Imported Coal IPPs Face Scrutiny Over Costly Procurement Practices

Independent power producers (IPPs) using imported coal have come under scrutiny after regulators and the Power Division identified procurement practices that may be increasing electricity costs for consumers through monthly fuel price adjustments.

 

The issue gained attention after competitive bidding for the 660MW Jamshoro Power Plant secured a coal supplier discount of $7.12 per tonne, significantly higher than discounts of just $0.20 to $0.50 per tonne seen in some IPP contracts.

 

The Power Division said procurement inefficiencies could be costing consumers and the national exchequer, with new policy measures expected to generate savings of up to Rs380 million annually.

 

Nepra has also raised concerns over coal procurement by Port Qasim Electric Power Company (PQEPC), including the use of estimated coal prices to evaluate bids and limited advertising of tenders. The regulator said broader competition could potentially have resulted in better discounts.

 

Following a March 2026 order requiring fresh bidding, officials said PQEPC procured around 1.2 million tonnes of coal before issuing a new tender, securing a discount of only about $0.50 per tonne compared with Jamshoro’s $7.12 discount.

 

Officials estimate that the difference in discounts on the procurement could amount to around $8 million, with the potential impact considerably larger if similar practices exist across other IPPs.

 

Pakistan has around 5,280MW of coal-fired generation capacity that relies fully or partly on imported coal. Since coal prices are linked to international benchmarks such as the API-4 index, the discount negotiated with suppliers can have a direct impact on the final fuel cost and, ultimately, consumer electricity bills.

 

The Power Division is now reviewing procurement practices and contractual arrangements across the sector to improve competition, transparency and efficiency in imported-coal purchases.