Power plants in K-P: Increase in gas supply could open Pandora’s box

Finance ministry argues other provinces will follow suit and seek more gas allocation.


Zafar Bhutta December 18, 2014

ISLAMABAD:


The Ministry of Finance, while responding to the request of Khyber-Pakhtunkhwa (K-P) government for allowing consumption of gas produced in the province, argues that allocation of the entire output to the province will open a Pandora’s box, officials say.


The K-P government had been consistently pressing the Ministry of Petroleum and Natural Resources to earmark an additional 100 million cubic feet of gas per day (mmcfd) to pave the way for setting up combined-cycle gas turbine power generation projects under Article 158 of the Constitution.

The article says “the province in which a wellhead of natural gas is situated shall have precedence over other parts of Pakistan in meeting requirements from the wellhead subject to commitments and obligations as on the commencing day.”

According to the officials, the finance ministry told the Economic Coordination Committee (ECC) in its meeting held on November 20 that implementation of Article 158 would open a Pandora’s box as other provinces would also start asking for implementation of the clause. If done so, Punjab will face a crippling gas shortage.



The petroleum ministry is already seeking to amend Article 158 to ward off controversy in the future and ensure a smooth and continuous supply of gas to provinces, including Punjab, which has a low share in production. Sindh is producing 70% of total gas output in the country.

“If like Khyber-Pakhtunkhwa, Sindh also comes up with a demand that it should be allowed to consume all gas produced in the province, it will spark another controversy,” an official remarked.

However, the ECC approved the provision of gas to K-P with some conditions, dismissing concerns of the finance ministry.

It agreed to the allocation of 100 mmcfd for setting up combined-cycle gas turbine power plants in the province.

At present, average supply from various gas-producing sources in the province is 370 mmcfd whereas average consumption stands at 260 mmcfd.

Contrary to the summer months, the province consumes the whole gas volume of 370 mmcfd in winter. Thus, the surplus of 110 mmcfd will only be available in summer if demand is restricted to the existing level, the possibility of which is quite remote.

According to the plan, gas supply to combined-cycle power projects will depend on acceptance of the condition that in the first phase 50 mmcfd could be allocated from January 2016 and another 50 mmcfd from January 2018.

The power plants will be dual-fuel based and gas supply will be subjected to the load management programme. All the risks and costs associated with the projects will be borne by the K-P government in the case of depletion of gas resources in the province or an increase in demand from other sectors.

The provincial government will also undertake and complete a bankable feasibility study, land acquisition, regulatory approvals, financial close and engineering, procurement and construction (EPC) tender process.

Published in The Express Tribune, December 19th, 2014.

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COMMENTS (6)

Affan | 9 years ago | Reply

So you can setup combined gas turbine in Punjab called Nandipur without having Gas in Province but not in KPK

Dr. Khalid | 9 years ago | Reply

Punjab dominated government is alienating other provinces and that is exactly the root cause of all problems. We wouldnt have problems in Baluchistan and KP if people were given their rights to their resources.

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