The Economic Co-ordination Committee (ECC) of the Cabinet, scheduled to meet on Tuesday, is likely to approve allocation of 18.5 mmcfd additional gas for rental power plants (RPP) 1 and 11 at Naudero, owned by US based Walters Power International (WPI) Limited. The WPI has already been allocated 12 mmcfd gas for existing RPP-1 at Naudero and has requested an increase in its gas quota to 15.5 mmcfd.
The WPI has also requested allocation of 15 mmcfd additional gas for 49.52 MW rental power plant-11 at Naudero. Sources told Business Recorder on Wednesday that the Water and Power and Petroleum Ministries had proposed to the ECC to approve additional allocation for rental power projects at Naudero. However, the Ministry of Industries and Production opposed the proposal, requesting the ECC to provide gas to already established industry.
According to the sources, based on the commitment of the Sui Southern Gas Company Limited (SSGCL), the Petroleum Ministry proposed diversion of an additional 15 mmcfd gas from the SSGCL''s system, including diversion of 14 mmcfd gas currently supplied to the cement sector, for use by the PPIB/Ministry of Water and Power for power generation on "as and when available basis" for five years up to October, 2014.
The SSGCL has maintained that it has revised its pipeline design to ensure supply of gas at 500 psig, and, therefore, the installation of compressors by project sponsor and relevant gas allocation was not warranted. For additional capacity of 49.52 MW, the SSGCL can divert around 14 mmcfd gas, currently supplied to cement sector, to the Water and Power Development Authority (Wapda) and later to the rental power project at Naudero, subject to Natural Gas Allocation and Management Policy 2005.
THE MINISTRY OF INDUSTRY HAS COMMENTED ON THE SITUATION AS FOLLOWS:
-- Already established local industry needs should be met on priority basis.
-- The existing industry should be given incentives to switch to other energy sources for fuel.
-- Only such industry should be encouraged that utilises gas as a feed stock and not as fuel.
-- The new power generation units are designed to operate on coal fuel as a policy measure.
According to the sources, the Ministry of Industry is of the view that the natural gas policy needs to be prioritised in view of the proven gas reserves that are inadequate to meet total national demand. "Our proven vast coal reserves are expected to be tapped in the near future and it is only pragmatic to invest in new coal fuelled power plants infrastructure that may be utilised in the long term," the Ministry of Industry said in its comments.
The sources said that the Ministry of Water and Power had supported allocation of additional gas for power generation purposes. Keeping in view the contracts of rental projects, the ministry suggested that the gas allocation should be on firm basis instead of "as and when" available basis.
The ministry argued that the services contract of rental power projects did not provide dual firing arrangement and conversion in combined cycle plant and the increase in efficiency of aero derivative gas turbine in combined cycle mode was limited. Moreover, the units are not easily susceptible to dual fuel arrangements.
The Water and Power Ministry pointed out that as per the fuel arrangement in the Naudero-1 Rental Services contract dated June 4, 2009, the buyer, ie concerned Genco, had to arrange sufficient quantity of gas for full load operation of the plant. The Water and Power Ministry stated that the WPI had solicited for allocation of 27 mmcfd gas on account of elimination of compressor load due to supply of gas at 500 psig instead of earlier committed 150 psig.
The compressor load is limited and does not significantly alter the over all gas requirement of 30.5 mmcfd gas for Naudero-1 and 11 rental power projects. The Water and Power Ministry proposed to allocate 30.5 mmcfd gas for five years on round the year basis for the Naudero 1 and 11-rental power projects instead of 27 mmcfd.