02 August 2004	Monday	15 Jamadi-us-Saani 1425

Please Visit our Sponsor (Ads open in separate window).

ISLAMABAD, Aug 1: In view of the looming gas shortfalls, the government has decided in a major policy shift to reject investment proposals for gas-fired power plants and has put in place a new gas allocation plan, Dawn has learnt.

Sources in the Private Power and Infrastructure Board (PPIB) said the two gas utilities - SNGPL and SSGCL - have clearly refused to commit gas supplies beyond five years in view of non-availability of the gas.

The PPIB has so far received around $4 billion worth of two- dozen unsolicited proposals for gas-based power plants with a total capacity of 3,548-mw. "In view of projected gas shortfalls, all these projects, except one or two, have no future at least in the given circumstances", said a senior government official.

This has sent alarm bells in the government circles because if proposals for investments in the gas-fired power plants on raw sites are accepted, the government would be exposed to substantial financial risks against the sovereign guarantees it is required to provide under the 2002 power policy.

In view of this situation, the government has imposed a moratorium on accepting raw-site proposals based on pipeline quality gas. Accordingly, it has been decided that the PPIB would send request of serious investors to petroleum ministry for confirmation of gas availability, who in consultation with the gas utilities would respond to that.

Moreover, the gas utilities and the petroleum ministry have been restricted not to directly correspond with the sponsors of the power projects regarding gas availability.

Furthermore, in view of limited gas availability and also to avoid the risk of any unforeseen gas shortage a provision would now be kept in design agreements of new power plants to run on dual fuel as and when needed. However, to cut the cost, the duel firing system would be imported only after confirmation regarding non-availability of gas.

Also, gas to captive power plants would be supplied strictly in accordance with decisions of the economic coordination committee to industrial units only and not to hotels, wedding halls, banks and other commercial organizations.

The official said the government is left with the only option to hold international competitive bidding for one or two projects on sites where supply of pipeline quality gas is available on a long-term basis i.e. at least 20-plus years, because of significant interest shown by the sponsors for such sites.