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July 24, 2019

KE looks for RLNG suppliers to fuel 1,460MW power plants

Business

July 24, 2019

KARACHI: K-Electric on Tuesday expressed its interest in buying 400 million metric cubic feet/day (mmcfd) of re-gasified liquefied natural gas (RLNG) from local suppliers to fire its existing and new power plants of 1,460 megawatts.

“K-Electric Limited is considering the procurement of re-gasified LNG to be delivered at plant gate of the Bin Qasim Power Station (BQPS),” the company said. “The RLNLG will be utilised to meet the fuel requirements of its two combined cycle gas turbine power plants at the Bin Qasim Power Complex, namely BQPS II and BQPS III.”

BQPS II is an existing power plant with production capacity of 560MW, while BQPS III with 900MW capacity is scheduled to begin operations in 2021.

K-Electric is interested to receive RLNG supplies in two tranches: 150mmcfd from October next year and 250mmcfd in the next five years.

“The company is seeking expressions of interest (EoI) from the interested parties to participate in the bidding for RLNG supply,” it said in a request for EoI for procurement of RLNG.

The power utility needs 150mmcfd of RLNG under a three and a half-year contract, starting from fourth quarter of 2020, using any of the existing LNG import terminals with the option of contract renewal based on mutually agreed terms.

The second supply of 250mmcfd is sought under a 15 years contract, starting from the second quarter of 2024, using any of the existing or new LNG import terminals.

The country currently has two terminals with capacity to re-gasify 1.2 billion cubic feet/day (bcfd).

“We have initiated the bidding process, which will determine the preferred bidder and accordingly the re-gasification terminal proposed by preferred (bidder) will be used,” a KE official said.

Presently, KE produces electricity from its own generation units with installed capacity of 2,267MW. Additionally, it has arrangements with external power producers for 1,362MW, including 800MW from the grid.

The power utility usually faces 500 to 600MW of gap in demand and supply in summer. Last year, the then Prime Minister Khaqan Abbasi stepped in to address an issue of gas shortage for K-Electric to help the utility meet consumer demand of gigantic 2,700 megawatts. K-Electric was demanding 190mmcfd at that time and instead it was receiving 90mmcfd from SSGC. The gas supply was increased to 130mmcfd and another 60mmcfd of RLNG was assured.

Dubai-based Abraaj Group three years back agreed to sell its majority stake in K-Electric to China’s Shanghai Electric Power for $1.77 billion. But, the takeover deal is yet to be executed on settlement of outstanding debts.

KE said any party responding to the request for EoI must be a terminal developer or a RLNG supplier, with experience of handling an equivalent or larger quantity of LNG supply.

“If the bidder is a consortium, the (required) information must be provided for each member of the consortium along with the designation of the lead partner and consortium structure,” it added. “Only one EoI should be submitted for each consortium.”

Power sector was the main consumer of natural gas during FY2018, consuming 37 percent of the total available gas. Share of RLNG in the overall gas supply increased to 23 percent in FY2018. LNG imports rose 35.96 percent to $3.33 billion in FY2019. Gas shortfall is estimated to jump 157 percent to 3.7bcfd in FY2020 — almost equal to total gas supplies at present. Around 700,000 consumers were added to the system last year. The Oil and Gas Regulatory Authority estimated gas shortfall to reach 6.6bcfd by FY2028.

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