Punjab-based RLNG-fired power plants: Suspension of gas supply contributed to blackout

ISLAMABAD: The countrywide power blackout last month was partially due to suspension of gas supply to three RLNG-fired power plants in Punjab by the Sui Northern Gas Company Limited (SNGPL), administratively controlled by the Petroleum Division.

This was revealed during a public hearing held in Nepra to consider request of Central Power Purchasing Agency - Guaranteed (CPPA-G) on Fuel Cost Adjustment (FCA) for January 2021. Vice Chairman, Saif Ullah Chattha, presided over the hearing whereas Member Sindh, Rafique Ahmad Shaikh and Member Balochistan, Rehmatullah Baloch were present at the hearing.

The Authority is expected to approve an increase of 90 paisa per unit in tariffs of Discos across the board, to recover Rs 6.9 billion from consumers. The increase will be reflected in the bills of March 2021. The three different inquiry reports on January 9, 2021 blackout, conducted by the Power Division and its attached organizations indicate that the three big plants must run to balance load.

"The worst blackout occurred on January 09, 2021 due to non-availability of key gas-fired power plants. On this date, no gas was available for these plants. If gas had been made available to Bhikki Power Plant, Balloki power plant and Haveli Bahadar Shah power plant, complete blackout could have been averted," said a senior official of National Power Control Centre (NPCC) - the system operator.

The Authority was informed that in winter specially in January the main issue power sector faces is shortage of gas. The government gave first preference to domestic consumers as per policy whereas power sector was allowed to use other fuels like furnace oil, etc., for generation.

The Authority was further apprised that the power sector had sought an allocation of 450 MMCFD for January 2021 but the Petroleum Division gave only 154 MMCFD on January 8, 2021, which was 35 percent of total demand, whereas allocation for January 09, 2021, was zero. It was a weekend and NPCC was informed that allocation will be resumed only after the weekend.

"NPCC was informed on January 8, 2021 that there will be no gas on January 9, despite the fact that the organisation wrote a letter to Power Division that zero allocation will be a big issue and create problems in the system,” the official added.

On January 10, 2021, 110 MMCFD gas was allocated to power sector. There was a severe winter wave till January 24, 2021, and supply to power sector was less. However, on January 25, 2021, SNGPL allocated 363 MMCFD after which consumption of furnace oil was zero. In January, furnace oil of Rs 12 billion was consumed to bridge the gap due to less or non-availability of gas/RLNG.

Nepra's technical team stated that consumers were overburdened with Rs 3.90 billion by violating the Economic Merit Order (EMO).

On a question raised by Member Sindh, Rafique Ahmad Shaikh, Deputy Managing Director, NTDC Muhammad Ayub, noted that the system operator submits its fuel/gas demand six months before the requirement.

"We had submitted our gas demand in November 2020 but it was revised due to government's packages," he explained.

The Authority was informed that NPCC has no role in the purchase of RLNG or any other fuel, adding that Gas Sale Agreement (GSA) is between SNGPL and the power company.

NPCC officials maintained that their main issue is supply of gas which is a cheap fuel, adding that as the generation crosses 17,000MW mark, it has to use furnace oil.

In January 2021, demand grew by 6.3 percent as the government had also announced an industrial support package. The impact of RFO was 7.5 percent in total and reference value increased to 12 percent.

NPCC noted that total 1003 Gwh was generated due to non-availability of gas which increased consumption of RFO.

Muhammad Ayub briefed the Authority that not a single plant is under-utilized, adding that no plant in the world is run at 100 percent efficiency. He asked: “if load is reduced from 12,000MW at 1:00 to 6,000MW at night how can a plant be operated at 100 percent efficiency?” He suggested Nepra to send its economic merit order monitoring team for a three-month training at NPCC, after which they will never say that plants are under-utilized. He further proposed that the Authority should summon Discos' CEOs and inquire from them the reasons behind lesser recovery and higher losses.

Chief Financial Officer (CFO), Rehan Ahmed, informed the Authority that capacity payment to power plants has reduced to some extent due to increase in consumption. With economic growth the amount of capacity is reduced, adding that with current increase in consumption of power, Rs 6 per unit is recovered as capacity payment. He said the current increase in consumption has improved capacity recovery by approximately Rs 3 billion.

According to CFO, reference values of fuels are now updated and will be changed from next month.

Vice-Chairman opined that growth in consumption is a good sign. He also inquired if furnace oil consumption was higher this January vis-a-vis corresponding month of last year to which NPCC responded that furnace oil consumption is higher as compared to 2019 but less than 2018.

Wrapping up the hearing, Vice-Chairman Nepra held out an assurance that the Authority would inquire from Petroleum Division as to why it failed to allocate committed gas/ RLNG to the power sector in January.

The Authority reserved its decision on proposed increase in tariff of Discos under FCA for January 2021 which according to Nepra's technical team is 90 paisa per unit. The decision will be made public after verifications of provided ‘evidence’.

Copyright Business Recorder, 2021