‘Legitimate’ discount in coal prices: Chinese plants asked to pass on benefit to consumers

ISLAMABAD: National Electric Power Regulatory Authority (NEPRA) has warned the Chinese imported coal-fired power plants to be ready for harsh action if “legitimate” discount in coal prices is not passed onto the consumers.

This very strong message was conveyed by Chairman, NEPRA, Tauseef H. Farooqi to the Chinese companies at a hearing about a couple of weeks ago which was attended by foreign and local representatives of Chinese imported coal-fired projects like, 1320 MW M/s China Power Hub Generation Company (CPHGC), 1320 MW Port Qasim Electric Power and 1320 MW Sahiwal Power Plant.

The stock of overdue receivables of these plants is over Rs 100 billion. The managements of these plants and Chinese embassy have already written letters to the government for early payments.

Chinese Foreign Minister, who is also attending OIC Summit in Islamabad, is likely to raise the issue of payments and other affiliated issues being faced by the Chinese projects established under CPEC framework with his counterpart.

“We are not seeing any seriousness on the part of representatives of Chinese projects. All you and I can see is that you are very averse to this idea (of extending legitimate discount in coal prices). You are not appreciating or realizing that NEPRA is not insisting on this for itself. We have much better options and instead of reporting this matter to National Accountability Bureau (NAB), who will call you to their office and keep you there for eight hours to respond to very, very serious allegations, which will be reported in all the newspapers, please take this seriously and don’t resist it,” said Chairman NEPRA.

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Chairman Nepra further stated that the matter was referred by the highest office as serious complaints were received against Chinese imported coal-fired projects that they are siphoning money in the name of coal suppliers.

“These are very serious allegations. Please try to understand. I don’t want to caution you here but take my words very, very, very seriously.

"Show some very serious effort here; otherwise I’m warning you for the last time that you will be in deep, deep, deep trouble,” he warned.

Some of the representatives of Chinese projects said that they are seriously approaching international coal suppliers to bring down prices but they are not ready to do so far.

Chinese floated the idea that the government should establish an organization like Pakistan State Oil (PSO) to supply coal to the power plants so that doubts about price manipulation are sorted out. Initially, Chairman NEPRA agreed to the proposal and indicated that he would place the idea before the government but later on backed out from it, saying that the government cannot involve itself in such business as it is the responsibility of power plants.

NEPRA proposed that the Chinese should renegotiate contracts with the coal suppliers and place orders jointly to get a better price.

A representative of a Chinese project proposed that they should be given three months’ time to negotiate with existing coal suppliers or find new suppliers.

NEPRA maintained that for competitive rates, the Chinese companies need to adopt competitive process on long-term basis.

“Chinese companies should inform coal suppliers about the mechanism NEPRA is discussing right now and officially inform the whole coal market, and everyone is given a chance to bid on whatever terms NEPRA will be prescribing,” said Salman, a Nepra’s official.

He proposed the Chinese companies to revisit contracts and look for other suppliers who might be willing to supply at competitive rates.

Chairman NEPRA commented that given the economies of scale, three or four Chinese companies can join hands and place a joint order.

Copyright Business Recorder, 2022