The federal government has decided to revisit gas pricing mechanism for thermal power plants including the Authority competent to make gas allocations to the new power sector, well-informed sources in Petroleum Ministry told Business Recorder.
Presently, Petroleum Ministry is responsible for allocating gas to the power sector on the recommendations of Private Power and Infrastructure Board (PPIB) and formal approval of the Economic Co-ordination Committee (ECC) of the cabinet. There are reports which suggest that in the past this authority was misused by some vested interests who allocated gas for those power projects which were shown only on paper.
The new decision has been taken by a high level committee headed by the Finance Minister, Dr Abdul Hafeez Shaikh. Giving the details, the sources said that M/s Mari Gas Company Limited (MGCL) was providing 110 mmcfd Mari Shallow gas to Thermal Power Station Guddu (TPSG) which was subsequently diverted to Fatima Fertiliser Company Limited (FFCL) through the ECC decisions taken on August 28, 2004 and February 10, 2009.
Gas supply to TPSG from MGCL was gradually reduced after the commissioning of M/s FFCL. Only two machines out of 13 per generating units at TPSG, capable of dual firing were converted to oil with maximum furnace oil consumption rate of 500 tons per day, equivalent to 28 mmcfd of Mari Shallow gas, hence there was a deficiency of 82 mmcfd gas.
The sources said, 100mmcfd gas is being directly supplied from Kandhkot gas field to TPSG. The tenure of Gas Sale Agreement (GSA) stood completed in April 2010, therefore, in order to operate the generation, plants, formal allocation of remaining gas reserves of Kandhkot gas (till field''s depletion expected in 2019-20) to TPSG at the rate of 100mmcfd was obligatory.
SNGPL is providing 50 mmcfd gas from Kandhkot to GPSO against swap of equal quantity of gas through Zamzama since September 2004. The company is also supplying an additional 40 mmcfd Kandhkot gas to TPSG which is in lieu of Mari Shallow gas. This quantity can be further increased by another 10 mmcfd by M/s PPL making a total of 50 mmcfd.
The sources further stated that PPIB has allocated 44 mmcfd to M/s Star Power Generation Limited which is likely to take another two years for commissioning. The allocated 44 mmcfd gas is available for any other power project on interim basis. MGCL has offered 44mmcfd gas from Mari Deep to SNGPL for supply to TPSG for two years or until commissioning of SPGL.
According to sources, MGCL and Pepco have agreed to share the construction cost of 10-km long pipeline from Mari Deep to Mari Shallow delivery point. The Ministry of Water and Power has sought the approval of following proposals from the committee: (i) M/s PPL to continue supply of 100 mmcfd raw dehydrated gas from Kandhkot gas field directly to TPSG till 2019-20; (ii) in lieu of diversion of 110 mmcfd Mari Shallow gas from TPSG to FFCL, the following arrangement was solicited; (a) 50 mmcfd raw dehydrated gas already being supplied to Guddu from Kandhkot be formally allocated to SNGPL for supply to TPSG till 2019-20, thereafter, the gas supply will gradually decline and; (b) 44 mmcfd from Mari Deep( low BTU gas equivalent to 34 mmcfd Mari Shallow gas) allocated to SNGPL for supply to TPSG.
The Ministry had also proposed that PPL, SNGPL, MCGL and Pepco will sign back to back GSAs within six months of gas allocation. When the issue came under discussion in the meeting, it was pointed out that the efficiency of these power plants has receded with the passage of time; therefore, these plants cannot produce optimum electricity.
Ministry of Water and Power, however, argued that at present less than 50 per cent electricity is generated from these plants. Nevertheless, gradually, new machinery is being installed replacing the old one which would significantly enhance their capacity. After detailed discussion, the meeting decided to allocate 44mmcfd gas to TPSG already earmarked for Star Power for two years as interim arrangement.