LEPCL warns of systemic risks, calls for immediate action on coal transport infrastructure

ISLAMABAD: M/s Lucky Electric Power Company Limited (LEPCL) has sought PPIB’s (Private Power & Infrastructure Board (PPIB) to resolve its coal transportation issues on permanent basis as truck loading facility will mitigate short-term operational risks, it cannot substitute for the contractual protection of a force majeure remedy, Newzshewz has learnt reliably.
The Company’s CEO, Rohail Mohammad recently held a meeting with Managing Director PPIB, Shah Jahan Mirza and discussed Inland Coal Transportation Agreement (ICTA) with Pakistan Railways.
According to CEO LEPCL, at the time of financial close and execution of the Security Package (PPA & IA), railway transportation of coal was not envisaged. Coal transportation was planned exclusively through road logistics from Thar to Port Qasim, and this arrangement was duly reflected in the Coal Supply Agreement (CSA) with Sindh Engro Coal Mining Company Limited (SECMC).
Subsequently, the Government has advised that coal transportation be routed through Pakistan Railways under the ICTA framework. The power company understands that Phase-I of the Thar Mine-Chor railway track (approximately 105 km) is about 40% complete, with Pakistan Railways targeting operational readiness by June 2026. Once ICTA is executed, the contractual responsibility for transportation will rest with Pakistan Railways.
While LEPCL remains aligned in principle with this policy initiative, the current state of supporting infrastructure and the absence of essential fallback mechanisms expose the supply chain to risks not envisaged at financial close. These risks merit resolution at a policy and contractual level before operationalization of the ICTA.
According to LEPCL, the 9 km spur line and common unloading facility near PIBT remain under PC-1 review with the Planning Commission. Until these are completed, in another 18-24 months, coal transported by rail will require double handling, resulting in higher costs and constraining the ability of LEPCL to move coal in volumes equivalent to its requirement. Moreover, Pakistan Railway shall have to identify and make provision at nearby rail network point to off load coal trains and LEPCL will transport coal from the designated point to the plant site.
It further stated that under the CSA, SECMC was responsible for establishing coal loading arrangements. However, tariff treatment by TCEB does not have the provision of multi-modal unloading facility i.e. for truck or rail. With the Government’s preference for rail, SECMC is likely to be focused on a rail loading facility only. This leaves no provision for truck loading at the mine-mouth, which would be essential in the event of rail suspension or delays in Segment-Il completion. In such circumstances, LEPCL would have no alternate evacuation mechanism, creating a systemic risk for plant operations.
To align the ICTA framework with operational and contractual realities, LEPCL has requested PPIB’s support to: (i) ensure that the coal transportation through railway shall not be binding to the company until Segment-II is completed ;(ii) ensure development of a truck loading facility at the mine-mouth, alongside the rail loading facility, so that coal supply remains uninterrupted during delays in the completion of Segment-II or during rail disruptions. This will require suitable amendment of the CSA in consultation with SECMC, TCEB, and other stakeholders. In this regard an urgent meeting of relevant stakeholders (TCEB and SECMC) may be convened by PPIB to persuade the concerned to amend CSA; and (iii) facilitate amendment of the PPA to insert a power purchaser’s force majeure event clause covering ICTA-related risks. This treatment, already available in the PPA of the Sahiwal Coal Plant, is essential to ensure that systemic failures of rail operations do not leave LEPCL exposed without contractual protection.
While the provision of a truck loading facility will mitigate short-term operational risks, it cannot substitute for the contractual protection of a Force Majeure remedy. Both measures must be pursued in parallel to ensure continuity of coal supply, alignment with Government’s policy shift towards rail transportation, and long-term sustainability of plant operations.