PD identifies coal discount gaps causing Rs380mn annual losses to Pakistan
In a major step to reduce electricity costs for consumers, the Power Division has identified significant inefficiencies in power plants’ procurement of imported coal and issued policy guidelines for corrective action that could save the national exchequer up to Rs380 million annually. The revelation came across during a series of high-level meetings chaired by Federal Minister for Power Sardar…
The Power Division (PD) has identified inefficiencies in the procurement of imported coal for Pakistan's coal-fired power plants, which are causing annual losses of up to Rs380 million to the national exchequer. The PD, during high-level meetings chaired by Federal Minister for Power Sardar Awais Ahmed Khan Leghari, reviewed actual data, contractual arrangements, and market practices, revealing significant discrepancies in the discounts received by different power plants from the same suppliers.
These discrepancies ranged from $0.25 to $7.12 per metric ton, despite all plants using the same international pricing benchmark. The PD attributed the disparity to varying discounts negotiated with suppliers, some of which were lower than those offered to other plants. The PD has issued policy guidelines to the National Electric Power Regulatory Authority to enforce transparency, consistency, and competition in coal procurement.
A key reform involves requiring power plants to purchase coal from their contracted suppliers offering the highest discount against the applicable international benchmark, aiming to save approximately Rs380 million annually.
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