Nepra Exposes Chinese Power Plants for Using Inferior Coal, Billing for High-Quality Fuel

The National Electric Power Regulatory Authority (Nepra) has uncovered a startling revelation regarding Chinese coal-fired power plants using subpar imported coal instead of the promised higher-quality coal with a calorific value of 6,000 (CVs). These power plants have continued to claim multi-billion rupees in capacity payments from the public despite not meeting the required standards.

This revelation emerged during a public hearing conducted by Nepra on Thursday, aimed at reviewing the existing mechanism, last revised in 2016. The mechanism is based on a fixed benchmark weightage of different coal origins and heat values, initially approved by Nepra in June 2014 as part of the determination of coal upfront tariffs.

Chairman of Nepra, Waseem Mukhtar, presided over the proceedings, with the authority's members, including Mathar Niaz Rana (member Balochistan), Maqsood Anwar Khan (KP), Amina Ahmed (Punjab), and Rafique Ahmad Shaikh (Sindh), in attendance.

The coal-based current derated installed capacity in Pakistan stands at 6,777MW, which is foreign-funded on imported coal, and it carries an outstanding capacity payment of a significant Rs643 billion.

A Nepra member cited documents, stating, "Your documents say that you imported lower quality coal against what was promised in the agreements."

The Sahiwal Coal Power Project, now known as Huaneng Shandong Ruyi (Pakistan) Energy (Limited), revealed that it had imported multi-thousand tons of coal in July 2022 when prices were high, at a rate of Rs70,000 per ton ($380).

In response, a Nepra member remarked, "You claim capacity payment, but you don't use costly coal."

It was disclosed that these coal-based power plants had pledged to utilize coal with a calorific value of 6,000 (CVs) but had been importing coal with CVs ranging from 4,500 to 5,500. Consequently, they were employing substandard coal while billing customers for the price of higher-quality coal.