Private and state-owned Independent power producers (IPPs) are paying significantly higher prices than those achieved through competitive government procurement. This is impacting the electricity bills of hardworking homeowners.
The Power Division and the National Electric Power Regulatory Authority (NEPRA) have identified inefficiencies in the way some IPPs procure imported coal. The additional cost is ultimately reflected in electricity prices through monthly fuel price adjustments.
The issue became more apparent after a recent tender for coal supply to the 660-megawatt Jamshoro Power Plant secured a discount of $7.12 per ton from the supplier.
By comparison, some coal contracts involving IPPs offered discounts of only $0.20 to $0.50 per ton.
The Power Division said its review found significant inefficiencies in imported coal procurement and issued new policy guidelines to address them. The measures could save the national exchequer up to Rs. 380 million annually.
NEPRA had previously questioned the coal procurement process followed by a private power plant. The regulator found that this plant’s six-year coal supply contract offered discounts of only $0.20 to $0.50 per ton and evaluated bids against estimated future coal prices.
NEPRA said this approach could prevent suppliers from competing effectively on discounts because future coal prices could change.
It added that a stronger focus on supplier discounts during bid evaluation could have produced more competitive offers.
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