'Coal supply deals stabilise power costs'

Industry players claim long-term contracts bring savings, operational reliability

ISLAMABAD:

Energy-sector experts say that long-term coal supply agreements between power producers and suppliers are helping stabilise generation costs and ensure uninterrupted electricity production.

Industry insiders note that consistent fuel provision arrangements have reduced dependence on spot market purchases and shielded consumers from the impact of international price fluctuations, leading to more predictable and affordable electricity tariffs for end-users.

Independent power producers (IPPs) have particularly benefited from such arrangements as they enable better operational planning and prevent shutdowns due to fuel shortages. The agreements also allow suppliers to commit larger volumes, resulting in better negotiated rates.

Talking to journalists, Shoaib Batvia, Chief Financial Officer and spokesman for Awan Trading Company, one of the country's leading coal suppliers, said the model has proven beneficial for all parties involved.

"Long-term coal supply agreements with IPPs create a win-win situation for the entire power chain," Batvia said. "When we sign multi-year contracts, we are able to commit larger volumes and negotiate better prices from the international market. Those savings are not kept by us – we pass them on to IPPs, which ultimately means lower generation costs for electricity consumers."

Batvia explained that long-term contracts bring not only financial savings but also operational reliability. "Energy generation is all about consistency," he said. "When a power plant knows that its coal supply is secured for years ahead, it can plan production efficiently, reduce downtime and improve maintenance scheduling. That stability benefits everyone – from the supplier to the regulator and, most importantly, the end-consumer."