Fertiliser producers lobby for enhanced gas supplies

Move will squeeze power plants that need gas to boost production.


Zafar Bhutta April 16, 2014
47.1% of allocated gas has been received by power plants in the current fiscal year, resulting in higher tariffs and increasing outages. PHOTO: FILE

ISLAMABAD: The Ministry of Water and Power, which is striving to make promised gas available to power plants, may face a setback as fertiliser manufacturers are lobbying to win enhanced gas supplies in order to increase urea production, sources say.

Power producers have already been unable to reach maximum production levels in the face of reduced provision of gas and are forced to consume expensive furnace oil or high-speed diesel for generating electricity.

Four independent power plants, which are called the most efficient with over 800 megawatts of capacity, have got no gas since 2011 following the expiry of their gas supply agreements. At present, they either stay closed or run on diesel to ease shortages during periods of widespread load-shedding across the country.



In a meeting on March 28 of a sub-committee constituted by the Economic Coordination Committee (ECC), the Ministry of Petroleum and Natural Resources disclosed that an agreement for allocating 157 million cubic feet of gas per day (mmcfd) to the Thermal Power Station Guddu had expired. However, the power station was still being provided gas in the national interest, sources said.

The body is tasked with making arrangements for the supply of entire gas quota to the fertiliser industry in order to enable it to meet requirements of farmers in the Kharif sowing season.

In the current fiscal year, power plants have got only 47.1% of the allocated gas, resulting in higher electricity tariffs and increasing outages in the country. Government policies are blamed for
the squeezed supplies as new gas connections are provided for winning votes as well as to compressed natural gas (CNG) stations and fertiliser producers.

Power plants were to receive 1.525 billion cubic feet of gas per day but they got only 718 mmcfd in the current year. Plants connected to the network of Sui Northern Gas Pipelines Limited received only 30.8% of gas while the plants linked with Sui Southern Gas Company’s system got 24.4%.

However, power plants got 84.1% of supplies from different gas fields with which they were directly connected.

According to sources, an official of the petroleum ministry told the sub-committee that the Thermal Power Station Guddu had been earmarked 200 mmcfd of gas from Pak­istan Petroleum Limited’s Kandh­kot field. However, it got 157 mmcfd over the past 12 months.

Apart from this, outstanding payments against the sale of gas to the Water and Power Development Authority (Wapda) were Rs15.5 billion.

However, the official said the agreement for gas supply had expired and at present no agreement existed, but supplies had not been stopped in the national interest.

He pointed out that in April 2010, 60 mmcfd from the Mari field was diverted from fertiliser plants to the Thermal Power Station Guddu for increasing power generation. Later, the gas was allocated to Engro Fertilizer in August 2013 for meeting the anticipated urea shortfall in the Kharif season in line with an ECC decision taken in July 2013.

According to the official, the shallow reserves of Mari had been dedicated to the fertiliser industry while deep reservoirs were set aside for the power sector.

Published in The Express Tribune, April 17th, 2014.

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