Port Qasim Electric Power Company (PQEPC) has opposed a proposed one-year limit on coal supply agreements, warning that the restriction could disrupt fuel supplies, complicate procurement and increase risks for coal-fired power plants.
According to comments submitted to the Central Power Purchasing Agency-Guarantee (CPPA-G), the company also challenged a proposal to compare coal procurement discounts across tenders, arguing that differences in supplier offers do not, by themselves, indicate irregularities.
PQEPC operates a coal-fired power complex with a capacity of 1,320 megawatts. It said its imported coal purchases complied with its approved tariff determination, generation license, power purchase agreement and implementation agreement with the government. The company argued that procurement guidelines could not override these contractual and regulatory requirements unless formally incorporated into them.
The company said tenders could not be compared on headline discounts alone because they differed in quantities, contract periods, payment currencies, delivery arrangements, coal quality requirements and performance guarantees. It rejected the use of discounts ranging from $0.20 to $7.12 per metric ton as grounds for an adverse finding.
According to PQEPC, the $7.12-per-ton discount cited by the Power Division related to a contract that was never implemented and carried a performance guarantee of about Rs. 5 million. The company said this guarantee represented only a fraction of the financial exposure it required from its own suppliers, making the contract an unsuitable benchmark.
PQEPC also questioned the use of historical discounts on Indonesian coal as a permanent benchmark, citing tighter quality requirements and supply constraints. It said the minimum acceptable net as-received calorific value had increased from 4,000 to 4,200. The company further cited a 23.34 percent year-on-year decline in Indonesia’s seaborne coal exports in August 2026, alongside reported supply and logistical constraints.
The company argued that suppliers might charge more for coal meeting the revised quality standards and that changes in discounts should not automatically be treated as evidence of misconduct. It also said differences in offers to independent power producers could reflect varying contract terms, quantities and risk profiles.
Defending its use of backup suppliers, PQEPC said securing coal at a lower discount than the one available under a principal supply contract could be necessary if the main supplier failed to deliver. Such arrangements, it argued, helped protect power plants from fuel shortages, capacity payment deductions and liquidated damages under power purchase agreements.
Opposing the proposed one-year contract limit, PQEPC said international coal miners and vessel owners generally did not enter supply arrangements on such short horizons without minimum purchase commitments. It also warned that mandatory annual retendering could leave insufficient time for board, shareholder and regulatory approvals.
PQEPC blamed CPPA-G’s alleged failure to meet minimum annual energy payments for the lack of minimum coal purchase commitments. It said monthly fuel price adjustments already allow NEPRA to review procurement costs.
The company supported holding defaulting suppliers accountable but called for due process, hearings and exemptions for force majeure and other circumstances beyond either party’s control.
PQEPC said it bears fuel supply risks, earns no return on fuel costs and recovers only verified expenses through tariffs. It cited a loss of about $0.58 per metric ton in its latest fuel price adjustment and Rs. 1.62 billion under spot coal procurement guidelines. It urged the government and CPPA-G to assess procurement against project agreements, reject claims of irregularity based solely on differing tender discounts, reconsider the one-year contract limit and include safeguards in supplier-default rules.
PQEPC also proposed that a public-sector agency take charge of procuring and supplying coal to power plants, citing NEPRA’s June 22, 2026, recommendations.
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