ISLAMABAD: The government has reportedly given one month’s time to Power Division for preparation of constraints removal plan, meant to reduce utilization of furnace oil for power generation to a minimum level, sources close to newly-appointed Special Assistant to Prime Minister told Business Recorder.
Besides reforms in the tottering power sector, the newly-appointed SAPM Tabish Gauhar, former Chairman of erstwhile KESC, has been given the assignment to facilitate sale of 66.4 of M/s Abraaj Capital in KE to Chinese company M/s Shanghai Electric Power (SEP). He has shared his plans with the top bosses, but these are yet to be presented to the Cabinet.
The sources said government has given go-ahead to the Power Division for essential import of furnace oil for Generation Companies (Gencos) and Independent Power Producers (IPPs). However, Power Division has been directed that while working out import requirements, it must ensure that all other available capacities are fully dispatched and local furnace oil production is fully utilized.
According to sources, Power Division requested Finance Ministry to release half of the tariff differential subsidy’s amount allocated for FY 2020-21 to import over 1 million metric tons of HSFO and LSFO respectively to meet fuel requirements of Gencos and IPPs, well informed sources told Business Recorder.
A meeting under the chairmanship of Minister for Energy was held in Power Division on September 25, 2020. Special Assistant to the Prime Minister on Petroleum and Natural Resources and former SAPM on Power along with Secretaries of Power Division and Petroleum Division attended the meeting.
The meeting reviewed energy supply and demand in the national grid system. National Power Control Centre (NPCC) apprised that owing to low stocks of LSFO and RFO many Gencos and IPPs have very low fuel inventory while gas and RLNG supply may also be downgraded in view of increasing demand of gas in coming months.
Keeping in view, the current fuel situation the forum reviewed the power demand for October, November, and December 2020 as well as January 2021, and the Petroleum Division indicated that during the winter further RLNG will be diverted to domestic gas sector and there would be an expected cut in RLNG and natural gas supply to power sector. Additional fuel supply chain would be required to maintain power in grid through the HSFO and LSFO fired power plants.
The meeting was apprised that due to expected power demand as forecast by NPCC, a total of 736,078 MTs of HSFO and 362,080 MTs of LSFO was the estimated requirement from October 2020 to January 2021 to maintain adequate power supply and strategic reserves.
Petroleum Division indicated that local refineries would not be in a position to meet such demand. Therefore, the required quantity would have to be imported. It was agreed that Petroleum Division would confirm the local LSFO/ HSFO availability and remaining demand would be met through import of Petroleum Division.
The representative of CPPA-G stated that currently the cash flow position to order for such supply was not adequate and additional financial finances would be required to augment the cash flow to maintain such oil supply chain. Further, it was apprised that the Finance Division has not so far released first quarter subsidies.
Power Division has proposed that Petroleum Division makes arrangements for the import of HSFO and LSFO of over 1 MMT for relevant Gencos and IPPs. Power Division has also requested Finance Division to release 50 per cent of TDS budgeted for 2020-21 to enable CPPA-G to make payment for the FO requirements.
The sources maintained that Power Division has been directed to submit a summary to the ECC for release of 50 per cent tariff differential subsidy earmarked for the FY 2020-21. However, at the same time, it has also been directed that in future the Power and Petroleum Divisions will jointly work out HSFO and LSFO import requirements keeping in view the local HSFO LSFO production and generation requirements of power sector.
The sources said an unpleasant situation was witnessed at the public hearings on monthly FCAs in Nepra, when Nepra’s top boss fought with senior officials of CPPA-G and NPCC on despatch of expensive power plants on furnace oil and HSD.
The NPCC officials recently gave a detailed presentation on system constraints due to which furnace oil was and is being dispatched keeping in view load centres.
However, the Power Division has been directed by Minister for Planning, Development and Special Initiatives to present detailed analysis of system constraints due to which furnace oil plants have to be dispatched.
Copyright Business Recorder, 2020
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