Karachi Electric (KE) has claimed that it is still restricted to take 900 MW BQPS-III into commissioning phase due to non-availability of RLNG by Pakistan LNG Limited (PLL).
In a letter to Secretary Petroleum, Ali Raza Bhutta, CEO KE, Syed Moonis Abdullah Alvi has said that RLNG supply has not yet started to the power utility despite a letter from the construction contractor Harbin Electric (Pvt) Limited on February 4, 2022, and signing of GSA with PLL on August 10, 2021 with the blessings of GoP in compliance with CCoE decision of March 27, 2020 for 150 MMCFD RLNG.
“The KE is still waiting for PLL to start RLNG supply to KE for the commissioning activities that are pending pressurization, testing, and commissioning of the gas infrastructure at the receiving end followed by the commissioning of 900 MW BQPS- Ill power plant,” he added.
According to the CEO KE, despite the readiness of gas infrastructure at SSGC Custody Transfer Station (CTS), issuance of SBLC amounting to Rs 6.6 billion and several requests made to PLL for the commencement of RLNG supply, power utility is still restricted to take the project into the commissioning phase due to non-availability of RLNG.
He maintained that it has now become extremely critical that the RLNG supply to KE is immediately started without any further delay, so that KE is able to carry out the commissioning activities to bring the 900 MW power plant to commercial operation before the start of Ramazan and summer months, so as to meet the anticipated significant increase in electricity requirements in Karachi city and adjoining areas during such high-power demand periods.
The CEO KE further stated that while simultaneously facing tremendous pressure from the construction contractor of the BQPS project, KE has reached the stage where no cushion has been left for further delay in the commencement of commissioning activities.
“The Foreign Technical Advisors of OEM are already mobilized on the site for commissioning of plant and holding them idle at site would not be easy for long time and if they de-mobilize it will be a disaster for this project,” he said adding that the gas system is already ready and it requires simply opening the tie-in valve at CTS, which if not done immediately, would make it impossible for KE to get the 900 MW power plant ready for delivering power to the consumers during the fast approaching Ramazan and summer months.
According to official documents, the ECC which is scheduled to meet on Wednesday (toady) will consider a summary of Petroleum Division meant to amend Second Schedule of Petroleum Products {Petroleum Levy Ordinance, 1961 and issuance of guidelines to Ogra for determination of Re-gasified Liquefied Natural Gas (RLNG) for Karachi Electric (KE) for its 900 MW RLNG-fired power plant.
The existing provisions in the OGRA Ordinance, 2002, and the rules made thereunder, do not provide for determination of consumer sale price of RLNG, therefore, in order to enable Ogra to determine RLNG sale price, RLNG was declared as petroleum product under Petroleum Products (Petroleum Levy) Ordinance, 1961 and the rules made thereunder by way of inclusion of RLNG in First Schedule ‘the list of Petroleum Products’ and inclusion of name of M/s SNGPL and SSGCL in Second Schedule.
Ogra was delegated with a power to administer or establish the price of RLNG on behalf of M/s SNGPL and SSGCL. Since June, 2015, Ogra is determining the price of RLNG for sale by SNGPL and SSGCL to their consumers only.
According to sources, GSA between KE and PLL has been finalized and executed while an Interconnection Agreement (IA) between SSGCL and PLL has also been initialed and sent to Ogra for approval.
In order to enable PLL to supply RLNG to KE’s 900 MW power plant and finalize its RLNG sale transaction, Petroleum Division has proposed the following: (a) amendment to the Second Schedule of Petroleum Products {Petroleum Levy Ordinance, 1961 pursuant to Section 7 of the Petroleum Products (Petroleum Levy) Ordinance, 1961}- (i) federal government, except for Fifth Schedule, can amend the schedules of the Ordinance by notification in official gazette, therefore, name of PLL may be included in the Second Schedule of Ordinance and Ogra may be delegated the power for establishing/administrating RLNG price on behalf of PLL as per the draft SROs duly vetted by Law Division; and (b) Determination of sale price of RLNG; (c) LNG DES price to be taken as per contract(s) as per existing guidelines; (d) PLL’s LNG import related costs and port charges to be taken at actual as per the existing guidelines; (e) PLL’s margin on LNG to be taken as per the existing guidelines; (f) all the charges under Operation Services Agreement (OSA) including but not limited to capacity charges, utilization charges of Terminal as well as retainage to be taken at actual as per the existing guidelines; (g) terminal management fee at actual as per the existing guidelines; (h) costs associated with interconnection agreement between PLL and SSGCL to be taken as per the agreement; (i) any other costs under the GSA between KE and PLL to be taken as per the agreement including Operation and Maintenance (O&M) fee for the metering setup; (j) costs associated with issuance of Performance Security by PLL to KE under Heads of Agreement (HoA); and (k) transmission loss to be determined and charged at actual as per existing guidelines.
