The Asian Energy Ventures Ltd, Karachi, plans to set up a pioneering naphtha-based independent power project. The company has requested the government to allocate 325,000 tons of naphtha on a yearly basis for use as a primary fuel.

The project will be a combined cycle power plant installing two units of gas turbines along with two heat recovery steam generators and one steam turbine and produce about 240 mw of electricity.

The least expensive of oil fuels, naphtha is also used the world-over for power generation, either as primary or alternate fuel to natural gas. Leading world manufacturers of gas turbines and diesel/gas engines have installed, in recent years, a number of simple-cycle and combined-cycle units using naphtha as fuel for power generation in many countries. India has a rich experience in using naphtha on gas turbines. Currently, there are 27 naphtha-fired and dual-fuel- fired (gas and naphtha) power plants total installed capacity of more than 11,299 mw in operation.

Naphtha production in Pakistan, as a by-product from petroleum refineries, is around 833,000 tons annually. There has been a sharp increase in its output as a result of refinery expansions in recent years. Naphtha requires special safety considerations for use in gas turbines and diesel/gas engines. Its high volatility can cause fire explosions, as in case of other liquid fuels. The related technology however has recently improved and more effective protection systems and safety management regulations are in place.

There are obvious advantages of naphtha-based power generation, naphtha being indigenous and of lower price compared to other oil fuels. Also, there is no increase in capital cost of power generation machinery as it is the same as applicable to using other oil fuels. Thus, using naphtha would significantly reduce power generation costs and electricity tariffs. But then there are issues relating to safety and environmental concerns.

At present, naphtha is exported as a low-valued commodity. Its price in Asia in particular has been fluctuating and since there is no price mechanism for it in Pakistan, international markets dictate its price. Naphtha is viable for power generation at current price but may not be on a high price, if and when projected. This may result in forced closure of the power plant as natural gas, as an alternate fuel, would also not be available in the foreseeable future. This had happened in India.

Of late, naphtha is being put into better utilisation in many countries. Besides setting up hydro-cracker plants, naphtha production is converted into high-octane gasoline in many countries. Bangladesh is constructing a plant at Chittagong to produce 150,000 tons of high-octane gasoline by using naphtha, which will be operational next year.

A major refinery in Pakistan is already producing high-octane gasoline using its by-product of naphtha. If other refineries follow the suit, naphtha would not be available for relatively less value-added power generation.

The Asian Energy Ventures Limited, which has no track record in power sector, claims that the project is being implemented on fast-track and the US Export Import Bank has provided letter of intent to finance the procurement of gas turbines. The financial close for the project is thus expected within six months, whereas commercial operations may commence within another two years. Surprisingly, they have not yet obtained requisite letter of intent (LOI) from the Private Power and Infrastructure Board (PPIB), as per provisions of the Power Policy 2002 in vogue. They have also not initiated preparation of the project feasibility study.

The selection of machinery has been done in the absence of a techno-economic feasibility study. Professionally, a comparative study of available technologies and related machinery is to be conducted so as to select the most suitable option. The sponsors have selected LMS100PA that are high-efficiency modern turbines but not yet proven successful on naphtha as a primary fuel.

On the other hand, GE's Frame 9E turbines have been commonly used on naphtha-based power plants in many countries. Also, the selected turbines are very costly, at $871 per kW, compared to $583 and $679 per kW of other compatible turbines namely GE's 9171E and Alstom's GT11N2 respectively, according to cost estimates worked out.

Only based on technical and economic conclusions made in the detailed feasibility and environmental studies to be conducted, the parameters of power plant including selection of machinery could be finalised. The lack of such studies may hamper progress on implementation of the proposed project as envisaged by the sponsors.