Access denied: No natural gas for power plants that refuse LNG

Petroleum ministry says a blend of local and imported gas to be supplied.

ISLAMABAD:

The Ministry of Petroleum and Natural Resources has refused to allocate locally produced natural gas in the summer to those idle power generation plants that are not willing to buy and consume imported liquefied natural gas (LNG).

“There should be some blending of re-gasified LNG and natural gas in order to make the supply possible as it will be difficult to provide natural gas produced in the country to the inoperative power projects,” an official quoted the petroleum ministry as saying to the Ministry of Water and Power.

Of late, these power plants were hesitant to purchase LNG in spite of very attractive terms offered to them that they had previously accepted, the official said.



According to officials, total power demand will rise to 25,000MW in summer compared to the peak of 23,500MW last year. However, electricity generation will be in the range of 15,000 to 16,000MW.

Four power plants in Lahore with a cumulative production capacity of 840 megawatts and a 350MW plant in Faisalabad had either been staying closed or running on diesel in the summer season due to soaring demand.

Now, the government is supplying LNG to three of these plants in Lahore including Sapphire and Orient instead of operating them on diesel in an attempt to avoid higher costs.

The petroleum ministry has notified the provisional price of LNG at $12.80 per million British thermal units (mmbtu) for supply to the power plants.

Though some plants have received LNG, they have yet to clear their bills despite the fact that Pakistan State Oil (PSO) had made payments in advance to the suppliers for four LNG-carrying ships.

The price is much higher compared to the rate announced by Petroleum Minister Shahid Khaqan Abbasi about three weeks ago.

This is the initial price as adjustments will be made after the final price is notified by the Oil and Gas Regulatory Authority (Ogra).

Speaking at a press conference on April 27, Abbasi had claimed that the price of fuel delivery to power plants in northern Pakistan will be $11.5 per mmbtu for LNG, $12.6 for high sulphur fuel oil (HSFO), $13.8 for low sulphur fuel oil (LSFO) and $22 for diesel. Now, the LNG price notified by the petroleum ministry is higher than the price of HSFO.

Officials say the first LNG shipment was supplied to Pakarab Fertilizers, Fauji Kabirwala Power Company and Kot Addu Power Company (Kapco). The gas utility provided 56 million cubic feet per day (mmcfd) to Pakarab Fertilizers, 120 mmcfd to Fauji Kabirwala and the remaining to Kapco’s power plant. Fauji Kabirwala has not made the payment so far.

Published in The Express Tribune, May 20^th,  2015.

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