ISLAMABAD: Karachi Electric (KE) has sought Petroleum Division’s help in finalization of Gas Supply Agreement (GSA) with Sui Southern Gas Company Limited (SSGCL), and provision of indigenous gas to its power plants.
The power utility has also raised the issue of recent reduction of gas to 35 MMCFD to its power plants. Chief Executive Officer (CEO) KE, Syed Moonis Abdullah Alvi, has written two separate letters to Secretary Petroleum, Ali Raza Bhutta, copies of which have also been sent to other concerned authorities, on the gas-related issues being faced by the power utility.
Alvi, in his letter of January 7, 2022 also shared correspondences of October 12, 2021, November 17, 2021 and response by Ministry of Energy {Petroleum Division) dated November 11, 2021 wherein KE had requested the Petroleum Division to arrange a meeting with all stakeholders including SSGC and NEPRA for resolution of gas pressure and related issues.
The CEO KE stated that a meeting was held on December 16, 2021 chaired by Abdul Rasheed Jokhio, Director General, Petroleum Division along with SSGC and NEPRA’s representatives regarding the long outstanding matter of low gas pressures at KE’s KCCP, KGTPS and SGTPS plants.
The power utility has appreciated the Petroleum Division for arranging the meeting on this critical matter as low gas pressure at KCCP, KGTPS and SGTPS plants significantly impacts KE’s ability to properly utilize these plants which results in higher costs of generation due to usage of alternate expensive fuel and ultimately burdens the consumers and GoP.
GSA with SSGCL: KE team in Islamabad
Further, as explained in the meetings, another meeting was held between Ministry of Energy, SSGC and KE on October 8, 2020, co-chaired by the Minister of Energy and special Assistant to Prime Minister on Petroleum, wherein the matter relating to Gas Supply Agreement (GSA) was taken up. In the meeting, it was decided to ring fence old issues for resolution at GoP level and proceed towards execution and finalization of GSA.
Subsequently a series of extensive discussions were held between KE and SSGC with a view to conclude negotiations and to finalize the GSA at the earliest. Additionally, a joint meeting of MoE {Petroleum Division), KE and SSGC was held on March 11,2021 wherein the Minister of Energy directed to refer the matter to Cabinet for guidance on resolution of ToRs’ issue hindering the GSA execution.
SSGC was also given directives in these meetings to resolve the low gas pressure issue for which KE has also offered to discuss modalities of financing for such augmentation/ rehabilitation work.
Meetings between the Management of KE and SSGC were held on December 08, 2021, in which SSGC was requested to provide projection of gas volumes for KE and schedule for resuming the GSA discussion, pending since the negotiation rounds held between KE and SSGC at SSGC Head Office from October 9th to 15th, 2020. A meeting between KE and SSGC was also held on December 16, 2021, along with representatives of MoE and NEPRA wherein it was emphasized that GSA should be executed at the earliest.
Further, supply of indigenous gas to KE is decreasing, resulting in generation on higher cost fuel such as RLNG and furnace oil to meet high power demand of Karachi which ultimately puts burden on consumers of KE and Government of Pakistan in the form of higher fuel cost adjustments and Tariff Differential Claims (TDCs). Accordingly, non-provision of required indigenous gas to KE is ultimately burdening the GoP and consumers.
On January 10, 2022, CEO KE wrote another letter to Secretary Petroleum, saying that after the earlier reduction of RING to 72 MMCFD, SSGC has now curtailed KE’s supply to extremely low level of 35 MMCFD.
Nepra urges SSGCL to ink GSA with KE
The present power demand of the city is around 1900 MW which has to be managed by supplying power through efficient/ economic plants, mainly the combined cycle plant BQPS-II of 560MW at Port Qasim, whose operation is now restricted to only one out of three machines generating only 180MW at 35MMCFD gas.
This low gas situation has compelled KE to generate power not only from alternate expensive fuel (HFO) based lPPs but also from BQPS l, which eventually will have a direct impact on the electricity tariff due to price and efficiency difference and at current price level this reduction will cause additional impact of approximately Rs 1.1 billion per month for its substitution with expense fuel source.
CEO KE argued that reduction in KE’s gas supply is not in the interest of consumers in Karachi city and it also contravenes the decisions of the CCoE and High Court of April 23, 2018 and June 2018, respectively, which bind SSGC to supply 190 MMCFD of gas with 130 MMCFD originating from local/ indigenous sources.
Further, looking at the demand situation and scheduled outages of power plants/ NTDC, this drastic reduction will impact the Annual Preventive Maintenance for Generation plants which are necessary to ensure smooth reliability during summers.
Copyright Business Recorder, 2022
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