Power Division Identifies Flaws in Imported Coal Procurement Process, Issues Corrective Guidelines
ISLAMABAD: The Power Division has detected the system-wide weaknesses in the imported coal procurement process and has issued new guidelines to the National Electric Power Regulatory Authority (NEPRA) for the initial reforms which are estimated to save Rs 380 million annually.
The Power Division said that several high-level discussions led by Minister for Energy Awais Leghari have been held for a thorough examination of the real coal procurement statistics, current contracts, and market practices.
The attention of the Director of the Office of the Comptroller is drawn to the issue of discrepancies and reform in supplier discounts.
The government has begun extensive reforms in the entire imported coal procurement and sourcing and coal logistics, the Power Division said. The new principle, dubbed “best available discount” will be in effect, preventing coal power plants from buying coal at lower discounts from international suppliers.
Previously, officials said, some of the power plants were able to get different discounts from the same suppliers — from $7.12 a ton to 25 cents a ton — and some backup power supply deals offered more discounts than primary supply deals. In addition, it is known that some of the coal power plants refused to sign contracts with the suppliers with high discount, and that the difference between the cost of coal and the cost of electricity was addicted to the electricity consumers.
Minister for energy urges transparency and relief for consumers
Minister for Energy Awais Leghari said that the Power Division is looking for structural gaps based on careful data and market analysis and attempting to correct them with proper regulatory and policy initiatives.
The cost savings of these changes will be reflected directly on the electricity bill of the user,” he added. He said intervention in the procurement of coal is not meant to disrupt business, but to streamline and make the fuel procurement transparent. Leghari said that as the cost of electricity is being recovered from the consumers, it is important that the procurement process is cost effective, transparent and optimized and is free of any unnecessary expenditure in order to give the consumers the real relief.