ISLAMABAD, Nov 24: The federal government has asked Private Power and Infrastructure Board (PPIB) to hold international competitive bidding (ICB) to set up a 600-mw power plant at Uch gas field.

Informed sources told Dawn on Wednesday that Economic Coordination Committee (ECC) of the cabinet has also directed the Oil and Gas Development Company Limited (OGDCL) to ensure the supply of purified gas to the prospective investor at a mutually agreed place and well negotiated commercial price.

However, the ECC has turned down a number of conditionalities for the prospective power sector investor proposed by the ministry of petroleum and natural resources with the observations that such conditions would scare away the investors.

The investor would have the right to do his due diligence with respect to the reserves, volumes and gas specifications. In the agreement with the prospective investor, the failure of gas field would be settled as force majeure event.

It has also been decided that low-BTU (non-pipeline quality) gas from Uch field should not be given to the existing power producer. The sources said price of Uch-1 and Uch-II is linked with 100 per cent furnace oil price with floor of $1.9612 per mmbtu (million british thermal unit) and ceiling of $3.9223 per mmbtu.

OGDCL is the operator of Uch gas field and is supplying 250 mmcfd (million cubic feet per day) to Uch Power Limited (UPL). Out of 4.5 tcf (trillion cubic feet) recoverable Uch reserves, 2.56 tcf stands dedicated to the UPL under a gas sale and purchase agreement and 1.904 tcf is still available.

According to a recent study of the OGDCL, adequate additional gas reserves are also available over and above the ones already committed with the UPL. The reservoir study showed that 220 to 280 mmcfd of gas is available for 14 to 16 years which cannot be used for any other purpose except power generation.

The OGDCL is authorized under the rules to enter into third party sale arrangement for supply of additional volumes of this gas for power generation instead of allowing the existing investor to expand.

The Uch field has a heating value of 430-480 BTU which is not a non-pipeline quality (waste) gas and cannot be injected into the main gas transmission system. At expected dispatch levels and current gas prices, OGDCL would receive annual additional revenues of $100-120 million based on uninterrupted supply of gas.

It has already received $245 million from the existing investor since the start of operations in the late 1990s. The project is of a strategic location to Wapda and the national grid because its power could be easily dispatched to Sibi and Guddu with substantial savings in line losses.