The Economic Coordination Committee (ECC) of the Cabinet on Friday (today) will resolve a dispute between Power Division and Petroleum Division on the supply of RLNG to the two RLNG-fired plants being privatised, well informed sources told Business Recorder.
Recently Prime Minister Imran Khan directed the Privatisation Commission to resolve the issues of RLNG power plants at the ECC for smooth privatisation of both plants.
The issues are related to outstanding payment of Rs 10 billion revision of Gas Supply Agreement (GSA), Power Purchase Agreement (PPA), political force majeure of non-supply of gas and confirmation of Gross Calorific (GCV) for future LNG gas supplies.
The Power Purchase Agreement (PPA) also, for the purpose of privatisation, is required to be reviewed. System Operator, in coordination with CPPA-G should continue to give the Annual Production Plan (APP) based on the expected utilization of RLNG plants as per economic merit order to meet the projected demand, however, without any minimum take or pay obligation.
Petroleum Division has stated that PSO agreement with Qatargas, wherein the off-take is guaranteed cannot be reviewed before 2025(210 years since 2025). As such, the existing structure of the PPA, GSA and IA are required to be retained for the purposes of privatisation. It is the understanding of the Power Division that the review in 2025, will be both on price and volume basis.
The Power Division will submit two options for consideration and approval of the ECC which are is to withdraw the existing minimum guaranteed off-take of 66 percent on annual basis. Accordingly, the annual production plan will continue to be provided without any minimum guaranteed off-take of 66 percent and will be reflected in the revised PPA, GSA, IA to be executed for the purpose of privatisation of NPPMCL; or in case Government of Pakistan is contractually bound to adhere to PSO agreement with Qatargas up to the year 2025, following may be approved( a) withdraw the existing minimum guaranteed off-take of 66 percent immediately after the review period of PSO agreement with Qatargas in 2025 and till 2025 the following option shall be incorporated in the revised PPA, GSA, IA to be offered for privatisation and to ensure that SNGPL to follows NPCCs' instructions pertaining to diversion of unutilised RLNG and such instructions shall take precedence over any other RLNG supply arrangement of SNGPL with any power sector project operating on RLNG on " as and when available" basis and ;(b) till 2025, the difference of RLNG requirements for these two power plants as per economic merit order principle and the RLNG requirements for minimum 66 percent guaranteed off-take should be utilized by other sectors for the economy( on OGRA's notified price of RLNG) and/or sold back to the spot market and difference to be paid by power purchaser.
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