Sahiwal Coal Plant Challenges Lowest Price Rule in Court
The Sahiwal Coal Power Plant, operated by Huaneng Shandong Ruyi Pakistan Energy Ltd (HSRPEL), has taken the Central Power Purchasing Agency (CPPAG) and the National Electric Power Regulatory Authority (NEPRA) to court, seeking exemption from the rule requiring coal to be bought at the lowest available market price.
The company is asking for approval to procure more expensive coal from a preferred supplier under a pre-agreed discount arrangement, a move industry experts caution could burden electricity consumers with millions of dollars in additional costs each year.
Court filings show HSRPEL arguing that the Private Power and Infrastructure Board’s Implementation Agreement and the Power Purchase Agreement allow fuel purchases under mutually agreed contractual discounts. The company claims this structure was part of its original financial model, ensuring supply stability and predictable pricing.
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However, CPPAG and NEPRA officials point to procurement rules and guidelines that require fuel to be sourced at the lowest evaluated market price to protect consumers, as fuel costs are passed directly to them via tariffs.
Legal experts note that under the NEPRA Act, only “prudently incurred” costs can be recovered through electricity tariffs, and competitive bidding remains a core safeguard.
In June 2025, NEPRA reaffirmed the principle that suppliers offering the highest discounts help keep power affordable. Observers warn that granting HSRPEL’s request could encourage other coal-based power plants to sidestep competitive bidding, undermining transparency and increasing consumer costs.
Legal analysts also question whether the civil court has jurisdiction under the Specific Relief Act, and whether the plant’s No Objection Certificate supports its claims.
NEPRA has recently pushed for fresh bidding in other cases, emphasising the need for transparent and competitive procurement. Experts believe upholding these principles is essential to protect both affordability and public trust.
