Govt plans to privatise 2,550MW RLNG power projects

KARACHI: The government planned to divest its stakes from the two mega re-liquefied liquid natural gas- (RLNG) based power plants being set up in the Punjab with a cumulative capacity of 2,550 megawatts.

These projects, namely 1,275MW plant in Balloki of district Kasur and 1,276MW plant in Haveli Bahadur Shah of district Jhang are currently being financed by the federal government under the public sector development program. The government holds 30 percent equity in the projects. It committed to finance the remaining 70 percent in the form of loan.

“These plants may be privatised in future under the applicable laws of the country,” the state-run National Power Parks Management Company told the National Electric Power Regulatory Authority (Nepra).

The regulator has already granted two generation licences to the company.

The ministry of petroleum and natural resources, in pursuance to a decision of the Economic Coordination Committee, has allocated 200 million metric cubic feet per day of RLNG for each plant with effect from 1 April, 2017 on firm take or pay basis for 15 years.

The government has initiated a project to lay pipelines to transport RLNG to the sites. The project is likely to be completed by December 2017.

Nepra, in a statement, said electricity is a fundamental element for the economic growth of any country. 

“The electricity consumption per capita has a strong correlation to the social development and economic indices,” it added. “Increasing electricity consumption per capita can directly stimulate faster economic growth and indirectly achieve enhanced social development. 

The regulator further said the economic growth of any country is directly linked with the availability of safe, secure, reliable and cheap electricity.

It said all types of electric power generation resources, including natural gas, coal, hydel, wind, solar and other renewable energy resources must be tapped and developed on priority basis both in public and private sectors for sustainable development.

The existing energy mix of the country is heavily skewed towards the thermal power plants, mainly operating on furnace oil. 

Prices of furnace oil may not remain at the existing level for the longer period, especially in the wake of a possible cut in global oil production. The crude supply glut cut the oil price to $30/barrel in early this year from $100 two years ago. This downward trend is likely to soon reverse.

Therefore, the government considers it imperative that efforts must be made to change the energy mix towards cheaper fuels. 

With the depleting natural gas reserves in the country and relatively longer lead time for the construction of hydroelectric power projects, the projects, using coal and RLNG, are considered to be one of the best option in the short- and medium-term. 

It is vital for the economy that coal and RLNG projects are given priority for power generation and their development is encouraged to reduce the energy demand-supply gap.