The PPP-led government increased power tariff by 63.6 percent during last two and a half years. This was stated by sources in the Ministry of Water and Power while presenting an alarming picture before the Ministry of Petroleum and Natural Resources to compel it to make the entire gas available at Kunar/Pasakhi gas field for power generation.
"The current generation pattern and fuel mixes has more than tripled the cost of generation, requiring proportionate increase in power tariffs," the Ministry of Water and Power said, adding that only during the last 30 months there has been an increase of 63.6 percent in power tariff. The Water and Power Ministry has warned that if the situation continued, further increase in power tariff would be inevitable.
"Natural gas from Kunar/Pasakhi gas field has been identified as a major intervention to make power tariff more affordable," the Ministry of Water and Power said, adding that, at present, electricity cost on fuel oil stands at Rs 11.37 per Kwh, diesel at Rs 15.88 per Kwh, and natural gas at Rs 2.86 per Kwh.
But the Ministry of Petroleum (MoP) strongly opposed the plan of the Ministry of Water to allocate entire gas available at Kunnar/Pasakhi gas fields for power generation, saying that the Economic Co-ordination Committee (ECC) of the Cabinet had already allocated 250 MMCFD gas from Pasakhi/Kunner field to SSGC, which would share 50 percent gas with SNGPL through swap arrangements.
"Reopening of the settled issue is not supported," the Petroleum Ministry said, and urged the Ministry of Water and Power to update inefficient power plants to generate more power with existing gas allocation. "This may lead to uproar among the gas consumers and massive unemployment by the fertiliser industry and CNG sectors," it added.
The MoP warned that SNGPL, which is unable to fulfil its commitments under Gas Sales Agreements (GSAs) with independent power producers (IPPs) due to gas shortage, would be forced to pay heavy penalties in the form of alternative fuel cost.
On the SNGPL and SSGC systems, a demand of 150 MMCFD per annum is being added due to Government of Pakistan targets of new gas connections. At present, SSGC and SNGPL are facing a shortfall of more than one billion cubic feet gas per day (BCFD) which is projected to reach 1.8 Bcfd in 2014-15 despite addition of Pasakhi/Kunnar, other small fields and anticipated commissioning of Iran Pakistan (IP) gas pipeline and LNG project. With the progressive depletion of the major gas fields, it may not be possible for SSGC/SNGPL to meet the demand of the existing consumers.