Ministry withdraws gas summary

Ministry of Petroleum and Natural Resources has withdrawn a summary from the ECC on allocation of 150 MMCFD gas from PPL''s Kandkot field to Thermal Power Station Guddu (TPSG). Giving the background, the sources said the ECC on May 23, 2016 while considering a summary submitted by Ministry of Petroleum & Natural Resources had directed Secretaries of Petroleum & Natural Resources and Water & Power to sort out the issues of outstanding receivables of PPL against TPSG and ''take or pay'' clause for allocation of gas within a week and come up with clear proposals before ECC.
Pursuant to the ECC decision, two meetings were held between the Secretaries of Petroleum & Natural Resources and Water & Power ie on June 24, 2016 and August 31, 2016 respectively whereas a few meetings at the level of Managing Director/Chief Executive Officers of M/s PPL, TPSG / Central Power Generation Company Ltd (CPGCL) were also held to deliberate upon the issue of gas allocation and take-or-pay conditions.
During the first meeting held on June 24, 2016 between Secretaries of Petroleum & Natural Resources and Water & Power it was agreed that M/s TPSG is current in payment of gas sales invoices to M/s PPL, however, if any amount becomes due upon reconciliation, it will be cleared forthwith by the Ministry of Water & Power. In respect of "take or pay" clause, it was agreed to cap it at the level of 60% (take-or-pay) against supply of 150 MMCFD gas from Kandhkot field.
Subsequently, another meeting was held on August 31, 2016 between Secretaries of Petroleum & Natural Resources and Water & Power which was also attended by the Managing Directors M/s PPL, M/s SNGPL and M/s SSGCL respectively. In that meeting it was agreed that M/s PPL will enhance its existing gas production of Kandhkot field from 200 MMCFD to 250 MMCFD for onward supply to TPSG which will require further investment by M/s PPL. The enhanced supply will be subject to the condition that TPSG will provide firm gas off-take guarantee in the form of minimum take-or-pay quantity upto 80% and construction/commissioning of new line from Kandhkot to TPSG.
Based on the understanding reached in the meetings held between the two Secretaries, M/s PPL and M/s CPGCL negotiated and initialled Gas Sales Agreement (GSA) on November 16, 2016 wherein M/s CPGCL has agreed to take direct supply of 200 MMCFD gas from M/s PPL''s Kandhkot field subject to 72.5% take-or-pay with effect from June 01, 2017 or the date of commissioning of TPSG''s new pipeline whichever is earlier. Keeping in view the agreement between the Petroleum Ministry and Water and Power Ministry, the former submitted the following proposals for consideration of the ECC of the Cabinet: (i) allocation of 150 MMCFD to TPSG (100 MMCFD directly through PPL and 50 MMCFD through SNGPL) which has since expired on 07.05.2013 may be validated; (ii) M/s PPL will supply 50 MMCFD additional gas, in addition to 150, directly to TPSG with effect from 01.06.2017 or the date of commissioning of TPSG''s new pipeline, whichever is earlier. The entire 200 MMCFD direct gas supply would be subject to minimum 72.5% take-or-pay quantity; and (iii) the outstanding receivables against supply of gas to TPSG would be settled forthwith subject to reconciliation.
The sources said when the summary was tabled in the ECC meeting on February 13, 2017, the sponsoring Ministry ie Ministry of Petroleum and Natural Resources sought ECC permission to withdraw it. Finance Minister Ishaq Dar who is also the chairman of the ECC allowed the Petroleum Ministry to withdraw the summary.