Coal procurement: NEPRA unlikely to grant another extension to PQEPCL
ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) is unlikely to grant another extension to Port Qasim Electric Power Company Limited (PQEPCL) for coal procurement under an interim arrangement, despite the company’s reported efforts to persuade the regulator’s officials, sources said.
The development comes amid concerns over the alleged lack of transparency in coal procurement by the 1,320-megawatt Port Qasim coal-fired power plant, with the Prime Minister’s Office (PMO) reportedly ordering an inquiry into the matter. The Power Division is also said to be concerned that procurement on commercially unfavourable terms could add to the financial burden ultimately borne by electricity consumers.
National Accountability Bureau (NAB) is also active on power sector matters and has established a special directorate on this sector.
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According to sources, representatives of PQEPC recently met NEPRA officials to seek a further two-month extension of the interim arrangement. The request has reportedly been submitted to the regulator in writing, but there is no clear indication that the Authority will approve it.
The controversy centres on the ongoing coal procurement process and the availability of bids offering a discount of US$2.10 per metric tonne for South African-origin coal. According to the information available, the discount has been described as the highest obtained by PQEPC in its procurement history.
The case for proceeding with competitive bidding is being advanced on the grounds that accepting eligible and responsive bids offering the stated discount could help protect consumers’ interests and improve transparency in fuel procurement.
However, PQEPC is alleged to be seeking to continue purchasing coal from its existing supplier or suppliers at a comparatively lower discount while delaying, withholding or cancelling the ongoing bidding process, despite the availability of the South African coal offer.
An insider said NEPRA could direct the company to proceed through open bidding and consider eligible offers in accordance with the applicable bidding terms and conditions, rather than favouring arrangements that provide a lower discount.
The regulator’s position will be significant because coal procurement costs form part of the fuel-related expenses associated with power generation and can ultimately affect electricity tariffs through the applicable adjustment mechanism.
The issue is also expected to be raised during NEPRA’s public hearing on the Fuel Charges Adjustment (FCA) for September 2026, scheduled for Thursday, according to sources.
The Federal Board of Revenue (FBR) has also reportedly entered the matter in light of court orders, adding another dimension to the scrutiny surrounding the procurement process.
The coal supply terms cited in the procurement documents require the bidder to sell and deliver coal according to the agreed delivery schedule. The purchaser is required to notify the bidder in writing of the aggregate quantity required no later than 45 days before the expected discharge of the shipment.
The pricing mechanism varies according to the coal’s country of origin. For South African coal, settlement is linked to the monthly average of the FOB Richards Bay index, expressed in US dollars per metric tonne on a 6,000 kcal/kg net-as-received basis and published by Argus/McCloskey as the API4 Index for the month in which the relevant bill of lading is dated.
For Indonesian-origin coal, the settlement price is linked to the monthly average FOB Indonesia Coal Index on a 4,600 kcal/kg net-as-received basis, published by Argus/Coalindo as the ICI3 Index for the month corresponding to the bill of lading date.
The competing procurement positions therefore raise questions about the commercial terms available to PQEPC, the treatment of bids submitted under the ongoing process and the basis for any decision to continue with existing suppliers rather than proceed with competitive offers.
The 1,320MW power plant is located at Port Qasim, Karachi, with coal delivered to its dedicated unloading jetty.
The procurement decision is consequently important not only for the company’s fuel supply arrangements but also for ensuring that the process follows the applicable bidding conditions and protects electricity consumers against avoidable costs.
NEPRA’s decision on the requested extension, together with the outcome of the reported inquiry and any proceedings arising from the FBR’s involvement, could determine the future course of the coal procurement process.
The allegations concerning procurement practices and the preference for existing suppliers have not been independently established in the information provided. PQEPC’s response and NEPRA’s formal position would be required to establish the company’s justification for seeking the extension and its approach to the competing bids.
Copyright Business Recorder, 2026