Coal procurement: KATI urges Nepra not to grant extension to PQEPCL sans bidding

ISLAMABAD: Korangi Association of Trade and Industry (KATI) has urged the National Electric Power Regulatory Authority (NEPRA) not to grant any further extension to Port Qasim Electric Power Company (PQEPCL) for coal procurement under an interim arrangement without competitive bidding, warning that electricity consumers could be exposed to millions of dollars in avoidable fuel costs.

In a formal submission to NEPRA Registrar on Wednesday, KATI Secretary General Osman Maftun requested the regulator to complete the company’s pending coal procurement tender within a short, definite timeframe and ensure that only commercially justified and competitive fuel costs are passed on to electricity consumers through the Fuel Charges Adjustment (FCA) mechanism.

KATI, which represents industrial electricity consumers, stated that consumers ultimately bear the fuel costs recovered by power producers through monthly FCA adjustments.

READ ALSO: Coal procurement: NEPRA unlikely to grant another extension to PQEPCL

The association maintained that its submission was based on information available in the public domain, including Fuel Cost Components (FCCs) and press reports, and did not constitute an allegation of wrongdoing against any person or entity. It requested NEPRA to independently verify the concerns raised from documentary evidence available with the Authority.

According to KATI, NEPRA had directed fresh competitive procurement of coal for PQEPCL through its decisions of October 2025, while its order dated June 18, 2026, allowed a further interim period of three months, which expired on September 18, 2026.

The association contended that granting another extension would prolong procurement on potentially less competitive terms and deprive consumers of the benefits of transparent bidding.

KATI claimed that other power plants had reportedly secured discounts of USD7.12 per metric tonne and USD5.66 per metric tonne against the API-4 index, while a discount of USD5.66 per tonne was also reportedly available in PQEPCL’s current tender.

However, coal supplies to PQEPCL were reportedly being priced at a discount of only USD1.08 per tonne, which was reflected in its FCCs.

The association calculated that the difference of USD6.04 per tonne between the USD7.12 discount and the USD1.08 discount, applied to approximately three million tonnes of coal, represented a potential avoidable cost of USD18.12 million.

KATI estimated that the potential cost could be around USD20 million annually, subject to verification by NEPRA.

The association requested the regulator to examine whether the highest applicable discount secured by any power plant for the relevant tenor should be reflected in PQEPCL’s fuel cost adjustments and whether previous FCCs required corresponding adjustments.

It also questioned the reported ordering of approximately three million tonnes of South African coal since July 2025, comprising around 1.5 million tonnes during FY2025-26 and another 1.5 million tonnes since July 2026.

According to KATI, the latter quantity appeared to cover the entire coal requirement for FY2026-27.

The association sought clarification regarding whether these orders had been reported to or approved by NEPRA and whether any procurement commitments had been placed or dated after September 18, 2026, when the interim arrangement reportedly expired.

It further requested the regulator to verify vessel orders, delivered cargoes, stock positions and contractual arrangements with suppliers before approving further FCCs.

KATI also expressed concern over the delay in finalising PQEPCL’s ongoing long-term coal procurement tender, which reportedly remained inconclusive after more than two months.

The association claimed that comparable procurement processes undertaken by other power plants were completed in approximately two weeks.

It urged NEPRA to establish a definite timeline for completion of the tender and disclose bidders, coal origins, quantities, discounts, technical and commercial evaluations, lowest responsive bids and reasons for any delay or rejection.

The submission also raised questions over the tender’s requirement for 50 percent Indonesian coal.

KATI stated that FCCs reflected no Indonesian coal consumption at PQEPCL for five consecutive quarters between January 2024 and March 2025, while historical purchases over the preceding four years reportedly indicated a share of around 20 percent.

The association argued that Indonesian coal was reportedly trading at a premium and that a requirement unsupported by historical consumption or technical considerations could restrict participation of competitive suppliers and undermine price discovery.

It requested NEPRA to independently examine the technical basis for the proposed Indonesian coal requirement by analysing verified consumption, heat-rate and plant-efficiency data and comparing PQEPCL’s specifications with those of other power plants.

KATI further questioned supplier concentration, asking NEPRA to explain what safeguards were in place to ensure genuine competition and competitive pricing where the majority of coal supplies reportedly originated from a single supplier.

The association urged the regulator to ensure that costs arising from non-competitive procurement or discounts that could reasonably have been obtained but were not secured should not be passed on to electricity consumers through the FCA mechanism.

It also requested that PQEPCL provide documentary evidence of contractual arrangements, vessel orders, deliveries and stock positions, with independent verification by NEPRA.

KATI maintained that no further extension of the interim coal procurement arrangement should be granted, arguing that competitive procurement had already been directed in October 2025 and a three-month interim period had subsequently been allowed.

The association observed that electricity consumers were already facing a substantial financial burden due to high electricity prices and that any decision concerning coal procurement should be transparent, reasoned and based solely on consumer interests in accordance with NEPRA’s statutory mandate.

KATI also requested an opportunity to be heard before NEPRA takes any decision on a further extension and sought a copy of the Authority’s decision along with its reasons.

Copyright Business Recorder, 2026