Chinese coal plants may ask PD to procure coal itself and supply

ISLAMABAD: The imported coal-fired power plants established under China Pakistan Economic Corridor (CPEC) are likely to ask the government to procure coal itself and supply to them.
This development is happening in the light of recent letter written by the Power Division to National Electric Power Regulatory Authority (NEPRA) which also attracted anger at the Prime Minister Office.
In this regard, Chinese companies are planning to write a letter to Power Division citing reference of its letter of August 24, 2026 titled (Submissions for Improvements in Coal Procurement Guidelines for Coal-Fired Power Plants).
” Chinese have reviewed the contents of the letter and noted certain observations regarding coal procurement prices, discounts, supplier offers, backup supply contracts, committed quantities, and supplier performance. We believe that some of the information and assumptions reflected in the letter do not accurately represent the actual procurement arrangements, contractual framework, and operational practices of our power plant,” sources quoted Chinese as saying.
As the proposed provisions may have significant implications for coal-fired power projects and their tariff arrangements, we consider it important to present the actual facts, supporting records, contractual documents, and procurement data before any further policy or regulatory action is taken, he added.
” Chinese will request for a meeting between Power Division and them , which would allow them to clarify the matter in detail and present the relevant factual information and supporting documentation for your consideration,” sources added.

On August 24, 2026 Power Division in a press release stated that it has identified significant inefficiencies in the procurement of imported coal by power plants and has issued policy guidelines for corrective action that could save the national exchequer up to PKR 380 Million annually.
According to the press release this revelation came across during a series of high-level meetings chaired by Federal Minister for Power Sardar Awais Ahmed Khan Leghari, where officials reviewed actual data, contractual arrangements and market practices rather than relying on reports or external inquiries.
Pakistan has a significant fleet of coal-fired power plants with a combined capacity of approximately 5,280 megawatts that rely wholly or partly on imported coal. These include three major 1,320 MW plants at Port Qasim, Hub Power and Sahiwal, as well as the Lucky and Jamshoro plants which also have the capability to use imported coal. To keep these plants running, they must enter into Coal Supply Agreements with international suppliers. The price of imported coal is generally linked to internationally recognized benchmarks such as the API-4 index, which reflects the market price of coal traded in global markets. However, the price that a power plant ultimately pays depends not only on this benchmark but also on the discount it is able to negotiate with the supplier.
The analysis revealed a significant discrepancy. Different power plants were purchasing coal from the same suppliers, using the same international pricing benchmark, yet receiving materially different discounts ranging from USD 0.25 to USD7.12 per metric ton. The review also found that the same supplier had offered substantially different discounts to different power plants. In some cases, backup supply arrangements were negotiated at lower discounts than the main supply agreements. There were also instances where coal was being received from a supplier offering a lower discount even though another supplier offering a higher discount remained under contract.
This discrepancy matters because the cost of fuel is ultimately passed on to electricity consumers through the tariff. Any avoidable difference in fuel procurement cost directly increases the burden on households and businesses across Pakistan.
According to Power Division it has moved decisively to strengthen the regulatory framework. Policy guidelines are being formally issued to the National Electric Power Regulatory Authority to enforce greater transparency, consistency and competition in coal procurement. As a first phase of reform, the Power Division is introducing a simple but important principle of “best available discount” in coal procurement. Power plants will be required to purchase coal from their contracted suppliers offering the highest discount against the applicable international benchmark and will not be permitted to purchase from a supplier offering a lower discount. Based on this reform, an estimated saving of approximately 380 million annually is expected. This saving will be achieved without any additional investment, but simply ensuring that power plants purchase coal at the best available discount. Ends