Power Division Flags Coal Procurement Gaps To Unlock Rs. 380 Million Savings
In a major step to reduce the cost of electricity for consumers, the Power Division has identified significant inefficiencies in … Read More The post Power Division Flags Coal Procurement Gaps To Unlock Rs. 380 Million Savings appeared first on ProPakistani .
To reduce electricity costs for consumers, Pakistan's Power Division has exposed significant inefficiencies in the procurement of imported coal by power plants, which could lead to up to Rs. 380 million in annual savings. During high-level meetings chaired by Federal Minister for Power, Sardar Awais Ahmed Khan Leghari, officials examined actual data and market practices instead of relying on reports.
Pakistan has a substantial fleet of coal-fired power plants using imported coal, with three major plants at Port Qasim, Hub Power, and Sahiwal, along with the Lucky and Jamshoro plants. To keep these plants running, they enter Coal Supply Agreements with international suppliers, with prices linked to the API-4 index. However, the actual discounts received by power plants varied widely, from USD 0.25 to USD 7.12 per metric ton, despite using the same benchmark and suppliers.
The review revealed that suppliers offered different discounts to different plants, and sometimes backup arrangements were negotiated at lower discounts than the main supply agreements. Power plants will now be required to purchase coal from suppliers offering the highest discount against the international benchmark, preventing them from buying from suppliers offering lower discounts.
This reform is expected to save approximately Rs. 380 million annually, without any additional investment. The move aims to enhance transparency, consistency, and competition in coal procurement, benefiting electricity consumers across the country.
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