RLNG pushes up generation cost: KE urges govt to help provide gas to its power plants

ISLAMABAD: K-Electric has approached federal government for allocation of indigenous gas fields which can be utilized by relocating its plants, sources in Petroleum Division told Business Recorder.

Chief Executive Officer (CEO) of KE, Syed Monis Abdullah Alvi, in a letter to Petroleum Minister, referred to KE’s letter of July 19, 2024, on allocation of indigenous gas for K Electric Ltd sent to Ministry of Energy (Petroleum Division).

According to CEO KE, over the past few years, due to severe depletion in supply of indigenous gas to KE, there has been an increased reliance on Re-Gasified Liquid Natural Gas (RLNG) for power generation by KE which has resulted in a high generation cost basket as KE’s fleet is comprised mainly of gas based generating units.

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“Our generation fleet of 1,000 MW remains idle, as indigenous gas, which was earlier promised to KE, is no longer available. We do understand the depletion scenario of existing gas fields and acknowledge the limitations in this regard,” Alvi added.

The CEO argued that KE has been proactively engaged with the Ministry of Energy (Petroleum Division) and relevant gas exploration companies, for the possibility of direct allocation of indigenous gas. There are two ways and options through which this gas allocation may be possible - either through relocation of KE’s generating assets to a field or transporting/swapping gas to the plant site.

The power utility company claims that it has identified certain possibilities that may fulfil one or both proposed options which are as follows: (i) KE understands that Uch field of Oil and Gas Development Company Limited (OGDCL) in Balochistan has ample gas reserves available or can be made available with minor investment on gas compression.

Since the gas extracted from Uch field is of low calorific value, its transportation may not be viable. However, KE’s generation plant(s) can be retrofitted after its relocation to Uch field, next to Uch power plant, and power generated from it can then be evacuated through existing transmission network and KE-NTDC interconnection.

KE may engage with relevant stakeholders and initiate requisite assessments and feasibilities upon obtaining principal approvals from the Ministry; and (ii) further, KE has requested Petroleum Division for the allocation of 100MMSCFD of indigenous gas from Mari Petroleum Company Limited (MPCL), as their contract with SNGPL expired as of June 2024.

The re-allocation of this gas to KE would be of significant benefit to the consumers of Karachi, as at present KE’s gas fleet is operated on RLNG, which is three times more expensive than the indigenous gas.

“We request the government to facilitate the gas allocation from MPCL, or any other gas field deemed prudent by the Ministry, to KE for a more cost-effective gas supply for our generation plants,” Alvi said requesting to schedule a meeting to provide KE an opportunity for presenting its plans and seek guidance on its proposal and to make affordable power available to the customers of Karachi.

Copyright Business Recorder, 2024