K-Electric signs 150mmcfd RLNG supply deal with PLL

ISLAMABAD: K-Electric and Pakistan LNG Limited (PLL) on Tuesday entered into an initial Gas Supply Agreement (GSA) for the supply of 150mmcfd RLNG for power utility’s flagship 900MW power plant at Port Qasim (BQPS-III).

“This is the first agreement of it's kind where RLNG is being directly supplied by a government entity to a private sector company,” a statement after the signing of GSA said.

Minister for Energy Muhammad Hammad Azhar witnessed the agreement signing by Moonis Alvi, chief operating officer of K-Electric and Masood Nabi CEO of PLL. Special Assistant to the Prime Minister Tabish Gauhar and secretary petroleum also attended the ceremony.

BQPS-III is KE's flagship project valued at over $600 million and will add 900 MW to KE's generation supply and meet Karachi's growing power demands.

Pakistan has been relying on imported LNG over the last few years as its local gas output has declined, while domestic demand has climbed. The power sector alone accounts for about 38% of gas consumption in the country, according to a report by Oil and Gas Regulatory Authority issued last year.

Minister Azhar lauded both organisations on this milestone, calling it “a step in the right direction for the future of Karachi and a positive move for both KE and PLL which ensures the interests of both parties as well as Karachi”.

Alvi of KE said work on BQPS-III is progressing swiftly and it is the fastest commissioning of a project in recent times. “The addition of this plant will go a long way in supporting Karachi's continued socio-economic growth."

Last week K-Electric submitted a plan to the National Electric Power Regulatory Authority (NEPRA) for investing Rs140 billion in the city’s power sector in addition to the previously approved Rs299 billion for the tariff control period of 2017-2023.

If the NEPRA approves the submission, it would bring K-Electric’s total investment plan to Rs440 billion for the period. Per the Multi Year Tariff 2017-2023 notified in May 2019, the utility was allowed an investment plan of Rs299 billion.

Karachi’s power situation becomes worse during summer, as unannounced load shedding increases. In June, 70 percent of the city had suffered from blackout for several hours following major breakdowns.

K-Electric has already invested over Rs255 billion as of 2021 since the start of the tariff control period.

The utility company’s 900MW RLNG-based power plant at a cost of around $650 million is expected to complete by the end of the calendar year 2021.

K-Electric has invested over $3.8 billion since privatisation, which has resulted in reduced transmission and distribution losses.