PPL to supply gas to TPSG by enhancing production, ECC told

A meeting of the Economic Co-ordination Committee of the Cabinet has been informed that Pakistan Petroleum Limited (PPL) has agreed to increase the production of gas at its Kandhkot field from 200 to 250mmcfd for supplying it to the Thermal Power Station Guddu (TPSG).
Sources said that enhanced gas supply was contingent to firm gas off-take guarantee in the form of minimum take-or-pay quantity up to 80 per cent and construction/ commissioning of new line from Kandhkot to the TPSG. They added that based on an understanding reached in meetings, PPL and M/s Central Power Generation Company Limited (CPGCL) negotiated and initialed Gas Sales Agreement (GSA) on 16.11.2016 wherein M/s CPGCL has agreed to take direct supply of 200mmcfd gas from M/s PPL's Kandhkot field subject to 72.5pc take-or-pay with effect from 1.06.2017 or the date of commissioning of the TPSG's new pipeline, whichever is earlier. The existing valid allocation of 50mmcfd gas for supply to TPSG through SNGPL would continue till reserve dedication 2024.
The Ministry of Petroleum stated that a meeting of the ECC, dated 23.05.2016, directed the secretaries of petroleum & natural resources and water & power to sort out the issues of outstanding receivables of PPL against TPSG and 'take or pay' clause for allocation of gas within a week and come up with clear proposals before the ECC.
Pursuant to the ECC's aforesaid decision, two meetings were held between the secretaries of petroleum & natural resources and water & power on 24-6-2016 and 31-8-2016, respectively, whereas a few meetings at the level of managing director/ chief executive officers of M/s PPL, TPSG/Central Power Generation Company Ltd (CPGCL) were also held to deliberate upon the issue of gas allocation and take-or-pay conditions. During the first meeting held on 24.06.2016 between the secretaries of petroleum & natural resources and water & power, it was agreed that on account of gas sales invoices of M/s PPL, if any amount becomes due upon reconciliation against TPSG, the same will be cleared immediately by the water & power ministry. In respect of "take or pay" clause, it was agreed to cap the same at the level of 60pc (Take-or-Pay) against supply of 150mmcfd gas from Kandhkot field.
Subsequently, another meeting was held on 31.08.2016 between the secretaries of petroleum & natural resources and water & power and was also attended by the managing directors of M/s PPL, M/s SNGPL & M/s SSGCL. It was agreed upon in the meeting that M/s PPL will enhance its existing gas production at Kandhkot field from 200mmcfd to 250mmcfd for onward supply to the TPSG for which further investment would be required by M/s PPL. This enhanced supply will be subject to the condition that TPSG will provide firm gas off-take guarantee in the form of minimum take-or-pay quantity up to 80pc and construction/commissioning of new line from Kandhkot to TPSG.
On a proposal of petroleum ministry, the ECC meeting presided over by Finance Minister Ishaq Dar approved: (i) the allocation of 150mmcfd to TPSG (100mmcfd directly through PPL and 50mmcfd through SNGPL) which has since expired on 07.05.2013 may be validated; (ii) PPL will supply 50mmcfd additional gas along with 150 mmcfd directly to TPSG with effect from 01.06.2017 or the date of commissioning of the TPSG's new pipeline, whichever is earlier. The entire 200mmcfd direct gas supply would be subject to minimum 72.5pc take-or-pay quantity; (iii) and the outstanding receivables against supply of gas to the TPSG would be settled forthwith subject to reconciliation.