ISLAMABAD: K-Electric (KE) has sought support of Petroleum Division (PD) to get 100 MMSCFD indigenous gas from the Mari Petroleum Company Limited (MPCL), which is declared surplus after the expiry of its agreement with SNGPL, well-informed sources told Business Recorder.
KE has cited reference of its letter of November 3, 2023 in which a request was made for allocation of indigenous gas for KE’s gas fleet from a specified gas field. This gas can then be either swapped or transported to KE fleet as required.
With respect to its correspondence and Secretary Petroleum Division’s recommendation to engage with gas exploration companies, KE has explained that it has initiated discussion with Mari, PPL, PEL, Eni, OGDCL and MoI, etc., to ascertain availability of gas.
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“It has to come to our knowledge that Mari Petroleum Company Limited has 100 MMSCFD gas available, as their contract with SNGPL for supply of 100 MMSCFD of gas has expired as of June 2024,” said KE’s Chief Strategy Office Shahab Qader Khan.
KE is of the view that this gas be reallocated to it to reduce the burden on the Karachi consumers.
Considering, if 100 MMCFD of indigenous gas is provided to KE for running its fleet, it would reduce KE’s generation basket. The comparison shows that RLNG price is $12.35/ MMBTU whereas cost of indigenous gas is $ 3.77/MMBTU. The share of RLNG in fuel cost component is Cents 7.71 per unit, whereas, indigenous gas cost share in basket is Cents 3.09 per unit.
The impact of RLNG price is in accordance with the OGRA notification of June 28, 2024 whereas indigenous gas price considered at Rs 1050/ MMBTU, in accordance with the OGRA of February 15, 2024.
KE has maintained that consistent supply of 100 MMSCFD of indigenous gas rather than RLNG would translate to $328 million (Rs91.4 billion) in annual savings which may also reduce the power utility’s subsidy requirement.
In November 2023, KE, in its letter had stated that it is aware of the depleting gas scenario of Pakistan and in consideration of the CCoE allocation of 130 MMSCFD of indigenous gas to KE, adding that it wanted to explore the possibility of securing gas from specified gas fields with support of Petroleum Division.
Given, that KE is a utility responsible for supplying power to Karachi’s consumers. Its sole reliance on expensive imported RLNG has resulted in a growing burden on KE consumers.
It further stated that in current times of economic crisis, providing low-cost power is a pressing priority to relieve the residential and industrial consumers from hefty electricity bills and in turn enhance economic growth. Hence, it is critical to find a solution for 70 per cent of KE’s fleet which is on gas to be able to operate at affordable rates.
Copyright Business Recorder, 2024
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