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January 8, 2021

K-Electric permitted to lay own gas pipeline

Business

January 8, 2021

KARACHI: The government has allowed K-Electric to lay a gas pipeline to fuel its upcoming RLNG-based power project of 900 megawatts in a first such move to remove an input constraint faced by the power company, it was learnt on Thursday.

Oil and Gas Regulatory Authority (Ogra) licenced KE to lay the pipeline which will handle RLNG supply of up to 250 million metric cubic feet per day (mmcfd), according to a licence copy available with The News. The licence was notified on Wednesday.

In May last year, KE applied for a licence for construction and operation of a transmission pipeline. The company is expected to soon complete the Bin Qasim Power Station-III.

The gas pipeline with 14-inch diameter is expected to cost $4 million, an insignificant amount compared to $641 million that is an estimated cost of building two power plants of 450 megawatts each by KE. “The proposed transmission pipeline is mandatory for connecting the RLNG supply source with the Bin Qasim Power Complex including 900MW RLNG-based power plant,” Amir Rizwan Qureshi, director Business Development KE said in an virtual Ogra meeting over licence in November last year. “The strategic location of KE’s Bin Qasim Power Complex in the closed proximity of custody transfer station allows KE to have a dedicated high pressure RLNG supply pipeline with a length of 2 kilometer.” The licence allows KE to procure RLNG directly from Pakistan LNG Limited. The decision was taken despite concerns of Southern Gas Company (SSGC). KE has been in conflict with Suit over payment dues. This often leads to curtailment of gas supply to the power company.

For SSGC, KE is a “major defaulter”. “The total receivable amount as at 30th September 2020 is Rs115,913 million. If KEL is allowed to lay down and operate this pipeline then it is most likely that they would never pay off the outstanding balance towards SSGCL as they would no longer require SSGCL’s supplies,” SSGC Managing Director Amin Rajpoot said.

KE’s representative said the outstanding gas bill and arrears are under litigation. “KEL will continue to do business with SSGC as it requires natural gas to the tune of 180 mmcfd for its other power plants,” said the official.

KE said this is a very positive development for KE as the grant of the licence by OGRA is a first ever license obtained by KE in the oil and gas sector and is a key step in ensuring that the upcoming BQPS III power plant receives the right amount of gas, at the right pressure.

“This milestone will go a long way in helping bridge the supply-demand gap in Karachi in the years to come,” KE said in a separate statement.

The engineering, procurement and construction contractor and the owner engineer for the pipeline project are already onboard. The detail design is already completed and the pipeline material has already been procured. Work on the BQPS-III power plant is proceeding on a fast-track basis. Gas turbines and steam generators have arrived and are waiting to be installed so that the first unit of 450 MW can be brought online by summer of 2021, and the second unit by end of 2021.