Inquiry called over corruption allegations in Sahiwal Power Plant coal deal

An investigation has been initiated into corruption allegations regarding coal contract at the Sahiwal Power Plant, a China-Pakistan Economic Corridor (CPEC) project, following concerns from outgoing Energy Minister Muhammad Ali about the procurement process.

Muhammad Ali, just three days before he departed from office as caretaker minister, penned a letter based on concerns raised by stakeholders. They informed him that the Sahiwal power plant's long-term coal purchase contract lacked transparency.

According to them, the contract, which ideally should have been awarded through a bidding process, appeared to have been designed to favor a specific party, as indicated by the Request for Proposal (RFP) process.

The minister's letter brings attention to the alleged preferential treatment of two suppliers in the financial year 2022-23, who were said to be supplying coal at significantly higher prices than the market rate.

Following industry pushback, the National Electric Power Regulatory Authority (Nepra) introduced spot bidding, which notably reduced coal prices, benefiting consumers but disadvantaging the initially favored suppliers.

Reports indicate that subsequent suppliers faced disqualification under questionable pretexts, allowing the original suppliers to resume their premium-priced sales.

Complaints from other coal suppliers regarding these practices were reportedly made to the Chinese management overseeing the plant operations.

Despite these concerns, the economic burden of the price discrepancies, estimated to result in additional monthly costs of approximately Rs4 billion, falls on electricity consumers due to the pass-through nature of fuel costs.

The Sahiwal coal power plant, which relies on imported coal, has faced criticism not only for its procurement practices but also for the environmental and economic implications of transporting coal over long distances.