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August 17, 2018
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Gas sale-purchase agreement delayed by SSGC: Nepra reserves judgment on RLNG supply to KE

Business

August 17, 2018

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ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Thursday reserved its judgment on supply of re-gasified liquefied natural gas (RLNG) to K-Electric as a sales-purchase agreement by the SSGC has yet to be signed.

Nepra reserved the judgment on the provision of RLNG to the K-Electric’s power plants at a public hearing convened on the request of the utility. KE sought permission for the supply of RLNG to its existing power plants as an alternative fuel.

Officials of the power utility, during the hearing, said Sui Southern Gas Company Limited (SSGCL) was reluctant to commit supply of indigenous gas supply to power plants to generate cheaper electricity and was not ready to sign gas sales-purchase agreement.

SSGCL’s officials, however, said the domestic sector’s gas demand has sizably increased. They criticised KE for moving the court of law instead of amicably settling the issues.

Chairman Nepra Tariq Sadozai said if KE gets less local gas for its power plants, then the electricity bills of the consumers would balloon and they would face the burden of costly power generation.

KE estimated cost of electricity from diesel-based plants at Rs 21/unit, whereas it would cost Rs13/unit on RLNG.

KE’s official said cabinet committee on energy has already ordered the supply of 60 million metric cubic feet/day (mmcfd) of RLNG to KE.

The privately-run power utility requested SSGCL to enhance supply of local gas for power plants to generate cheaper electricity. KE is currently using 130 mmcfd of gas for power plants to generate electricity.

In April, a meeting of the cabinet committee on energy, presided over by the then prime minister Shahid Khaqan Abbasi, directed the officials to find out solutions of load shedding in Karachi. He had ordered the SSGCL to increase gas supply to KE under an arrangement of 130 mmcfd of natural gas and 60 mmcfd of RLNG to meet KE’s minimum gas requirement of 190 mmcfd.

Consequently, KE filed an application before Nepra on April 30, seeking inclusion of RLNG as an alternative fuel.

In June, the power regulator, in an interim order, allowed K-Electric to use imported gas (RLNG) as an alternative fuel for power generation, but on a condition that it would first consume a minimum 180 mmcfd of locally-produced gas.

SSGCL has committed to provide gas to KE’s power plants in line with the gas availability.

Nepra sought details of techno-economic analysis from K electric. KE authorities informed that new power plants would be run on RLNG and negotiations were going on regarding import of gas.

Nepra chairman said KE plants are based on oil and gas and the utility has infrastructure of diesel-based plants.

He said consumers would get relief from load shedding if diesel-based plants could be run. KE should apply for tariff for diesel-run plants.

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