Govt to import gas exclusively for power plants

Three LNG-based plants of 3,600MW will come online by June 2017


Salman Siddiqui July 26, 2016
Under the Tripartite Agreement 2, the government would also increase supply of imported gas to the industrial sector including CNG fuelling stations, fertiliser and textile manufacturers. PHOTO: FILE

KARACHI: In a landmark achievement, the government, trapped in a power crisis, has decided to import gas exclusively for the power sector ahead of commissioning of three liquefied natural gas (LNG)-based plants of 3,600 megawatts in Punjab next year, a federal minister told The Express Tribune on Tuesday.

“Three LNG-based power plants of 3,600 megawatts will come online in Punjab by June 2017,” said Petroleum and Natural Resources Minister Shahid Khaqan Abbasi.

World Bank opposes state monopoly over LNG import

For this purpose, various government-run institutions involved in importing and selling re-gasified LNG have resolved all their contentious issues and reached a tripartite agreement to supply 600 million cubic feet of gas per day.

Sui Northern Gas Pipelines Limited (SNGPL) reported to the Pakistan Stock Exchange (PSX) on Tuesday that “the Tripartite Agreement 2, Gas Sales Agreement (GSA), Re-imbursement Agreement (RA) and Gas Transportation Agreement (GTA) have now been signed by all the parties ie Pakistan State Oil (PSO), SNGPL, Sui Southern Gas Company (SSGC) and Central Power Purchasing Agency (CPPA) for the supply of 600 mmcfd of re-gasified liquefied natural gas (RLNG).”

“The addition of 500-600 megawatts to the national grid station would reduce power outages by half an hour across the country, while the addition of 3,600 megawatts would cut electricity load-shedding by three to four hours a day,” said Abbasi.

The minister, who claimed these power plants to be the most efficient, said they would consume half the quantity of gas compared to what the gas-based plants consumed at Jamshoro and Muzaffargarh. Accordingly, they would produce power at a much cheaper rate.

Two out of the three plants of 1,200MW each were being constructed by the federal government while the third will be built by the provincial government.

Biomass power plant set up with Chinese help

The plants will be set up by Chinese contractors at Haveli Bahadur Jang, Balloki and Bhakki near Shahdara, Lahore, using US technology.

According to a source, under the Tripartite Agreement 2, the government would also increase the supply of imported gas to the industrial sector including compressed natural gas (CNG) fuelling stations, fertiliser manufacturers, textile manufacturers and a few other power plants.

“The increased supply of gas to the industries might take some time, as the government has to ensure that there is no corruption involved in the entire process,” he added.

He said the country had so far brought some 30-35 ships of RLNG. “The first ship was brought privately by the Arif Habib Group carrying 147,000 cubic feet of LNG on March 26, 2015. The ships anchored at Port Qasim carrying gas volumes of 147,000 cubic feet to 175,000 cubic feet.”

RLNG was costlier by $1.5 per million British thermal units (mmbtu) than the locally produced gas. On an average, landed price of the imported gas (RLNG) at Port Qasim came at $7.5 per mmbtu as compared the locally produced gas at $6 per mmbtu, he added.

The government last year signed an agreement with Qatargas for import of LNG for the next 15 years at 13.35% of Brent crude oil price.

“The tripartite agreement was signed days before the Eid holidays,” said another source.

“SNGPL was the only party which raised questions before signing the agreement. Other signatories were eager to execute it as soon as possible,” he added.

Published in The Express Tribune, July 27th, 2016.

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COMMENTS (7)

Xnain | 5 years ago | Reply @ishrat salim: Open the websites of the concerned DESCOs,check their collection ratios and you'd know. These plants are expensive vis-a-vis hydro projects so to keep them afloat collection is crticial as opposed to hydro power where NTDC can absorb some of the non-collection.
TM043 | 5 years ago | Reply @ishrat salim: typically plants are setup near load centres to cut the line losses and infrastructure costs. Federal government is executing many other projects all over the country. Port Qasim Power project, Thar Coal, Neelum Jehlum, Naltar, Dasu, Diameer Bhasha, Kot addu, Jamshoro, and the list goes on. Hope I have cleared your misconception. Kindly check facts in future before posting things.
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