ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) is facing a difficult decision over Port Qasim Electric Power Company Limited’s (PQEPCL) reported request for a further extension of its interim coal procurement arrangement, despite more competitive offers emerging from a fresh bidding process, sources told Business Recorder.
Thank you for reading this post, don't forget to subscribe!Sources said PQEPCL had approached senior Nepra officials for an extension of a few months, although the regulator’s previously permitted interim period had expired. The Power Division is reportedly opposed to another extension, arguing that delays in adopting more competitive procurement terms could deprive electricity consumers of potential savings in generation costs.
PQEPCL initially entered into a long-term Coal Supply Agreement (CSA) with Wah Industries Limited (WIL) for May 2024 to April 2025, without a discount against applicable international coal price indices. The agreement was subsequently extended to maintain fuel supplies.
In April 2024, PQEPCL initiated competitive bidding for a long-term coal supply contract covering September 2025 to August 2030. Two suppliers participated, offering discounts against the API-4, ICI-3 and NEWC indices.
However, litigation resulted in an interim injunction on January 2, 2025, affecting the execution of coal supply agreements. Following the resolution of the dispute in favour of Awan, its contract was executed, but purchase orders were reportedly not issued.
Meanwhile, PQEPCL extended its agreement with WIL for June 2025 to June 2027, incorporating discounts of USD 1.08 per tonne against API-4, USD 0.20 against ICI-3 and USD 2.75 against NEWC.
On December 23, 2025, Awan improved its offer to discounts of USD 1.25 per tonne against API-4, USD 0.30 against ICI-3 and USD 2.90 against NEWC. However, according to procurement details, the company did not receive purchase orders despite the revised terms.
In its fuel cost adjustment decisions, Nepra subsequently restricted the WIL arrangement to the prescribed interim period and directed PQEPCL to undertake fresh competitive procurement.
Following these directions, PQEPCL entered into an interim arrangement with Yongtai Energy, a subsidiary of a Chinese company, for imported coal. The initial offer provided a discount of USD 0.50 per tonne for South African-origin coal, while Nepra directed that the applicable discounts be revised to USD 1.08 against API-4, USD 0.20 against ICI-3 and USD 2.75 against NEWC.
The interim arrangement was intended to cover procurement during 2026 while the company completed a fresh bidding process for long-term supplies.
On June 18, 2026, Nepra decided that, as the shipments procured from Yongtai Energy had originated in Indonesia, a discount of USD 0.20 per tonne would apply when calculating the price of each shipment. The regulator subsequently adjusted PQEPCL’s fuel cost component for variations in coal prices during March and April 2026.
The fresh procurement exercise has since attracted five bidders. According to the offers received in the second round, a supplier quoted a discount of USD 2.10 per tonne against API-4, while a premium of USD 5.45 per tonne was offered against ICI-3.
Sources described the API-4 offer for South African-origin coal as the highest discount obtained by PQEPCL in its procurement history. The USD 2.10-per-tonne discount represents an improvement of USD 1.02 per tonne over the interim API-4 discount of USD 1.08.
However, the actual financial benefit would depend on the volume of coal purchased, the applicable price index and the final contractual terms.
Sources argued that PQEPCL should proceed with the ongoing bidding process and award contracts to eligible and responsive suppliers offering the most competitive terms in accordance with the bidding documents.
They warned that extending the interim arrangement despite improved offers could undermine the purpose of competitive procurement and delay potential savings for the power producer and electricity consumers.
An insider said PQEPCL could seek additional time to continue procuring coal under its existing arrangements, potentially delaying or withholding the outcome of the ongoing bidding process despite the improved API-4 discount.
The sources maintained that the company should complete the procurement process within the period permitted by Nepra and comply with the regulator’s directions. Any further extension, they argued, should be limited to the minimum period necessary to ensure uninterrupted fuel supplies.
Coal procurement costs form part of the fuel cost of coal-fired electricity generation and are reflected in relevant fuel cost adjustments. Delays in adopting more favourable terms could therefore postpone potential savings, although the ultimate impact on electricity tariffs would depend on procurement volumes and other pricing components.
The Power Division is reportedly opposed to another extension, maintaining that consumers should benefit from the improved procurement terms. Nepra’s decision on any formal extension request is expected to determine whether PQEPCL moves forward with the fresh bidding process or continues operating under interim arrangements.
Story by Mushtaq Ghumman
