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Hamstrung by forex constraints, govt may not be able to purchase 3 more LNG spot cargoes

  • PLL has suggested that power sector be requested to analyse the possible savings with respect to power generation based on imported additional LNG through replacement of any other fuel
Published March 27, 2023
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ISLAMABAD: The country’s forex woes are unlikely to allow the government to take a prompt decision for purchase of three additional cargoes of LNG on spot whose price is around $ 13.4 MMBTU in the international market.

Well informed sources told Business Recorder that M/s Pakistan LNG Limited (PLL) has apprised the Petroleum Division that during April 2023 to September 2023 terminal capacity for additional 2-3 LNG cargoes per month is available at Terminal-2, while spot LNG prices are currently at $13.4 MMBTU ($ 43 million per cargo).

Accordingly, PLL has suggested that power sector be requested to analyze the possible savings with respect to power generation based on imported additional LNG through replacement of any other fuel.

Import of LNG: ECC is all set to approve PLL-SOCAR pact

Petroleum Division has requested the Power Division to provide views/ comments on the proposal of PLL in order to save cost of generation against any other imported fuel.

Last year, the government maintained that it could not purchase spot LNG because its price was over $40 MMBTU.

According to existing plan, PLL will ensure one cargo each from March to September 2023. However, total cargoes to be imported by both PSO and PLL will be nine in March, May, June and September whereas 10 cargoes will be imported for April, July and August 2023.

National Electric Power Regulatory Authority (Nepra), in its determinations and through letters, has repeatedly urged Power Division and Petroleum Division to supply agreed quantity of RLNG to power plants so that cost of expensive fuel like RFO is not passed onto consumers.

National Power Control Centre (NPCC), an arm of National Transmission and Despatch Company (NTDC), which is also facing an investigation for its failure to take remedial measures to stop power breakdowns, has also time and again complained during public hearings at Nepra that they are not being supplied required quantity of RLNG for the plants due to which they are operating expensive plants.

Meanwhile, on March 17, 2023 Directorate General of Gas (Petroleum Division) in a letter to Power Division that M/s Sui Northern Gas Pipeline Limited (SNGPL) has expressed its serious concerns that the system pack has reached saturation level despite taking all mitigation steps, i.e., increase in supply to captive power from 50 per cent to 100 per cent, repeated requests to power to increase off-take and curtailment in supplies from local gas fields.

M/s SNGPL has reiterated that the situation has arisen mainly due to lesser off-take by power against its given demand of 521 MMCFD. The average off-take by power since March 01 is 378 MMCFD while it is off-taking around 300 MMCFD right now and it is apprehended that consumption would further drop due to weather predictions. As per plan, SSGC had to retain 70 MMCFD while its average retention during March is only 11 MMCFD.

According to the letter, under the prevailing situation SNGPL is constrained to further reduce indigenous gas input to mitigate the situation which however has an impact on diversion of RLNG (diversion to domestic during March has been 140 MMCFD against the projection of 20 MMCFD).

Directorate General of Gas argues that immediate increase in power off-take and maximum RLNG retention by SSGC is; therefore, very critical. Indigenous input from local gas fields shall be normalized as soon as power starts off-taking gas per its given demand.

Directorate General of Gas has requested Power Division to advise the concerned quarters to increase RLNG consumption as per their demand for smooth operation of the gas system.

Copyright Business Recorder, 2023


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Tulukan Mairandi Mar 27, 2023 08:38am
Why not? Just export 1M more soccer balls to Qatar and Brazil
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Haw Mar 27, 2023 01:46pm
Never ending cycle of circular debt,:started by IPP agreements signed by PPP 2nd govt. (in mid 90s) with capacity payment in US Dollars & int'l Arbitration (including IMF, WB, etc), can neither be negotiated nor disclosed. Practice continued by PML-N govt. with mounting backlog of payments. As Musharraf took over in 1999 as Chief Executive he signed the bill authorizing IPPs payments, that resulted in bankruptcy of WAPDA. Later WAPDA was divided in to smaller DISCOs, KESC privitized & NEPRA was established. Another disaster was that mostly plants were operating on furnace oil (from local refineries), converted to natural gas (along with CNG stations), to reduce dependence on imported crude. This resulted in rapid decline of gas fields & redundant capacity of refineries (optimized for furnace oil production). Since than numerous issues started; - IPPs payments / circular debt - inefficient DISCOs / theft of electricity - ever increasing cost of electricity, making industrial production non feasible - redundant / bankrupt refineries, import of refined petroleum products & export of low value surfur furnace oil - rapid depletion of gas fields, import of costly LNG, bankruptcy of SNGPL / SSGC
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