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KE links new power plant’s fate to SSGC gas

By Javed Mirza
January 21, 2021

KARACHI: K-Electric on Wednesday tied test-running of its new power plant to supply of 150 million metric cubic feet per day (mmcfd) from Sui Southern Gas Company (SSGC).

“We will be test running the first unit of the 900MW plant this March-April provided we get the 150mmcfd,” Moonis Alvi, chief executive officer of K-Electric (KE) said during a briefing.

SSGC is reluctant to sign a gas supply agreement (GSA) with KE for the supply of 150mmcfd to KE’s under development dual-fuel plant unless the past receivables are agreed upon.

“KE has to pay SSGC Rs122 billion against gas supplies till 2012, while they admit the liability of Rs22 billion only,” Shabaz Aslam, a spokesperson of SSGC told The News.

“We have already sent the terms of reference regarding the appointment of third-party auditor to KE, and they are reluctant to sign it. GSA will not be signed unless this is issue is resolved because SSGC is a custodian of public money.”

A KE official said KE could not pay SSGC because it didn’t receive from federal and provincial governments. “Moreover, if SSGC is imposing mark-up, KE should also impose the same rate on government receivables,” said the official.

KE claims the principal amount payable is only Rs13.7 billion while an additional Rs102 billion is just mark-up and surcharge. KE has Rs220 billion of receivables as tariff differential claims and another Rs12 billion from federal government.

Further, another Rs29 billion are receivable from Karachi Water and Supply Board, Rs3 billion from Balochistan and Rs12 billion from Sindh.

Alvi hoped that the utility would get gas for the 450MW plant as it already received all the approvals and licences to lay the pipeline.

“The first unit of K-Electric’s RLNG-based 900MW (450x2) plant would be ready and tested by April this year enabling the utility company to shut down its 210MW fuel oil based inefficient plant by the end of 2021,” he said.

Earlier this month, the government allowed KE to lay a gas pipeline to fuel its upcoming RLNG-based power project Bin Qasim Power Station-III.

The gas pipeline with 14-inch diameter and that will handle supply of up to 250 mmcfd 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.

However, KE said it will continue to do business with SSGC as it requires natural gas to the tune of 180 mmcfd for its other power plants.