offering a lower discount.

Officials said that, until now, different power plants had obtained different discounts from the same coal supplier. The plants received discounts ranging from 25 cents to $7.12 per tonne on coal purchases. Some backup supply contracts carried even higher discounts than the main supply contracts.

According to the Power Division, some coal power plants did not buy coal from the supplier offering the higher discount, despite having a contract with it. As a result, the extra cost of coal procurement continued to be passed directly on to electricity consumers.

Energy Minister Awais Leghari said the Power Division was identifying flaws in coal procurement through data and market analysis. He said they were being addressed through effective regulatory and policy measures.

He said the savings from the reforms would go directly to electricity consumers. He said the intervention in coal procurement was not meant to interfere in commercial matters, but to make fuel purchases efficient and transparent.

According to Awais Leghari, the cost of fuel for power generation is recovered from electricity consumers. Fuel should therefore be bought efficiently, transparently and at the lowest possible cost. The Power Division aims to end unnecessary expenditure and give real relief to electricity consumers.