Govt refuses to allocate gas for Mari Petroleum’s power plant

Legal battle may follow as ECC will provide this gas to fertiliser producers

ISLAMABAD: The government and Mari Petroleum Company Limited (MPCL) may be locked in a tug of war as the former has refused to allocate Mari field gas to a 180-megawatt combined-cycle thermal power plant allegedly because of the influential lobby of fertiliser producers.

A senior official of the Ministry of Industries and Production told The Express Tribune that the Petroleum Division had tabled a proposal before the Economic Coordination Committee (ECC) in a recent meeting suggesting allocation of 66 million cubic feet of gas per day (mmcfd) from the Mari field for setting up a combined-cycle thermal power plant.

The official said the Power Generation Policy 2015 gave the first right to oil and gas exploration companies of establishing thermal power plants after taking the government’s nod. In this regard, Mari Petroleum has approached the government seeking its approval for setting up a thermal power plant and allocation of 66 mmcfd of low heating value gas from its field.

However, the fertiliser industry wanted to consume that gas in its plants. The ECC, in its recent meeting, did not approve the Petroleum Division’s proposal to provide gas for Mari Petroleum’s power plant.

The ECC, however, directed the Ministry of Industries to come up with options of allocating 66 mmcfd of additional Mari deep gas to the fertiliser sector. The official revealed that the ministry would now submit its findings to the ECC for formally providing the gas to the fertiliser sector.

The official was of the view that under the power generation policy, Mari Petroleum had the first right to use its gas in the planned power plant. “If the ECC allocates this gas to the fertiliser industry and denies its supply to Mari Petroleum’s power plant, the company may enter into a legal battle,” he cautioned.

The fertiliser industry is a major defaulter which is receiving gas infrastructure development cess (GIDC) from farmers but is not depositing it in government accounts due to the stay orders obtained from courts. GIDC against the fertiliser industry has piled up to Rs120 billion.

The industry has also got billions of rupees in subsidy since the PML-N government. After the recent increase in gas prices for old fertiliser plants, all fertiliser plants have increased urea prices by Rs130 per bag.

Published in The Express Tribune, December 13^th, 2018.

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