No gas for captive power plants, new connections for industry

Published January 22, 2021
ISLAMABAD: Federal Minister for Planning, Development, Reforms and Special Initiatives Asad Umar chairing a meeting of the Cabinet Committee on Energy at the Cabinet Division on Thursday.—APP
ISLAMABAD: Federal Minister for Planning, Development, Reforms and Special Initiatives Asad Umar chairing a meeting of the Cabinet Committee on Energy at the Cabinet Division on Thursday.—APP

ISLAMABAD: In a welcome move to enhance power consumption from the national grid facing a capacity trap, the Cabinet Committee on Energy (CCoE) on Thursday decided to ban fresh gas connections and disconnect supplies for captive power plants (CPPs) to existing industrial consumers.

The meeting presided over by Minister for Planning and Development Asad Umar “approved the applicability of the policy from Feb 1 for the general industry and from March for the export-oriented industry,” said an official statement.

The meeting discussed a proposal of Petroleum Division for moratorium/discontinuation of natural gas supply for CPPs. The policy only applies to industries which are connected to the power grid and therefore have an alternative electricity source.

The decision is based on the fact that cheaper domestic gas supplies were declining and their consumption in inefficient CPPs of industrial consumers was a big national loss. On the other hand, the surplus power generation capacity had become another challenge and a significant part could be absorbed in these industrial units at competitive rates and reliable supplies. There are pending applications for electricity connections for about 3,000MW load, according to Special Assistant to PM Tabish Gohar.

The Petroleum Division briefed the committee that gas will continue to be supplied to all those industries where gas is being utilised as integral part of the process, or where primary utilisation is not for power generation. The new measure will be implemented in a way that no disruption is faced by any industry.

Industry not currently connected to the power grid, will be encouraged to shift from gas-based captive power generation to the national power grid. This process would be completed latest by December this year.

These measures would, in the short term, make around 150 million cubic feet per day (mmcfd) of natural gas available for use in the power sector, which will replace expensive power generation on backup fuels. In the long-term, around 3,000MW load is expected to move to the power grid, which will help to reduce average cost of power as well as help in reducing circular debt buildup.

The Petroleum Division explained that these measures would increase the overall utilisation efficiency of the scarce natural resource (domestic gas) as large power plants are at least 30pc more efficient than CPPs.

The committee, while approving the proposal, directed the Petroleum Division to institute a transparent and verifiable process for implementation of the new measure and arrange third party verification as well. It also directed that sufficient time be given to the industry to apply for new connections from the electric utilities.

The meeting also decided that the Discos will expeditio­usly process new connections and load enhancement applications for industries and ensure quality of supply to industry.

This policy will apply to all industries, including those classified as zero-rated or export-oriented industries, across the country both on gas and RLNG. The proposed policy guidelines are based on Petroleum Division’s report that a total of 1,211 CPPs were operational on natural gas – 362 on SNGPL and 849 on SSGCL network.

The number of CPPs with electricity connection is 976. Of these 350 are on SNGPL and 626 on SSGCL network. The CPPs without electricity connection are 235 (12 on SNGPL and 233 on SSGCL system).

Total estimated gas or RLNG consumption of CPPs was 415 mmcfd – 205 mmcfd on SNGPL and 210 mmcfd on SSGCL system. The CPPs of export units are 610 –236 on SNGPL and 374 are on SSGCL system. Estimated gas/RLNG consumption of these CPPs of export industry is about 290 mmcfd – 155mmcfd on SNGPL and 135 mmcfd on SSGCL. The CCPs of non-export industry are 601.

Published in Dawn, January 22nd, 2021

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