ISLAMABAD:
The Economic Coordination Committee (ECC) of the cabinet has dismissed the suggestion of easing rules to allow Pakistan Petroleum Limited (PPL), a state-owned oil and gas explorer, to utilise gas from its own field for setting up a 50-megawatt power plant.
Instead, the committee has proposed that gas from the field can be offered through open bidding to a third party, officials say.
The Ministry of Petroleum and Natural Resources, in a meeting of the ECC on August 15, tabled a request, seeking allocation of 18 million cubic feet of gas per day (mmcfd) from Wafiq X-1 well for the upcoming power plant of PPL in an attempt to bring first gas supplies online on a fast track.
However, the economic managers pointed out during the deliberations that the ministry was seeking relaxation in the Petroleum Policy of 2009, which had been approved by the Council of Common Interests (CCI) – an inter-provincial committee.
The ECC was not a competent forum to make revisions to the policy and the proposal fell outside the scope of the current policy, they said.
They also noted that to support the proposal, the views of Private Power and Infrastructure Board (PPIB), National Electric Power Regulatory Authority (Nepra) and Law and Justice Division were required, which had not been obtained.
Furthermore, a transmission line needs to be laid to the Shahdadpur grid station for which the Ministry of Water and Power should submit a plan to the Planning Commission for approval.
“Gas can be offered through an open bidding process to a third party,” the ECC said and asked the petroleum ministry to draw up a policy framework for consumption of unutilised gas connected to the main system.
PPL, with 50% working interest in Gambat South block in Sanghar district, Sindh, has discovered gas in Wafiq X-1 and Shahdad X-1 wells in the block.
Both wells are in the testing phase during which an estimated 30 to 60 mmcfd of gas will be produced.
PPL has given a detailed project development plan and stated that the 50MW power plant is in parallel with the setting up of gas processing facilities for the sale of gas to Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Limited (SNGPL) during the testing phase.
The main features of the power project include acquisition of special-purpose power generation equipment on operating lease and supply of electricity generated by the plant to the Shahdadpur grid, which is only around 10 km from the well. PPL will also be responsible for providing fuel-quality gas for the plant.
Following the testing phase, PPL may consider the option of continuing power generation and setting up a permanent combined cycle power plant keeping in view the potential of existing discoveries to produce up to 64 mmcfd for four to six years. The success of the project will pave the way for other exploration and production companies to follow suit.
Assuming that PPL will get power tariff approved from Nepra in the range of 9 to 12 cents per unit, the operating lease of power generation equipment will be more viable, which will result in low-cost electricity generation and early monetisation of discovered gas with swift payback of investment.
Published in The Express Tribune, September 3rd, 2014.
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