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ISLAMABAD/KARACHI: The Oil and Gas Regulatory Authority (Ogra) on Thursday granted the K-Electric licence to construct and operate a gas pipeline that will supply Re-gasified Liquefied Natural Gas (RLNG) to an upcoming RLNG-based 900 MW BQPS-III power plant and supplement fuel requirements of the power plants located at its Bin Qasim Power Complex.

The oil and gas regulator took this decision on Wednesday (January 6, 2021), granting a licence to K-Electric Limited to undertake regulated activity related to construction and operation of 14-inch diameter x 2.4 kilometer natural gas pipeline along with ancillary/connected facilities for the purpose of transmission of natural gas/RLNG from Tie-in Point, SSGC Custody Transfer Station located at Bin Qasim to KE Bin Qasim Power Complex.

The Authority in exercise of its powers conferred under Sections 22(1), 23 (1)(a)(d) and 23(6) of the OGRA Ordinance, 2002 read with rules 3(3) of Natural Gas (Licensing) Rules, 2002 and Rule 3(1) of OGRA Gas (TPA) Rules, 2018 grants a licence.

The licence shall be valid for an initial term of 25 years with effect from January 6, 2021 unless revoked earlier or modified or amended by the authority.

The licensee shall not be liable to pay annual fee under the Natural Gas (Licensing) Rules, 2002, to the authority so long as the licensee is carrying out the transmission of natural gas exclusively for self consumption.

A team of Karachi Electric also visited the federal capital to seek the federal government’s support on Gas Supply Agreement (GSA) with the Sui Southern Gas Company Limited (SSGCL) for supply of its “committed” gas to its new and existing plants.

On December 16, 2020, the National Electric Power Regulatory Authority (Nepra) had also urged the SSGC to ink a GSA with KE to avert loadshedding in Karachi in future. This was suggested in a letter to the managing director of the gas utility, which had not finalised any GSA with power utility, despite years of deliberations.

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

The K-Electric had submitted an application for the same on 18 May 2020, so as to ensure the pipeline would be built in time for the commissioning of the first unit of the BQPS-III.

In the interest of expediting the process, the power utility has agreed to undertake the construction of the pipeline from the nearest SSGC Custody Transfer Station, on a self-finance basis.

The EPC contractor and the owner engineer for this pipeline project are already on-board, a detailed design is already completed and the pipeline material has already been procured.

Now, with the issuance of a licence by Ogra, K-Electric has immediately started construction of pipeline for its timely availability for commissioning of 900MW power plant.

A Heads of Agreement with Pakistan LNG Limited (PLL) for supply of 150MMcfd of gas for BQPS-III had already been signed; subsequent to which negotiations on the GSA reached the advance stage and any potential hurdles need to be removed as per past commitments by the Cabinet Committee on Energy (CCoE).

The KE said in a press release, the addition of the 900 MW RLNG Power Plant along with proposed decommissioning of older and less efficient units will increase the power utility’s generation capacity and lead to improved service delivery. In the interest of the residents of Karachi, and ensuring that they face minimal difficulties in the upcoming summer season, 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.

According to KE, the 900 MW RLNG based plant and its timely completion is just one step towards keeping Karachi energized. Even with the commissioning of this plant, NTDC needs to expedite work on the upgrade of the interconnection facilities at the KDA Grid so that the power utility can evacuate the promised additional 450 MW from the National Grid before Summer-2021.

K-Electric says it is confident that all concerned stakeholders will continue to lend support in these so that KE achieves its vision of bringing Karachi to a power surplus situation by the year 2022.

Meanwhile, a clarification issued by SSGCL on Thursday says the following:

This is with reference to the news item ‘GSA with SSGCL that appeared in Business Recorder, related to KE and SSGC issues. At the outset, it must be understood and appreciated that despite KE being the defaulter and despite the existence of GSA of only 10 MMCFD between the two companies, SSGC in the larger public interest provided even to the maximum of 290 MMCFD and on an average 250 MMCFD last summer when KE could not arrange the alternate fuels (FO/Diesel) and Karachi could have faced major load shedding. “Hence there should be no misgivings about SSGC’s seriousness and commitment towards gas supply to KE.

“SSGC reiterates that it has always shown utmost seriousness in ironing out contentious issues with KE including the signing of GSA and has already been communicating with the power company in this regard, even though over dues KE owes to the gas utility has now reached a whopping Rs. 122 billion.

“SSGC has always maintained that the long pending issue of growing over dues needs to be sorted out before the Company inks a fresh GSA with KE. However, the main reason behind lack of progress in signing GSA has always been due to KE’s reluctance to abide by 2018 decision of then Cabinet Committee on Energy (CCOE) wherein for a way forward the CCOE directed for the finalization and signing of Terms of Reference (TORs) for the settlement of dues between SSGC, KE and Karachi Water and Sewerage Board that has been pending for way too long.

“The TORs, initialed by the MDs of both the Companies (SSGC and KE) in April 2018, involved engaging an independent reputable Chartered Accountant Firm for the purpose of determining the actual overdues figure KE owes to SSGC.

“While SSGC had sent TORs to KE in August that year, the latter, to this day, has been reluctant to counter-sign the same. In fact when SSGC exerted pressure on KE to execute the TORs for reconciliation, in June 2018, KE went to the Sindh High Court. SSGC can neither be held responsible for any in-actions on the part of KE.

“Recently, while investigating on the issue of excessive load shedding in Karachi, the National Electric Power Regulatory Authority (NEPRA) also emphasized on the implementation of CCoE decision dated April 2018 in terms of not only finalization of GSA but the execution of TORs for reconciliation/settlement of dues between KE and SSGC. Based on the directives from NEPRA, SSGC has approached the Ministry of Energy (Petroleum Division) afresh for the implementation of CCOE decision.

“Moreover, SSGC has always shown its keenness in augmenting the infrastructure to meet KE’s pressure requirements simply because it wants to alleviate the sufferings of the people of Karachi. Only recently, SSGC augmented its network in the SITE area in the vicinity of Site Gas Turbine Power Station (SGTPS) by laying a segment of 1.5 Kilometers of 20” diameter. It is envisaged that this will go a long way in alleviating the pressure issues of the area, including SGTPS. With reference to KE’s new power plant at SITE and the assertion about the project design being changed, it must be understood that SSGC’s responsibility is to provide gas only for the said plant and there has been no change in the tie in or tapping point. Project design or any change in it is KE’s scope of work and has nothing to do with SSGC.

“To reiterate, since the interest of the people of Karachi is foremost for SSGC, the Company has always shown its seriousness in settling all contentious issues with KE, despite the assertions of the ‘sources’ mentioned in the above news item”.

Copyright Business Recorder, 2021

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