ISLAMABAD: The Project Committee of Private Power & Infrastructure Board (PPIB) has recommended that 226.5MW power plant of M/s Engro Powergen Qadirpur Ltd (EPQL) may be allowed to operate on commingled RLNG with available permeate gas till 2025, after which re-evaluation be done for further operation of the project, well informed sources in PPIB told Business Recorder.
The 226.5MW power plant by EPQL is utilizing low BTU Permeate Gas (PG) from Qadirpur gas-field. As per the latest gas profile shared by SNGPL, comingling fuel would be required to operate the plant technically at minimum level of 90 MW by the end of this year.
PPIB Board while approving Gas Depletion Mitigation-Plan/ Option (GDMP/GDMO)with RLNG in its 134th meeting directed NTDC and CPPA-G to provide despatch modelling and sensitivity analysis on comingled R-LNG, to be reviewed by the Projects Committee.
The Committee decided that further detailed sensitivity analyses under various scenarios be brought to the PPIB Board for decision. NTDC submitted sensitivity analysis in various scenarios and CPPA-G also forwarded a presentation on EPQL cost benefit/ sensitivity analysis for 2023-35 with different scenarios. CPPA-G also worked out the financial impact in various scenarios with normal system demand. PPIB highlighted some observations on the analysis made by CPPA-G.
The CPPA-G responded to the observations and it was decided that CPPA-G will also carry out the financial impact based on despatch analysis made by NTDC and the same will be presented to the Projects Committee.
In the meantime, CPPA-G Board decided that PPIB may opt to terminate the Implementation Agreement (IA) of EPQL and the project be handed over to some entity nominated by the government of Pakistan for its operation. EPQL expressed its interest for 25-55 MMCFD gas from Kandhkot and requested PPIB’s support for it. NEPRA in its suo moto proceedings on unavailability of power plants, directed to make urgent efforts for making Kandhkot gas available to EPQL.
OGDCL has also shared the tentative Qadirpur PG availability profile up to 2035- 36, according to which 32 to 6 MMCFD PG would be available for remaining 14 years. As advised by OGDCL, more than 50% of the recycled PG is recoverable whereas remaining PG is to be vented. The estimated revenue loss to gas supplier for vented gas is approx. Rs20 billion up to 2035. Considering the latest PG availability profile which was earlier expected to reach minimum level by 2017-18 whereas the actual gas availability was better, the option of maintaining the status quo so as to utilize the maximum possible available PG for next few months/ years can also be exercised.
On invitation of Managing Director, PPIB Shah Jahan Mirza, a presentation was given by a representative of CPPA-G.
Representative Planning Division opined that analysis of both CPPA-G and NTDC suggest that EPQL will get despatch till 2025, with no significant loss that can even be overcome considering safety margins and spinning reserves requirement in the system. Regarding buy-back or termination of project, it was discussed that it will lead to project transfer to some GoP entity like GENCOs, which may result in inappropriate O&M considering their experiences in other projects, besides arrangement of funding for plant modification/ pipeline. Moreover, such an arrangement will not be in line with the GoP focus on power sector transition towards management by private sector for efficiency enhancement. The project has also got an added advantage of black start facility, as was highlighted earlier by NTDC. It was also discussed that the project as running has the capability of being run for next few years in status quo; it will be of importance for power and energy security.
The Project Committee also deliberated on alternate gas supply arrangement for the project like Kandhkot. Representative Planning Division highlighted that there are other avenues of Kandhkot gas utilization being examined, thus it is not certain whether this gas can be allocated to EPQL, at this stage. It was also discussed that the option can be explored further to ascertain viability and availability for using Kandhkot gas by EPQL for power generation.
The Committee agreed that under prevailing economic conditions, where power generation is highly reliant on imported fuels, flaring of indigenous gas would not be prudent. Moreover, flaring is not the desired option considering its environmental implications.
Based on viewpoint of different stakeholders, the Committee discussed recommending that the project may operate on comingled RLNG with available permeate gas till 2025 and re-evaluation be done in 2025 for further operation of the project. EPQL would be asked to make necessary arrangements in this respect like plant modification, pipeline laying, etc., at its own cost.
Representative of Government of Punjab opined that EPQL is working at around 45% efficiency, whereas there are other projects available which are operating at above 60% efficiency. In such a situation, EPQL does not appear a feasible option. Representative Planning Division explained that since EPQL is getting flare gas for comingling, its weighted average cost of fuel would be lower and thus its tariff is expected to be lesser as compared to other plants. Moreover, the EPQL will be despatched on merit order.
MD PPIB added that even current provision of 50% minimum despatch will not be applicable and 100% merit order based despatch will be done if GDMP/ GDMO is implemented as minimum take-or-pay provision will not be carried forward.
After detailed discussion the Committee recommended that GDMPT/GDMO) for EPQL Power Plant, with the following terms and conditions: (i) EPQL will utilize RLNG as the comingling fuel with available Qadirpur permeate gas or HSD, as the case may be; (ii) term of the GDMP/GDMO shall be for a period up to December 31, 2025;(iii) EPQL power plant will be dispatched on economic merit order taking into consideration following criteria in the order of priority (a) on PG, to the extent of its availability, (b) on comingled PG and R-LNG till the time PG remains available, (c)on RLNG only when PG is completely depleted or not available; and (d) on HSD, as secondary/ backup fuel, when R-LNG is not available. There will be no provision of minimum dispatch or guaranteed off ‘take on any fuel in the PPA; (iv) all CAPEX and other associated costs to be incurred in relation to implementation of GDMO will be exclusively incurred by EPQL, with no liability or obligation of GOP, Power Purchaser or any other GOP entity under the respective project agreements; (v) EPQL will obtain approval of supplemental tariff with respect to fuel cost component from NEPRA for operating the plant on comingled RLNG; (vi) the project agreements (IA, PPA, GSA) will be amended to the extent necessary to give effect to GDMP/GDMO with the provision that GoP shall have unfettered right to terminate the IA on or after January 1, 2026 as if no GDMP/ GDMO were taken place. Operational details will be finalized through discussions under the relevant agreements;(vii) RLNG will be supplied by SNGPL on “as and when available” basis; (viii) arrangement will be implemented within minimum possible time, for which EPQL will liaise with SNGPL to reduce the period for pipeline laying and infrastructure development; (ix) any plant shut down for modification will be made in the scheduled outage period and there will be no additional outages allowed for implementation of this arrangement and (a) EPQL will be approached for confirmation on above GDMP/GDMO, before submitting the matter for approval by the PPIB Board, (b) EPQL project will be re-evaluated in 2025 to assess the financial viability and suitability of the EPQL project for power system, considering available fuel resources and dispatch analysis, and (c) option of using Kandhkot gas by EPQL for power generation, to ascertain its viability and availability will simultaneously will be explored further.
Copyright Business Recorder, 2022
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