The Power Division and Petroleum Division of Ministry of Energy are at loggerheads over the utilisation of imported liquefied natural gas (LNG) as Petroleum Division has complained that Power Division is neither ensuring the off-take of imported LNG, nor is placing timely demand. This was revealed during a subcommittee meeting of the Public Accounts Committee which held here under the chairmanship of Syed Naveed Qamar to discuss and review the audit paras regarding the Ministry of Energy of 2016-17.
During the meeting, Sui Northern Gas Pipelines Limited (SNGPL) and Power Division presented their viewpoints. The SNGPL officials highlighted that Power Division's actual consumption is far less than firm demand given by it, which is resulting in serious financial losses for the gas company since firm LNG orders have to be placed 90 days in advance. Also the same is leading to lack of signing of agreements with upstream suppliers, the SNGPL officials said and added that as a result of 'non-serious' attitude of the Power Division, almost Rs 100 billion of SNGPL has been stuck with various consumers, especially LNG-based power plants.
Naveed Qamar noted that proper planning for re-gasified liquefied natural gas (RLNG) utilisation should have been done since a 15-year agreement has been signed on firm take basis. Additional generation capacity was to be planned accordingly, he added. He termed it a serious failure of the government and a loss to the nation.
He directed minister for energy to resolve issues regarding firm utilisation of RLNG so that execution of pending agreements can be ensured. The committee further directed Power Division to inform PAC about the status when the same is accomplished. The SNGPL officials requested the panel to direct Power Division for ensuring the following steps: (i) Power Division must consume LNG as per firm demand provided by it to SNGPL; (ii) Power Division shall arrange for its independent power plants (IPPS) to enter into firm take or pay agreement with SNGPL.
The committee also directed the Power Division to ensure tripartite agreements with IPPS. Briefing the panel, secretary Petroleum Division said that LNG is lifeline of future, adding that use of inefficient fuel, furnace oil, by power plants must be stopped as it has been noted over the past few months that furnace oil use by power plants has been increased. The SNGPL also pleaded that the GPPS should be made must-run plants; otherwise, firm orders cannot be placed with such huge variations in consumption. The supply chain situation in such case will default. Also, generation of power through RLNG consumes over 85 percent of overall RLNG consumption and IPPs are always anticipated to be the predominately main consumer of the LNG. The SNGPL said that power consumption viz demand has been less by around 100 MMCFD since mid of July and August. Power Division has cut its demand by 150 MMCFD for September and for October onward demand has cut down by 200 MMCFD.
The secretary Power Division briefing the meeting spelled out the reason behind a cut in LNG demand and said that the division is bound by merit order to run cheaper plants first since it is its duty to provide cheaper electricity to consumers. Now that hydel and coal generation is increasing, RLNG consumption is getting affected. Also rapid seasonal changes, lower than expected temperatures and monsoon led to reduced consumption in power, which are not in line with the historical trend, he maintained.
The panel snubbed the National Accountability Bureau (NAB) representative for his 'failure' to give satisfactory briefing to the panel on Nandipur Power Plant case. The panel directed him to attend next meeting fully prepared and inform the panel on the latest position of the NAB reference against the people responsible for delaying the installation of the power plant by holding machinery of the plant at a port for years.
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