SSGC policy anomaly: ‘Captive power plants being supplied with gas, despite ban’

Gas distributor violates govt’s management policy.

As the citizens of Karachi continue to suffer long hours of power outages, the Sui Southern Gas Company (SSGC) has been openly violating government’s policies in a number of ways, say officials.

The most obvious violation of rules and regulations has been that captive power plants are getting uninterrupted supply of gas with priority above different sectors, especially the independent power producers, even though the Federal Ministry of Petroleum and Natural Resources had placed a ban on this. This ban had recently been extended for another year.

According to the still valid Government’s Natural Gas Allocation and Management Policy 2005, “Gas supply to all consumers in captive power sector will be made after first meeting the requirement of domestic, fertiliser, commercial, industrial and power (both Water and Power Development Authority/ Karachi Electric Supply Corporation (KESC) and the Independent Power Producers).”

The fact that SSGC is regularly supplying gas to captive power plants while it has failed to meet KESC’s legitimate requirement is a clear violation of the very first guideline of the said policy, say observers.

Additionally, the condition of combined cycle/co-generation technology is clearly being violated. The policy says that “those dual fired power plants with a capacity of up to 50 megawatts (MW), which employ combined cycle or cogeneration technology, shall be encouraged for allocation of gas”.

Sindh High Court has ordered SSGC twice to ensure regular supply of 276 mmcfd approved quota to KESC and even issued contempt of court orders against its managing director. However, SSGC continued to violate the apex court’s verdict as well and gave preference to captive power plants.

The violation of gas supply quota to KESC has been sabotaging the power supply scenario of Karachi and putting the utility into the vicious cash inflow shortfall because most of the KESC revenue goes into buying of additional furnace oil, at many occasions when gas supply is further decreased by SSGC.

The fact is that if KESC is supplied 276 mmcfd of natural gas on non-stop basis, the duration of power outages would come down to the minimum on one hand and would drastically curtail the shooting power tariff on the other.

Statistics of gas allocation to captive power plants in KESC’s franchise areas show that while residents of Karachi suffer miseries of power outages and frequent business and trade disturbances - all because of shortfall of about 200 to 300 MW of electricity - the captive power plants continue to generate over 800 MW of electricity only to serve a handful of industries. These trade barons are spread across Federal B Area, Hub, Korangi, Landhi, North Karachi, Port Qasim, SITE, Stadium Road and Super Highway.

Published in The Express Tribune, October 15^th, 2011.