Sahiwal power plant challenges NEPRA, CPPAG over coal procurement rules

The Sahiwal Coal Power Plant (HSRP), operated by Huaneng Shandong Ruyi Pakistan Energy Ltd (HSRPEL), has filed a lawsuit against the Central Power Purchasing Agency (CPPAG) and the National Electric Power Regulatory Authority (NEPRA), seeking to bypass the “lowest available price” requirement for coal procurement, The Express Tribune reported. 

The lawsuit challenges the existing rules, requesting approval to purchase coal from a preferred supplier at a higher cost, citing previously negotiated discounts that form part of the plant’s original financial model.

The company asserts that under its Power Purchase Agreement (PPA) and the Private Power and Infrastructure Board (PPIB) Implementation Agreement, it has the right to procure coal at mutually agreed-upon prices with its suppliers. HSRPEL argues that these terms were vital to securing long-term fuel supply stability and to keeping prices predictable.

However, CPPAG and NEPRA have pointed to Rule 5 of the Public Procurement Rules of 2004, which mandates that all fuel procurement should be made at the lowest price available in the market. This rule is intended to protect the public interest, as the cost of fuel is directly passed on to electricity consumers. The authorities maintain that competitive bidding should always determine the cost of procurement to ensure efficiency and transparency in the energy sector.

In its suit, HSRPEL insists that NEPRA has no legal authority to intervene in its contractual negotiations with suppliers, and that price agreements should be strictly between the power plant and the coal supplier. 

In a recent ruling, NEPRA reinforced the importance of securing the lowest possible price for fuel procurement, emphasizing that power suppliers offering the best discounts contribute to keeping electricity prices manageable for consumers.