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ISLAMABAD: National Power Parks Management Company (NPPMCL) has sought the Petroleum Division’s help in the execution of revised Gas Supply Agreements (GSA) with Sui Northern Gas Company Limited (SNGPL) regarding the waiver of a minimum 66% take or pay commitment in compliance with the CCoE and ECC decisions, well-informed sources told Business Recorder.

Power Division had advised NPPMCL to take necessary action for the resolution of issues related to GSAs.

NPMMCL, in this regard, has pointed out that CCoE/ ECC has only approved the amendment of GSAs to the extent of waiver of a minimum 66 percent take or pay commitment in the GSAs, adding that as such NPPMCL has always been willing and ready to implement the decision of CCoE/ ECC for which it has already obtained approval and authorization from its Board of Directors.

However, the compliance thereof has been delayed on account of SNGPL’S condition that NPPMCL should also agree with other amendments proposed by it. However, none of such “issues” has been approved by the Government.

The views and comments of NPPMCL on the issues are as follows:

Dispute Resolution Mechanism: As the privatization process of NPPMCL is in the advanced stage; therefore, any change in the dispute resolution mechanism provided in the GSAs, even if agreed by both the parties, shall require the consent of the Privatisation Commission, as well as, of CCoE/ ECC. Therefore, NPPMCL has reiterated that the waiver of a minimum 66 percent takes or pay commitment approved by CCoE/ ECC on September 18, 2020, and April 14, 2021, respectively should be implemented in the first instance and any other change be made subsequently after consideration by the parties and obtaining approval from the Federal Government.

Debt recapitalization: NPPMCL proposes amendments in GSA with two RLNG-fired power plants

Diversion of unutilized volumes: The language proposed by SNGPL to be added in Section 3.6 (b) of GSA6.3 (b) of the GSAs is unilateral; hence, not acceptable to NPPMCL. The terms & conditions of any agreement should be balanced and not tilted towards a particular party.

NPPMCL Legal Advisors are reviewing the diversion mechanism provided in Section 3.6 (b) of GSAs along with technical staff and NPPMCL shall revert to SNGPL soon.

Gas Specification/ Gas Calorific Value (GCV): NPPMCL fully understands that SNGPL is its sole supplier of gas and is aware that in the near future SNGPL will only be able to get RLNG having an upper GCV cap of 1150 BTU/ SCF as its gas turbines of NPPMCL are designed to operate on gas having a GCV range of 950 BTU/SCF to 1000 8TU/ SCF, which range was provided by SNGPL prior to detailed design and placing of the purchase order by the EPC contractors.

Accordingly, NPPMCL took up the matter with M/s. General Electric, the OEM of gas turbines, for working out the impact of change in GCV, etc. SNGPL time and again changed the proposed range of increased GCV; however, against the range of GCV and gas composition lastly provided by SNGPL, the OEM of gas turbines revealed that the approximate impact of rich fuel on performance of Combined Cycle will be: (i) Combined Cycle Output with one Gt will decrease by 0.6% at 25 degrees C (Ambient Temperature); and (ii) Combined cycle heat rate with one GT will increase by 0.1 percent at 25 degrees C (ambient temperature).

NPPMCL argued that in order to mitigate the impact of higher GCV range of the gas on the output and heat rate, certain software and hardware modifications/ additions in equipment will be required the cost whereof is being determined by General Electric. Accordingly, they said the cost would be required to be built-in in into the tariff of NPPMCL already approved by NEPRA.

However, NPPMCL has reiterated that the waiver of a minimum 66% takes or pay commitment approved by CCoE/ ECC on September 18, 2020, and April 14, 2021, respectively should be implemented in the first instance and any other change to be made subsequently after consideration by the parties and obtaining approval from the Federal Government.

NPPMCL has requested Power Division to request Petroleum Division to advise SNGPL to immediately execute revised GAAs in compliance with and to the extent of the decision dated September 18, 2020, & April 14, 2021, of the CCoE and ECC, respectively regarding the waiver of minimum 66% take or pay commitment.

Copyright Business Recorder, 2022

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