LAHORE: Private sector would have to come out of its selfish mode to cooperative power production as industries using RLNG to produce electricity are almost fifty percent less efficient that the recently installed gas run General Electric gas run power plants.
Industries in Punjab are supplied gas imported from Qatar in liquefied form and the re-gasified and supplied through SNGPL network. This gas is costlier than the natural gas supplied in other three provinces.
The gas run small power plants operated by the private sector are highly inefficient. The gas efficiency in these 2-3 megawatt plants is around 30 percent. The old large capacity IPPs operate at over 48 percent efficiency and the three latest plants operating partially operate at 60 percent efficiency.
Natural gas-fired (including LNG fired) power plants account for almost 20 percent of the world’s electricity generation. These power plants use gas turbines or gas turbine-based combined cycles.
Gas turbines in the simple cycle mode, only gas turbines running, have an efficiency of 32 percent to 38 percent. The most important parameter that dictates the efficiency is the maximum gas temperature possible.
The latest gas turbines with technological advances in materials and aerodynamics have efficiencies up to 38 percent. In the combined cycle mode, the new "H class" Gas turbines with a triple pressure HRSG and steam turbine can run at 60 percent efficiency at ISO conditions. This is by far the highest efficiency in the thermal power field.
The Pakistan Peoples’ Party government, in its last two years, asked All Pakistan Textiles Mills Association (Aptma) to replace the small gas run units with a bigger gas run plant and share the cost and production and supplies with its members.
This suggestion was made during acute gas shortages in Punjab while the private sector was consuming more gas for producing less power. It was found that with installation of larger plants, the power production would be fifty percent higher than the power produced individually by each mill operating on gas power.
The idea was shelved by the private sector as there was no guarantee at that time that after the 18th amendment, the government would ensure constant gas supplies.
After the Pakistan Muslim League-Nawaz government assumed power, it decided to resolve the issue of short gas supplies to Punjab by entering into a long term agreement with Qatar for importing liquefied gas.
While the LNG deal was in final stages, the Punjab government again asked Aptma to establish a power plant of larger size and supply the power thus produced to textile and other industries located around the power plant.
The millers after long deliberation refused this offer. They instead entered into agreement with the SNGPL individually for the supply of RLNG. The price of RLNG was linked to a certain percentage of global crude oil prices.
At that time, the crude oil prices were very low and the power produced on the inefficient gas-run plants was commercially viable. As the crude oil prices increased globally the rate of RLNG also increased according to the formula already agreed with the private sector captive producers.
After the RLNG prices increased, the small gas run units are producing electricity at Rs10.50 per unit. The three combined cycle gas plants established by the government are producing power from the same high priced RLNG at Rs6.50 per unit.
The small power plants in provinces other than Punjab are producing electricity at Rs6 per unit because the price of indigenous gas is 40 percent less than RLNG. Even the plants operating in other parts of the country could produce power at 40 percent less price if they upgrade to efficient technology.
By operating inefficient plants, we are not only increasing the cost of power production but also wasting precious gas resource irrespective of the fact whether the gas is domestic or imported.
The mills operating on inefficient gas power plants in other provinces can survive as the cost of power is still low because of cheaper rate of domestic gas. The mills in Punjab have no alternative but to find a way to produce gas in bulk from gas efficient larger plants and share the cheaper power with other industries.
They would have to enter into an agreement with other private sector manufacturers to establish larger efficient plants and reap the benefits of cheaper industry. The industrialists in Punjab must understand that it is not possible for the state to lower RLNG rates to cover the inefficiency of their plants.
