Gas supply for captive power generation: CCoE approves Petroleum Division’s proposal

ISLAMABAD: The Cabinet Committee on Energy (CCoE) has approved the proposal of Petroleum Division for moratorium/discontinuation of natural gas supply for captive power generation. The committee also approved the applicability of the policy from first February for the general industry and from first of March for the export-oriented industry.

The CCoE met with Federal Minister for Planning, Development and Special Initiatives Asad Umar in the chair at P-Block Secretariat on Thursday.

The Committee discussed a proposal of the Petroleum Division for moratorium/discontinuation of natural gas supply for captive power generation.

The proposal only applies to industries which are connected to the power grid and therefore, have an alternative electricity source.

The Petroleum Division briefed the committee that gas will continue to be supplied to all those industries where gas is being utilised as an integral part of the process, or where primary utilisation is not for power generation.

The new measure will be implemented in a way that no disruption is faced by any industry.

Industry not currently connected to the power grid, will be encouraged to shift from natural gas-based captive power generation to the grid.

The measures would, in the short term, make around 150MMcfd natural gas available for use in the power sector, which will replace expensive power generation on back up fuels. In the long term, around 3,000MW load is expected to move to the power grid, which will help to reduce average cost of power as well as help in reducing circular debt buildup.

The Petroleum Division emphasised that this measure would increase the overall utilisation efficiency of the scarce natural resource as large power plants are at least 30 percent more efficient than captive power generation units.

The committee, while approving the proposal, directed the Petroleum Division to institute a transparent and verifiable process for implementation of the new measure and arrange third-party verification as well.

It also directed that sufficient time be given to the industry to apply for new connections from the electric utilities.

The DISCOs will expeditiously process new connections and load enhancement applications for industries and ensure quality of supply to the industry.

The meeting was attended by Minister for Energy Omar Ayub Khan, Federal Minister for Information and Broadcasting Shibli Faraz, Federal Minister for Maritime Affairs Syed Ali Haider Zaidi, Advisor to the Prime Minister on Finance Abdul Hafeez Sheikh, SAPM on Petroleum Nadeem Babar, Abdul Razak Dawood, Adviser to the Prime Minister on Commerce and Investment and officials of various divisions.

Copyright Business Recorder, 2021