PM to be briefed on integrated energy plan on 20th

ISLAMABAD: Petroleum Minister Ali Pervaiz Malik will give the prime minister on Tuesday a presentation on Integrated Energy Plan (IEP) with an emphasis not to approve any summary of Power Division (PD) without input of Petroleum Division and vice versa.

A senior official of Petroleum Division told The News there would be no PD initiative taken in future and pitch it before IMF without consultation of Petroleum Division. This has been done in the case of captive power plants which are now facing off-the-grid levy apart from maximum gas tariff of Rs3,500 per MMbtu, the official said.

This has forced the export sector to reduce use of RLNG by 50 percent by Punjab industry and 25pc by Sindh export industry, resulting in reduction of textile exports by 15pc, the official said.

The gas at Rs3,500 plus Rs791 per MMbtu as a result of levy has reached Rs4,291 per MMbtu ($15.38/MMbtu) which is far more than spot price in international market. The export sector has started reducing use of imported and local gas. Sui companies are unable to sell costly gas to another bulk consumer in Pakistan.

The IEP also emphasizes all the summaries, either from PD or from Petroleum Division, would first go to CCOE and then they would be ratified by the federal government.

The official said government, in a bid to bailout the power sector, imposed a levy on petroleum products to finance relief in power tariff by up to Rs2.12 per unit for three months — June, July and August. “This is like looting Peter to pay Paul,” he said.

The official said when this costly gas of Rs4,291 per MMbtu is diverted to domestic sector, circular debt increases as domestic tariff is much lower than that of captive power plants. The circular debt has now reached Rs2.8 trillion.

In response to off-the grid levy, the export sector is also not being provided quality and sustainable supply of electricity, he said.

The IMF imposed the levy on export sector, forcing it to use grid electricity to bail it out from the capacity trap. But electricity is being provided with fluctuation and jerks. That is why the machinery in textile industry faces huge damages.

The IEP has been prepared by Wood Mechanize, a consulting firm hired by the government. The minister would sensitize the premier on non-implementation of Annual Delivery Plan of LNG cargoes, which is prepared with the input of PD. The official said PD places the demand for RLNG and then accordingly, Petroleum Division arranges LNG cargos.

Four RLNG power plants were installed in Punjab for which two LNG terminals were set up and pipeline was laid down. But the PD does not utilise RLNG plants at the optimum level as per the demand it places, he said.

This results in hike in line pack and gas pressure increase to over 5 billion cubic feet, putting national gas transmission network in jeopardy. When gas pressure in the main gas line soars above 5 bcf, the line can burst any time.

The PD says RLNG plants are run under Economic Merit Order. The system gets electricity first from the cheaper power plants, which run on coal, nuclear and hydro generation, then comes the turn of RLNG-based power plants.

The Petroleum Division says the LNG infrastructure was laid down for the four RLNG power plants. More importantly, government has made three long-term LNG agreements (two with Qatar and one with ENI, an Italian company).

When the power sector does not use RLNG, the line pack increases and surpasses 5 bcf — a danger mark — and we are left with no option, but to close down many local gas fields. When the local gas fields are closed down, crude oil and LPG supply from the fields is also halted. The chances of damage to gas fields also increase as in the past, gas fields could not be restored after they were closed down at natural pressure even after huge investments.

The prime minister would also be sensitized on the above issue, pleading the PD be asked to run RLNG power plants for consumption of imported gas. There are fears Pakistan may default any time as government has provided sovereign guarantees to Qatar on the provision of LNG supplies, which are on take or pay basis.

The official said the Petroleum Division so far has deferred the import of 5 LNG cargoes from Qatar to 2026 which were due in 2025. It has also diverted 5 cargoes from ENI to international market.

The sources said the petroleum minister is ready to ask Qatar to defer import of LNG cargoes. But the question is who will be responsible if PD says it needs LNG for power generation if some cheaper power plants face any snag.

The minister would also request the prime minister to order the PD to utilise imported gas for power generation. Less utilisation of RLNG is not only causing line pack pressure but also closure of local gas wells, resulting in lowering crude and LPG production.