Lucky warns of systemic risks to energy supply chain

MUSHTAQ GHUMMAN

ISLAMABAD: The government’s policy shift to route Thar coal transportation through Pakistan Railways is emerging as a major test case for private power producers, with M/s Lucky Electric Power Company Limited (LEPCL) warning that the absence of backup mechanisms could expose the energy supply chain to systemic risks.

The LEPCL, which currently relies on road logistics to transport coal from Thar to its Port Qasim power plant, has conveyed to the Private Power & Infrastructure Board (PPIB) that while it supports the government’s move towards rail-based transportation, contractual and infrastructural gaps must be addressed before the transition takes effect.

At present, Pakistan Railways is constructing the 105-km Thar Mine–Chor railway track, reportedly 40 percent complete, and aiming for operational readiness by mid-2026. Once operationalised under the Inland Coal Transportation Agreement (ICTA), the railway will assume contractual responsibility for coal delivery.

Industry insiders, however, note that the supporting infrastructure — including the 9 km spur line and common unloading facilities near Pakistan International Bulk Terminal (PIBT) — is still under PC-1 review. This means that for at least the next 18–24 months, coal may require costly double handling. LEPCL argues that without truck-loading arrangements at the mine-mouth, it will be unable to move coal in volumes required for uninterrupted operations, particularly if rail services face delays or suspension.

According to the company, the Coal Supply Agreement (CSA) with Sindh Engro Coal Mining Company (SECMC) originally provided for coal transportation by road, and did not envisage rail logistics at the time of financial close. With the government’s preference now shifting to rail, SECMC is expected to focus on establishing a rail-loading facility only, leaving no fallback mechanism for trucking.

The LEPCL has therefore requested PPIB’s support to (i) ensure that rail transportation does not become binding until completion of the second segment of the Thar rail project; (ii) facilitate development of a truck-loading facility alongside rail facilities to maintain supply flexibility; and (iii) amend the Power Purchase Agreement (PPA) to include a force

majeure clause covering ICTA-related risks. A similar contractual protection already exists in the PPA of the Sahiwal Coal Plant.

The company officials stressed that while provision of a truck-loading facility can mitigate short-term risks, it cannot replace the need for contractual protection against systemic failures in rail operations. Both safeguards, they argue, must be pursued in parallel to ensure an uninterrupted coal supply and alignment with the government’s policy objectives.

Sector experts add that the government’s push for rail-based coal transport is consistent with its broader goals of reducing road congestion and improving long-term cost efficiency. But unless backup arrangements and contractual protections are in place, the transition could expose coal-fired power plants to serious operational vulnerabilities.

By flagging these concerns, LEPCL has effectively placed the spotlight on the delicate balance between long-term policy ambitions and immediate operational realities in Pakistan’s evolving coal supply chain.