ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet has sought opinion of the Ministry of Law on a proposal to continue gas supply to Engro Fertilizers, a subsidiary of Engro Corporation, from the Mari field, an official says.
The issue arose after the arrangement for gas supply from the Mari field to the fertiliser manufacturer ended on December 21, 2015. The gas was earlier being provided to the Guddu power plant.
Gas supply to be diverted from Engro to Guddu plant
In a move meant to support the agricultural sector, the Ministry of Petroleum and Natural Resources, in a summary sent to the ECC, has argued since the gas belongs to Mari-based fertiliser plants, it should continue to support the country’s urea production.
In order to make up for the gas loss to the Guddu plant, the ministry has proposed allocation of 44 million cubic feet per day (mmcfd) by diverting it from Star Power Generation.
It pointed out that 100 mmcfd from the Mari’s deep reservoir was earmarked for new power projects near the gas field, which were identified by the Ministry of Water and Power in accordance with the approved power policy.
Power ministry opposes gas supply to Engro plant
The power ministry made the gas available to Foundation Power Company Deharki and Star Power Generation in the ratio of 60:40 mmcfd. Subsequently, the volume was enhanced to 65 mmcfd and 44 mmcfd respectively in line with an ECC decision.
However, Star Power has not been able to start construction of its power plant to date and has also failed to achieve financial close. Owing to the breach of gas supply agreement with Mari, the ECC diverted the gas from Star Power to Sui Northern Gas Pipelines for onward supply to the Guddu thermal power station.
The issue has landed in court and the petroleum ministry wants to allocate the gas to the Guddu plant and subsequently continue supply of 60 mmcfd to Engro, which was diverted from Guddu.
“The ECC has no objection to continuing gas supply to Engro, but it needs the opinion of law ministry for the allocation of 44 mmcfd, which is in litigation,” the official said.
Ministry wants Engro to continue getting gas from Mari
In the summary, the petroleum ministry pointed out that under the 2001 fertiliser policy, the government had dedicated a shallow reservoir of Mari field to the fertiliser industry whereas the deep reservoir was dedicated to power producers as it was suitable for electricity generation.
Published in The Express Tribune, January 2nd, 2016.
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