Pakistan is unlikely to have any new independent power producer (IPP) as the Petroleum Ministry has denied gas availability for gas-fired or dual fuel-based thermal projects in future, sources told Business Recorder here on Monday.
"Petroleum Ministry has reviewed gas availability position in the country and, based on overall projections, it is not possible to provide gas for power projects, in addition to the allocation already made for the current projects," said Director General, Gas, Saeed Ullah Shah, in a letter to the Managing Director of Private Power Infrastructure Board (PPIB).
Sources said that PPIB wanted allocation of gas for power projects of Tecna, an IPP, which intends to set up thermal power plants. Keeping in view the commercial operation date (COD) of planned IPPs, block gas allocation at the PPIB's disposal would be 300 mmcfd in 2007-08, followed by 240 mmcfd in 2008-09, and 180 mmcfd in 2009-10 (whereas gas already allocated to IPPs is estimated at 151 mmcfd in 2007-08), 227 mmcfd in 2008-09 and 152 mmcfd in 2009-10.
The remaining balance would be 179 mmcfd in 2007-08, followed by 13 mmcfd in 2008-09 and 28 mmcfd in 2009-10. The Petroleum Ministry, citing the facts, has conveyed to the PPIB that gas availability is limited for the thermal power projects.
According to information provided by PPIB, it has been noted that up to 51 mmcfd gas in 2008-09 could be provided till October, 2008, which could be further extended if any of the placed IPP did not become operational as per expected COD, sources said.
The Petroleum Ministry further said that 40 mmcfd gas from the block allocation already placed at the disposal of PPIB may be considered for allocation to Tecna by PPIB on nine months basis period up to 2009-10 on the understanding that for the period up to October 2008 or till commissioning of planned IPPs, whichever is later, gas allocation would be only to the extent that remained uncommitted from the block gas allocation placed at the disposal of PPIB, sources added.
They said that the Petroleum Ministry has also set conditions for providing gas to Tecna, according to which the project should be implemented on fast track basis and completed within eight months of signing of the Power Purchase Agreement (PPA), as was decided in the case of Savari. The milestones as laid down for Savari power project would also be prescribed for Tecna, the Petroleum Ministry added.
Gas availability, as indicated for Savari previously could not be reconfirmed as other projects, including Wapda's rental power plants, have already got allocation against the said availability, sources quoted DG, Gas as saying.
"Gas availability to Savari was subject to milestones, to which it had committed and was within a time window. Since it did not meet the milestones, gas is no longer available either for it or any other party including associated technologies proposing to step in their shoes," sources said.
They said that PPIB had asked the Petroleum Ministry to ensure uninterrupted gas supply to independent power producers (IPPs) for 25 years, which is life of a power project, as per power policy 2002. "Petroleum Ministry has been asked not to issue comfort letter to the sponsors until gas is arranged for the complete term of IPPs which is possible after 2010-11," sources said.
PPIB worked out allocation of gas availability on 9-month basis from SNGPL system as 94 mmcfd each for 200 mw dual fuel power project at Balloki, Muridkey, Faisalabad, 450 mw project at Faisalabad and 350-400 mw project at Chichoki Malian.
Sources said that due to restricted gas supply either on 9-month basis (in SNGPL) or 11-month (in SSGC), PPIB was constrained to process dual-fired projects. Gas placed at disposal of PPIB is not only for less than a year basis and for shorter than the proposed terms of projects but also too meagre to squeeze anything for the following projects which are either issued LoI or at advanced stage of issuance of LoI, sources added.
They said that due to non-availability of 200 mmcfd gas, PPIB had to shelve 900 MW (600 MW Hawkes Bay and 300 MW (Gadani) projects in KESC area, where power shortages have reached alarming level.