Carrying LNG

PMLN governments priority remains installation of power projects but little has been done so far regarding evacuation of power to the grid. That is why projects close to load centres are more practical and would have less trouble due to inadequate transmission infrastructure. Projects based in Punjab, almost all on imported fuel, could face a problem of transporting fuel from port to respective plants.
The priority is to have three RLNG plants of 1200 MW each in Punjab, prior to the completion of term in 2018. One project is under Punjab government, while other two are under federal government.
These projects have a clear edge over those conceived by the private sector. The local banks have limited financing capacity as the central bank has issues on import of power plants machinery based on local funding. Local financing is virtually only available to government owned projects.
The EPC cost of RLNG based government plants comes out to be much lower than initially anticipated. They bought latest machinery from GE at steep discount and have covered the risk of any potential issue that could arise by using untested machinery by negotiating longer guarantees. A job well done. NEPRA has moved these projects from upfront to cost plus formula to rationalize the tariffs.
Work on projects is in process and there are no issues of funding for at least two out of three projects. The potential problem could be the availability of imported RLNG. At this point from one operating terminal (Engro) 400 MMCFD gas is being imported on regular basis. It has a capacity to handle 500-600 mmcfd. Another terminal at port Qasim of similar capacity is supposed to come online in this tenure. This is apart from a terminal planned under CPEC to be executed by Chinese at Gawadar. Once all these terminals are in action, the LNG import could touch 1.5-2 bcfd.
But its all in the air and timelines can change. At this point only one terminal owned by Engro is operating and will that be enough to feed the new RLNG projects? The projects would need around 600 mmcfd gas and Engro terminal can take care of supply of this magnitude. However, there would be a cost to be paid by those enjoying this gas today.
Textile industry is happy these days as abundant supply of RLNG is letting them produce electricity at cheaper rates than grid. The additional gas has increased the supply of natural gas in the country; and everyone, be it power producer, fertilizer manufacturer or industrialist is jubilating.
But once the RLNG plants are online; the government owned projects would have the first right of refusal. And in the absence of other terminals; the existing players in various sectors would be at loss. Providing gas to textile to generate electricity on their captive power plants is an inefficient solution. A better option could have been to let the IPPs produce power on RLNG.
Of course IPPs are more efficient than CPPs. And around 220 MW CPP capacity exists in Pakistan. The problem is the electricity cost is based on the weighted average of all the fuel components on all the efficient and inefficient plants; and all kind of losses and interest payments are incorporated in the final price. Hence, those who are producing themselves are better off than to those on grid.
But that issue could be resolved by specific production by IPPs for industry, especially exporters, and rates could be negotiated based on the actual production cost. However, somehow an easier option of direct supply of gas is opted. Anyways, some plants which can either run on gas or diesel are getting gas nowadays.
If they do not get gas; they do not operate or partially operate, as diesel option is too expensive. In Punjab, there are plants such as part of KAPCO, Rosh and a few other IPPs that need 350-400 mmcfd of gas to operate; or else they would remain idle. The RLNG based new plants would require around 600 mmcfd. Hence the total need of power plants by 2018 would be around 1 bcfd.
All you need is one more terminal for importing gas at port. Transporting them to plants at load centre is a daunting task. The existing SSGC and SNGPL network can enhance its capacity by around 400 mmcfd by branching out; and work is in progress on that front.
It goes without saying that enhancement advantage would go to new plants. However, to have gas for other plants, industries, CNG and all; there is a need of new north south pipeline which has an estimated cost of $2-2.5 billion. This pipeline prospects are in doldrums; the government is envisaging Russian investment for it which is sketchy.
It can be said without doubts that the north-south gas pipeline will not be completed in this governments tenure. Hence, when the new RLNG plants will come online; other plants would remain deprived of gas and may not operate; and the addition to grid may remain elusive.