The Karachi Electric Limited (KEL) has approached National Electric Power Regulatory Authority (Nepra) for modification in its generation licence urgently, aimed at using RLNG as alternative fuel instead of RFO in case of shortage in gas supply quota of 170 MMCFD, which will lead to increase in tariff.
KE's Secretary, in its petition to the regulator, has argued that considering the current demand-supply situation along with growing electricity requirements of the Karachi City and significant curtailment of Natural Gas by SSGC, KE is proposing to use RLNG as an optional/backup fuel to ensure availability of plants in case of reduction in natural gas supply.
In meetings with Government for resolution of gas supply issues, both SSGC and GoP confirmed availability of RLNG and in this regard an agreement is expected to be finalized soon and will be submitted to Nepra.
Usage of RLNG will result in increase of consumer tariff as RLNG is three times more expensive than natural gas. However, in view of current scenario, where SSGC has unilaterally reduced the gas supply to KE's power plants and resulted in their redundancy, no other cheap option is available to KE than operating on RLNG. Additionally, as compared to High Speed Diesel (HSD) and Furnace Oil, RLNG is cheaper, hence a more viable option.
Presently, the generation cost of electricity at BQPS-1, unit-1 on natural gas is Rs 4.23 per unit, furnace oil, Rs 13.14 per unit and RLNG Rs 12.37 per unit. The generation cost of unit-2 on natural gas has been calculated at Rs 4.26 per unit, furnace oil, Rs 12.95 per unit and RLNG Rs 12.19. Unit 3, natural gas Rs 4.40 per unit, furnace oil, Rs 13.37 per unit, RLNG Rs 12.59 per unit. The fuel cost comparison of other units of BQPS-1 has been shared with Nepra.
The comparison of BQPS 2, KCCP, KHTPS and SGTPs shows that the consumers benefit from use of RLNG over High Speed Diesel (HSD) is almost Rs 6-7 per unit. "The proposed changes would result in lower tariff for consumers as opposed to use of HSD or FO at these plants," claims KE management.
According to the KE, the proposed change will improve availability of generation plants due to option of RLNG however the same will be achieved at the cost of increase in tariff to consumers, as it is three times as expensive as natural gas. In view of existing situation affecting consumers, no other cheap option is available to KE, hence Nepra was requested to approve their request for modification with immediate effect to include RLNG as an alternate fuel source for existing plants.
KE has also requested Nepra to allow KE to use RLNG on provisional basis until the process for modification is completed as the same is required to bridge the demand-supply gap in light of prevailing shortage of natural gas.
KE's generation fleet has a total available capacity of 1,902 MW, out of which around 913 MW depends on gas and requires at least 180 MMCFD to operate, while BQPS 1 is the only plant that can operate on dual fuel (Gas and Furnace Oil). Year on year, the gas being provided to KE by SSGC for power production has been declining thereby hindering KE's ability to generate ample power from its gas fired plants in order to meet the power demand of Karachi and its adjoining areas.
The current issue of erratic and reduced supply of gas received from SSGC, has seriously impaired the availability of KE's generation fleet. While, KE is evaluating the option of High Speed Diesel (HSD) as an alternate fuel for BQPS II and KCCPP, the possibility of operating the power plants on RLNG subject to certain modifications/ alterations at Plant sites was assessed. This assessment led to the request to NEPRA to also include RLNG as an alternate Fuel Source for KE's Power Plants in Schedule I of KE's Generation Licence. Further, in future KE would also evaluate option of dedicated RLNG line to ensure optimum cost and benefits for consumers.
According to KE, benefits associated are as follows: (i) optimal utilization of KE's existing generation fleet due to removal of fuel supply constraints; (ii) improvement in operational flexibility of the existing generation fleet by having different fuel mix options; and (iii) benefits' for consumers due to reduction in usage of Furnace Oil at BQPS-I as well as a cheaper source of power as compared to other alternative fuel ie HSD.
With certain minor alterations in anatomical structure of KE's Power Plants, these plants will be ready for their operation on RLNG. However, the proposed modification will not result in change in any operational parameters of the existing power plants.
"The proposed modification will resultantly improve the availability of supply through addition of an another fuel option of RLNG, which can be used in situations where gas supply is reduced or is unavailable, subsequently improving the performance of KE as per its obligations under the licence," said Aamir Ghaziani, Director Finance and Regulations, KE, in his letter to Registrar Nepra.
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