ISLAMABAD:
The Ministry of Water and Power has strongly opposed a plan to allocate gas from some fields and diversion of gas from power plants to the fertiliser industry, terming it a violation of the prime minister’s decision on giving priority to power companies.
“The prime minister has decided in the new gas allocation policy that the power sector will be given second priority (after residences), therefore, diversion of gas from power plants and allocation from the gas fields is against the policy,” said a source quoting a communication sent by the water and power ministry to the Economic Coordination Committee (ECC).
The power ministry suggested that instead of approving the gas allocation plan submitted by the Ministry of Petroleum and Natural Resources, a committee should be constituted to address the concerns.
The plan is expected to be taken up by the ECC in its meeting scheduled today (Tuesday).
According to sources, the petroleum ministry had submitted short and long-term plans for gas supply to four fertiliser plants, which were on the network of Sui Northern Gas Pipelines Limited (SNGPL).
Under the short-term plan, the ministry has proposed supply of 137 million cubic feet per day (mmcfd) of gas to the four fertiliser plants. This will also divert gas from the industrial sector, leading to additional gas outages for a day.
Under the programme, 60 mmcfd of gas will be diverted from Gas Turbine Power Stations of Wapda to Engro Fertilizer.
Since April this year, these power plants have not been consuming their full allocation of 200 mmcfd from Kandhkot gas field, resulting in a decrease in production from the field. Production from the field can be enhanced to 225 mmcfd to compensate for the proposed withdrawal of 60 mmcfd.
The ministry has also recommended supply of 22 mmcfd of gas to Engro Fertilizer from Mari field, which will take the total supply to 82 mmcfd. Agritech Fertilizer may be supplied 25 mmcfd from Makori field (Tal block).
SNGPL may arrange around 45 to 55 mmcfd for the other two fertiliser plants –Pakarab Fertilizer and Dawood Hercules – to enable them to operate on rotation by curtailing gas supply to the industrial sector, which will have to face an additional one-day gas load-shedding.
Under the long-term plan, the ministry has called for providing $400 million from the collection of Gas Infrastructure Development Cess (GIDC) to help fertiliser companies lay a transmission network over 1,000 kilometres for receiving gas directly from the fields.
This will shield the fertiliser plants from the impact of outages as plants will get gas directly from the fields without relying on gas utilities.
The fertiliser companies have also supported the plan of allocating 202 mmcfd of gas from dedicated sources of Oil and Gas Development Company (OGDC), Mari Gas and MOL.
OGDC will dedicate 130 mmcfd from Kunnar Pasakhi Deep (KPD) field, 15 mmcfd from its new field Bahu and 10 mmcfd from another new field Reti Maru. In addition to these, Mari Gas will dedicate 22 mmcfd and MOL 25 mmcfd from Makori East.
In a meeting held on August 16, the ECC approved in principle the proposal of the petroleum ministry to allocate new gas supply from existing or fresh discoveries to the fertiliser industry, especially the four plants which were on the SNGPL system but were lying closed due to suspension of gas supply.
Published in The Express Tribune, October 23rd, 2012.
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Engro Fertilizers is doomed. The poor guys set up a 1.3$bn setup at RYK and their CEOs ran away for fear of bankruptcy. Hussain Dawood just sold DH Chemicals, next up is Engro Fert, the corp itself would not get much but we heard he's selling his engineers @ $70 a-piece...!