ISLAMABAD – The Sahiwal Coal Power Plant, operated by Huaneng Shandong Ruyi Pakistan Energy Ltd (HSRPEL), has filed a civil suit against the National Electric Power Regulatory Authority (NEPRA) and the Central Power Purchasing Agency (CPPAG), challenging the regulatory requirement to buy coal at the lowest available market price.
The power producer is seeking court approval to source coal from a preferred supplier at a pre-agreed discounted rate — a deal critics say could push up electricity costs by millions of dollars annually.
Citing provisions of the Private Power and Infrastructure Board’s Implementation Agreement and its Power Purchase Agreement, HSRPEL argues it has the contractual right to secure fuel supplies under agreed discounts, which it claims are part of its original financial model to ensure long-term price stability.
However, CPPAG and NEPRA point to Rule 5 of the Public Procurement Rules 2004 and competitive bidding guidelines for Independent Power Producers, which mandate buying fuel at the lowest evaluated market price to safeguard consumers. Since coal costs are directly passed on to electricity tariffs, regulators insist competitive procurement is essential to protect public interest.
Legal experts note Section 31 of the NEPRA Act allows recovery only of costs “prudently incurred” — a standard that reinforces market competition as the baseline. NEPRA’s June 26, 2025 ruling also upheld the principle that maximum supplier discounts help keep power affordable.
Approving HSRPEL’s request could set a precedent for other coal-based plants to bypass competitive bidding, eroding transparency. The suit may also face jurisdictional challenges under the Specific Relief Act, with annexed documents failing to show unconditional approval from CPPAG.
Industry observers warn that granting procurement freedom without competition risks locking in higher prices and undermining public trust in tariff regulation.
