Power ministry opposes gas supply to Engro plant

Insists on diversion of gas to the Guddu power station

ISLAMABAD:

The Ministry of Water and Power has opposed the proposal of continuing gas supply to Engro Fertilizers from the Mari field and wants to divert it back to the Genco-2 power plant.

Engro has continued to receive gas from the Mari field since July 2013. Earlier, the Pakistan Peoples Party government had allocated 60 million cubic feet of gas per day (mmcfd) from the field to the Guddu power plant, which was later diverted to Engro.



The Ministry of Water and Power’s remarks came following a summary sent by the Ministry of Petroleum and Natural Resources to the Economic Coordination Committee (ECC), suggesting that since the gas belonged to Mari-based fertiliser plants, it should permanently remain with the fertiliser sector without affecting production of urea.

In an ECC meeting on December 24, 2014, Engro was permitted to consume 60 mmcfd from the Mari shallow reservoir after the company agreed to install a gas-boosting compressor for the 747-megawatt combined-cycle Genco-2 plant. The gas diversion to Engro was valid until December 21, 2015.

The water and power ministry, while giving its opinion, said according to the government’s decision, the power sector stood second in priority to domestic consumers in gas allocation.



As such, it said, the power sector should be given priority over fertiliser plants and the Guddu plant was currently the largest power generation facility in the public sector with available capacity of around 1,320MW. Apart from this, rehabilitation work was undertaken to increase the capacity by 360MW by year-end. As such, the power plant required adequate gas supply.

The ministry said the 60 mmcfd gas was taken from Genco-2 in July 2013 and was given to Engro in a temporary arrangement. Through a contract between Genco-2 and Engro, it was agreed that Engro would continue to use the gas until December 2015 and install a gas compressor at the power plant.

“In view of the above, the Ministry of Water and Power reiterates that the 60 mmcfd gas should be allocated to Genco-2 in compliance with the ECC’s earlier decision and the contractual agreement between Engro and Genco-2,” the ministry said.



The petroleum ministry, however, said under the fertiliser policy for 2001 the government had dedicated the shallow reservoir of Mari field to the fertiliser industry while the deep reservoir had been earmarked for the power plants as it was suitable for electricity generation.

It pointed out that 100 mmcfd from the Mari deep was allocated to the new power projects near Mari gas field which would be identified by the Ministry of Water and Power in accordance with the approved power policy.

Later, the allocated gas was supplied to Foundation Power Company Deharki and Star Power Generation Limited (SPGL) at the rate of 60 and 40 mmcfd respectively. Later, the volume was enhanced to 65 and 44 mmcfd respectively in line with an ECC’s decision.

So far, SPGL has not been able to start construction of its power plant and has not even achieved the financial close. In view of its failure to utilise its share of gas, the ECC in May 2011 allocated the gas to SNGPL for onward supply to the Thermal Power Station Guddu (Genco-2) for two years.

After laying a pipeline, gas supply to the thermal power station began in March 2012. This allocation ended on March 9, 2014.

However, Mari Petroleum has continued to supply gas to the power station in the national interest. However, gas offtakes by the power station has remained very erratic.

Published in The Express Tribune, December 25^th, 2015.

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