The National Electric Power Regulatory Authority (NEPRA) has called out Chinese power plants for utilizing lower-quality coal.
This was revealed during a public meeting held by NEPRA on Thursday, presided over by chairman Waseem Akhtar, to review the present mechanism which was last changed in 2016. It was first approved by the energy regulator in June 2014 to assess upfront tariffs for coal.
The Sahiwal Coal Power Project (Huaneng Shandong Ruyi Pakistan Energy Limited), revealed that it bought tens of thousands of tons of coal in July 2022, when prices were high, at a rate of Rs. 70,000/ton ($380). A NEPRA member criticized the plant for seeking huge capacity payments despite not using costly coal.
The meeting discussed that the coal-fired power stations had promised to use coal with a calorific value (CV) of 6,000 but imported substandard coal and invoiced customers for the price of higher-quality coal. The NEPRA meeting noted that the rates should be decreased due to the cheap quality in use.
Representatives of coal-based power plants complained to NEPRA concerning the use of differentials in computing Fuel Cost Adjustments without altering the pricing mechanism. They emphasized treating the electricity sector with care due to its specialized nature, particularly coal.
Several factors were considered, including the basis for procuring coal through tendering and buying 10-20 percent of coal on the spot market. Technical factors such as the introduction of new indices based on country of origin and calorific value, marine freight estimates based on time charter rates, and bunker fuel pricing were also discussed.
NEPRA proposed increasing the share of imported coal from the spot market to 20 percent and importing the fuel through a bidding process in order to obtain a competitive price from the market.
However, CPEC’s China Power Hub Generation Company (CPHGC), rejected the proposal to boost the stake to 20 percent.
Power producers further asked NEPRA’s permission to pay in Pakistani rupees, as the currency rate issue had cost them over $8 million in losses. They said that the spot market could not meet the demand for coal and that they had long-term relationships with suppliers, therefore there were numerous complications.