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ISLAMABAD: M/s Engro Powergen Qadirpur Limited (EPQL) has sought support from Ministry of Energy and National Electric Power Regulatory Authority (NEPRA) to get gas from Kandhkot field, already allocated to Guddu Power Plant and notification of Gas Depletion Mitigation Option (GDMO) to generate electricity at cheaper rates.

This request has been sent by the Chief Executive Officer (CEO), EPQL Shahab Qader to Managing Director PPIB, Secretary Power, Secretary Petroleum, Chairman NEPRA, CPPA-G, MD PPL and Director General, Gas (Petroleum Division).

Sharing the background, he said, EPQL entered gas insufficiency phase in September 2018 when Qadirpur gas field production levels were depleted to an extent that base load was permeate and gas supplies were not available for EPQL which has since then, followed the procedure envisaged under the Implementation Agreement (IA) to work with the stakeholder (including PPIB, CPPA-G SNGPL, NTDC, NEPRA, etc.) to identify and select an alternate fuel for EPQL power plant which can be used in conjunction with permeate gas. EPQL submitted the initial Gas Depletion Mitigation Plan (GDMP) in April 2019, updated GDMP in October 2019 and again in November, 2019. In this regard the stakeholders identified RLNG as the most viable option for mitigation of gas depletion. Final GDMP was submitted in September 2020 and after extensive and exhaustive consultation, stakeholders have finalized RLNG as the Gas Depletion Mitigation Option (GDMO) in March 2021.

Kandhkot field: PPL seeks govt nod to produce more gas

During the Pendency of GDMO notification and implementation, EPQL has been operating on mix fuel and making plant available on permeate gas and HSD. EPQL has even received dispatch on HSD, which is the most expensive fuel for Power generation and approximately 25 million units have been produced by EBQL on HSD between July 2021 and January 2022.

“Had these units generated on RLNG instead of HSD, electricity basket price would have been lower by approximately Rs 400 million (computed at current rates),” said CEO EPQL.

Accordingly, further delay in the notification by the GoP of RLNG as the GDMO for EPQL will continue to result in substantial losses for both the power consumers and the national exchequer. Had the GDMO been notified in a timely manner and EPQL Plant was available on RLNG, it could have provided over 500 million units of electricity at much lower rates compared to HSD/RFO from July 2021, resulting in potential reduction of electricity basket price by at least Rs 2 billion and forex savings of approximately $ 11.4 million in the last seven months. This invariably shows that RLNG is a cheaper fuel option in the generation mix compared to RFO/HSD.

He further contended that EPQL fuel cost component on HSD is Rs 33.3/ unit as per the merit order published on February 16, 2022 whereas the plant’s fuel cost component on current RLNG rate worked out to Rs 17.3 per unit.

He maintained that as per the most recent projected gas profile shared by SNGPL by end of 2022, permeate gas volumes (at the Qadirpur field) are expected to go down even further to a level where even minimum load operation of EPQL (90 MW) will require fuel to be commingled. Unless GDMO is immediately notified and RLNG is made available for commingling, HSD will continue to be used and commingled with permeate gas, leading to higher electricity tariff. Another possible implication will be the non-utilization of available permeate gas as commingling with HSD will result in a higher tariff and lower dispatch leading to an even bigger economic loss and perhaps expensive power generation on RFO/ HSD instead of permeate gas.

According to M/s Engro, it was recently learnt that Petroleum Division is planning to reallocate some volume (100 MMCFD) of Kandhkot gas to other consumers to enhance the off-take from the field. It is the company’s understanding that the Kandhkot gas field, which is located 30 km from EPQL power plant, is presently allocated to Guddu Power Plant, but the gas off-take from that source has remained extremely low in a past few years due to chronic operational and maintenance issues at the Guddu Power Plant. The company believes EPQL is a natural/ ideal consumer for Kandhkot gas as EPQL is located just 30km from Kandhkot and EPQL’s plant has been specifically designed for the consumption of low BTU gas with high H2S content.

The power company is of the view that supplementing the permeate gas supply with 25- 55 MMCFD (off-take from Kandhkot will increase as Qadirpur field depletes) gas volume from Kandhkot will enable EPQL to produce cheap electricity, particularly when compared to imported fuels such as HSD, and further enhance the energy security of the country.

The company has claimed that its plant has operated with a very high capacity/ availability factor over the last 12 years of operations which is testament to its excellent O&M practices.

The power company says it foresees the following potential benefits for utilizing indigenous permeate and Kandhkot gas at EPQL: (i) It can lower the overall energy basket price for the power sector resulting in potential benefit of over Rs. 300 billion to the consumers over next 13 years: (ii) it can potentially produce 23 billion units of electricity over remaining PPA term of EPQL plant (till 2035), which in turn can provide forex savings of up to $ 2 billion versus imported coal/ fuel); and (iii) assuming the stability of current gas prices, the supply of Kandhkot gas to EPQL can result in potential revenue of Rs 150 billion for PPL/ GoP till 2035.

Copyright Business Recorder, 2022

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