Ministry plans to supply LNG to more power plants

Wants a firm payment plan as LNG volumes will double after June

ISLAMABAD: The Ministry of Petroleum and Natural Resources is seeking a firm payment plan for the supply of liquefied natural gas (LNG) to power plants that had not been earmarked the imported gas earlier.

This comes in the wake of delay in commissioning the three LNG-based power plants being set up in Punjab.

According to an official aware of the development, construction work on the second LNG terminal will be completed by June this year, which will ramp up LNG supplies from 600 million cubic feet per day (mmcfd) to 1,200 mmcfd.

The first LNG terminal, built at Port Qasim, has already been running for the past around two years.

Under the present arrangement effective since February 2017, the official said, Qatar would supply five LNG cargoes under the annual delivery plan whereas energy company Gunvor will provide one cargo for LNG-based power plants.

Power producers need to pay for all the LNG purchased under this arrangement. Besides taking re-gasified LNG supplies in the first quarter of 2017, they will provide a firm schedule.

Talking to The Express Tribune, a senior official of Sui Northern Gas Pipelines Limited (SNGPL) revealed that LNG power plants in Punjab would not be able to continue to take LNG supply and gas would have to be diverted to other power plants like Saif, Halmore, Sapphire and Orient.

He said they had finalised a tripartite agreement with the Central Power Purchasing Agency (CPPA) and state-owned power producers under which LNG, which was not accepted by these plants, could be diverted to other power sector consumers.

This will depend on an agreement with the Ministry of Water and Power and payments under an agreed mechanism and billing cycle.

A draft of the tripartite agreement has already been sent to the Oil and Gas Regulatory Authority (Ogra) for approval, which has hitherto not been given because of a lack of quorum in the regulator.

The Ministry of Water and Power has nominated the National Transmission and Despatch Company (NTDC) for implementing the gas diversion plan.

On the issue of adherence to the payment schedule by the power plants to whom LNG is being diverted, officials of the power ministry have assured the petroleum ministry that necessary instructions will be passed on to the quarters concerned including the CPPA.

So far, LNG has been diverted to Orient Power, but it has not given its nod for meter reading, which will lead to delay in payments. “Orient Power may be directed to clear LNG invoices in line with the payment mechanism agreed with the LNG-based power plants,” he suggested.

These issues were also taken up in a high-level meeting held in March. LNG consumption schedule for 2017 and 2018 in respect of all the three LNG-based power plants - Balloki, Bhikki and Haveli Bahadur Shah - was also discussed.

First fire of gas turbine (GT)-1 of the Balloki power plant is slated for July 25 this year whereas GT-2 will be started on August 23.

For the Haveli Bahadur Shah plant, the first gas turbine will start running on April 27 and GT-2 on June 8.

The Bhikki power plant had already been tested and its GT-1 had started whereas GT-2 began running on March 13.

Balloki and Haveli Bahadur Shah plants will start taking LNG supplies at the beginning of June this year.

Published in The Express Tribune, April 7^th, 2017.

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