No money, no honey: No gas supply to power plants without cash

Petroleum ministry instead prefers fertiliser companies that ‘pay on time’.

ISLAMABAD:

The Ministry of Petroleum and Natural Resources has categorically said that it will not allow supply of gas to power companies for increasing electricity production, if the firms have no money to make payments for the fuel, officials say.

In a recent meeting of the Economic Coordination Committee (ECC) of the cabinet, Adviser to Prime Minister on Petroleum and Natural Resources Asim Hussain blamed power companies for creating circular debt, saying they were not paying their dues to oil and gas companies. “If you can pay money, we are ready to provide gas for the power sector,” a source quoted Hussain as saying.

Instead, he preferred fertiliser plants, which he said would get gas and pay money on time. The fertiliser sector had invested in the country against guarantee of gas supply and “if we do not give gas to them, gas firms will have to pay penalty,” he said.

Engro has already won a case in the Sindh High Court for ensuring gas supply to its fertiliser plant. Engro has also filed a case in the Supreme Court, which is currently being heard.



According to an official of the water and power ministry, Water and Power Secretary Nargis Sethi argued in the meeting that the petroleum ministry was denying gas to power companies in order to provide cheaper fuel for fertiliser plants.

She said power companies desperately needed gas as several plants had been shut down because of shortage of oil and gas. According to the ministry official, thermal power plants with a combined capacity of over 3,400 megawatts have been shut down in absence of fuel supply.

“The ECC has approved a policy that gives priority to the power sector (after residential consumers) in gas supply in order to boost generation and produce cheaper power, but the petroleum ministry is violating the policy by advocating gas supply to fertiliser plants,” she said in a summary.



At present, power shortfall has surged to 5,000MW per day following decline in hydropower generation because of lower water releases from dams as well as a drop in thermal generation due to fuel shortage. The shortfall is expected to reach 6,000MW in coming days following closure of canals for de-silting.

The power ministry wants to operate all thermal plants at full capacity to bridge the demand-supply gap and needs enhanced gas supply for the purpose. Otherwise, the plants will have to run on expensive furnace oil and diesel.

Owing to lack of gas supply, the four most efficient power plants including Saif, Halmore, Orient and Sapphire with combined generation capacity of 800MW have either been running on diesel or are currently shut down.

The Ministry of Water and Power strongly opposes a plan to dedicate gas from some fields 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, denying gas to the power plants is against the policy,” the power ministry official said.

Published in The Express Tribune, December 21^st, 2012.