The Islamabad High Court wants answers from the Ministry of Energy and NEPRA. They are looking into a possible fraud involving overpriced coal imports. The Sahiwal Coal Power Plant and Awan Trading Company are under scrutiny. They might have caused higher electricity prices.
Court documents show this alleged fraud could cost consumers Rs. 81.7 billion. NEPRA did not follow its own rules. This caused harm to the public. NEPRA, the Sahiwal Coal Power Plant, and Awan Trading Company might have worked together for their benefit.
NEPRA’s Attempt to Lower Coal Prices Fails
In July 2022, NEPRA told Sahiwal Coal Power Plant and others to buy coal locally. This happened because of high exchange rates and US Dollar shortages. From July to December 2022, Awan Trading Company sold coal at very high prices. They charged 85% more than the market price. This made consumers pay Rs. 185 for coal worth Rs. 100.
In January 2023, NEPRA made new guidelines. This led to lower coal prices. From January to December 2023, coal prices dropped. Discounts of 11-15% were common. Consumers paid Rs. 85 for coal worth Rs. 100. But Awan Trading Company found a way around these rules. They made long-term contracts to protect their profits.
These contracts let Independent Power Producers buy 90% of their coal from Awan Trading. Only 10% came from other sources. A new tender in November 2023 kept most suppliers out. It required bidders to import large amounts of coal by sea. This left Awan Trading as the only supplier.
Energy Sector Scandal Sparks Demand for New Rules
On December 13, 2023, Awan Trading loaded coal before getting the contract on December 17. This showed a pre-arranged deal. They sold coal at high prices under a long-term contract. The contract should have been cheaper than spot prices.
The sea shipment rule seemed unfair. It helped Awan Trading and kept others out. This ensured no competition. The 15% discount could save $300 million a year if all four coal power plants had similar contracts.
Petitioners say NEPRA failed to protect consumers. They want new rules to ensure fair competition and lower prices. They are asking for an immediate stop to the current contract.
This scandal affects Pakistan’s energy sector. NEPRA failed to make guidelines. This shows they neglected their duty. They must ensure fair tariffs and promote competition. The Islamabad High Court gave NEPRA and the Energy Ministry one month to respond.
To read our blog on “NEPRA endorsed extra new increase in the electricity tariff,” click here.