Rs215 million to be passed directly on to consumers
Another new financial burden has come to electricity consumers in Pakistan. NEPRA (National Electric Power Regulatory Authority) has, in a recent decision, allowed a burden of about Rs215 million to be passed directly on to consumers due to coal suppliers’ defaults. This situation has become another example of the increase in electricity prices in the country, which is causing public concern.
Financial burden and impact on consumers
Electricity consumers in Pakistan are already facing the highest prices, but after the recent decision of NEPRA, they will have to bear an additional financial burden. According to this decision, the losses incurred due to the failure of a coal supplier and breach of contracts will have to be compensated by consumers in the form of additional tariffs.
Nepra’s decision to pass on the financial burden to consumers came after it emerged that the coal supplier had breached its contractual obligations. They claimed that there was a ‘force majeure’ situation, but other suppliers continued to supply without interruption. This resulted in power plants having to buy alternative coal at a higher price, which led to an increase in consumer tariffs.
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Supplier’s non-liability and ‘force majeure’ claims
The supplier breached its contract, denied its obligations, and claimed a ‘force majeure’ situation. This meant that they were hampered in their supply of coal due to some unforeseen circumstance. They claimed that factors such as congestion at the South African coal terminal and tensions between India and Pakistan had hampered their supply.
But the reality was that other suppliers had fulfilled their contractual obligations during the same period. This made it clear that the ‘force majeure’ claim was actually a pretext to allow the company to benefit from the additional prices.
Supply chain disruption and breach of contract
The long-term contract entered into between the power plant and the supplier has become a very important issue. After the breach of this contract, the power plant had to purchase alternative coal, which was at a higher price than before. The burden of this additional cost was $691,931 (approximately Rs. 197 million), which had a direct impact on the tariff of the consumers. This meant that the power plant had to spend much more than the agreed-upon prices, and this additional cost had to be passed on to the consumers.
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Regulatory actions of NEPRA and consumer interests
Nepra’s decision to pass this financial burden on to the consumers has become a serious issue. When the supplier breached the contract, NEPRA should have taken action against it to protect the interests of the consumers. However, NEPRA not only did not seize the supplier’s performance guarantee but also did not take any effective action to compensate for this loss.
On the contrary, the defaulting supplier was allowed to win the tender for the same plant again on June 11, 2025. This decision proves that NEPRA’s decisions are made for the benefit of suppliers rather than the interests of consumers.
Lack of regulatory consequences and penalties for suppliers
After this decision, the question arises whether NEPRA has any way to take effective action against suppliers. When the supplier violated the agreement, no severe penalty was imposed against it. The supplier’s performance guarantee was also not seized, which further strengthened its fearlessness and non-performance.
This situation shows that regulatory bodies in Pakistan are not taking effective measures against supplier non-performance. And as a result, consumers are having to bear additional burdens.
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Conclusion and Recommendations
This incident highlights the dire need for regulatory reforms in the power sector in Pakistan. NEPRA should ensure that suppliers do not violate contracts and enforce strict laws for this. Moreover, protecting the interests of consumers should be the top priority of regulators. And for this, it is necessary to hold them accountable at all levels.
If NEPRA and other relevant institutions fail to address this issue,. It will not only affect the financial conditions of consumers. But will also have a negative impact on the country’s economy.