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ISLAMABAD: The Petroleum Division has reportedly prepared a plan to withdraw gas from older and inefficient units of Thermal Power Station Guddu (TPSG) aimed at giving it to the fertilizer sector, which has been lobbying for quite some time, well-informed sources told Business Recorder.

TPSG under Genco-II comprises of 13 gas + steam based old units as Combined Cycle Power Plant (CCPP) commissioned between 1974 and 1994 and 3 units under 747 CCPP commissioned in 2014.

According to the Petroleum Division, old units of TPSG have very low efficiency and have outlived their useful generation lives. These units continue to remain in operation despite having low generation efficiency and having directions of the CCoE ratified by the Cabinet for phased decommissioning and de-licensing of inefficient units besides submitting a phasing out plan by Power Division.

The units of 747 MW CCPP are the only efficient units with thermal efficiency of 55% and are currently on the active list of privatisation and Power Division has already requested separate allocation of up to 156 mmcfd gas along with execution or Gas Sale Agreement (GSA) with Pakistan Petroleum Limited (PPL) for the 747 MW CCPP.

June FCA: Discos allowed Rs9.90/unit tariff hike

On March 28, 2017, the ECC besides revalidating the expired allocation of 150 mmcfd, approved additional allocation of 50 mmcfd from Kandhkot gas field. Additional supply started in June, 2017.For supply of gas from Kandhkot field to TPSG, there are three dedicated Kandhkot (KK) pipelines, ie, KK-I, KK-II & KK-III each with a capacity of up to 90 mmcfd. Mari is connected with TPSG through a dedicated line.

Petroleum Division maintains that the analysis of gas offtakes provides a picture of sub-optimal and inefficient utilization of a very scarce natural resource by TPSG for past many years. Mari is now connected with SNGPL network at two separate injection points. Kandhkot on the other hand does not have connectivity either with SSGCL or SNGPL for possible utilization of undrawn/underutilized Kandhkot gas. As of June 30, 2022, the receivables of PPL, MPCL and SNGPL on account of gas supply to Guddu Power Plant have piled up to Rs. 256.99 billion. Both PPL and MPCL have been making requests for redressal of sub-optimal use of gas and payment issues.

The Nepra in its Annual Report(s) titled State of Regulated Industry has been consistently reporting the underperformance of TPSG in terms of its power generation as well as plant utilization.

As of December, 2021, the remaining recoverable gas reserves of Kandhkot gas field are 469 Billion Cubic Feet (BCF) which can last for 6-8 years provided that the gas production rate is maintained at 150-200 mmcfd. Considering the specification of Kandhkot gas, it cannot be utilized into the system unless it is processed and conditioned before injection either into SSGCL or SNGPL network. Estimated expenditure on the installation of gas processing facility is US$ 95 million with 18 -24 months’ time for completion of such a facility. Assuming flow of up to 100 mmcfd gas from Kandhkot, the possible options of connectivity with existing SSGCL and SNGPL network are as follows: (i) SSGCL-Kandhkot-Shahi Wah Kashmore (18inch x 25 kms, Rs 3.1 billion; and (ii) Kandhkot-Shikarpur (18inch x 65 kms, Rs 7.6 billion. SNGPL - (i) Kandhkot Qadirpur field (18 inch x50 kms) Rs 8.71 billion; and (iii) Kandhkot-Guddu-Qadirpur (20-inch x 114 kms) Rs 12.84 billion.

After explaining the case, the Petroleum Division has submitted following proposals for effective and efficient utilization of Kandhkot gas field during its remaining useful production life: (i) considering low efficiency of older units of Guddu power, only 747 MW CCCP may be provided gas up to 156 mmcfd gas for which separate GSA would be executed on take-or-pay basis. The gas over and above 156 mmcfd threshold may be allocated to SSGCL to whoever has the nearest injection network to meet its demand/supply deficit; (ii) SSGCL would be required to undertake construction of pipeline connecting Kandhkot filed with its network; (iii) both PPL and SSGCL would expeditiously complete the installation or processing plant and pipeline for early injection of gas. Upon availability of gas in SSGCL system, Government may decide to further allocate this gas to any bulk customer preferably fertilizer and/or industry on SSGCL network; (iv) in order to enable PPL to invest in installation of gas processing facility (- $ 95 million ), gas compression (- $ 25 million) and to drill the additional wells at the cost of $ 40 million for extension in the plateau period of production, the wellhead gas price of Kandhkot gas may be fixed at Petroleum Policy 2012 for volumes over 150 mmcfd. Any undrawn/unutilized volume or TPSG diverted to SSGCL may also be charged at Petroleum Policy 2012. The sources said the Petroleum Division has prepared a draft summary on this issue and sent to concerned ministries/Divisions for comments prior to submitting it to the ECC.

Copyright Business Recorder, 2022

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