ISLAMABAD, Sept 10: The federal government has approved a new gas allocation and management policy for supplies to fertilizer units, independent power plants (IPPs), captive power plants and CNG stations, and for optimum utilization of non-pipeline quality gas to reduce dependence on high-cost fuel imports, it was learnt.
A senior petroleum ministry official told Dawn on Saturday that the Economic Coordination Committee (ECC) of the cabinet headed by Prime Minister Shaukat Aziz took a decision to this effect last week and approved allocation of about 200 mmcfd (million cubic feet per day) of natural gas for two IPPs and a fertilizer unit.
Under the decision, additional 100 mmcfd pipeline quality gas from Qadirpur gas field has been allocated to Sui Northern Gas Pipelines Limited (SNGPL) for the setting up of an efficient state-of-the-art brand new fertilizer plant at Dharki in Sindh.
The SNGPL has been directed to prepare the transaction structure in consultation with the ministry of petroleum and natural resources and submit to the ECC for approval.
Another 75 mmcfd of permeate gas of about 575 BTU heating value from Qadirpur gas field has been allocated to SNGPL and placed at the disposal of Private Power and Infrastructure Board (PPIB) for setting up a new 150-mw IPP at Dharki.
Furthermore, a 20 mmcfd of low-BTU gas (200-BTU) from Kandra gas field has been allocate to Sui Southern Gas Company Limited (SSGCL) which along with five mmcfd of pipeline quality gas from SSGCL’s system at Sukkur has been placed at the disposal of PPIB for setting up of a new 60-mw IPP at Sukkur.
Natural gas with less than 900-BTU per cubic feet heating value is normally considered as low-BTU or non-pipeline quality gas. The official said due to shortage of indigenous urea, the government has decided to import 500,000 tons of urea during 2005-06.
Imported urea being highly expensive, the government would have to pay a substantial amount of subsidy as a differential between the price of imported and locally manufactured urea. Hence, it was found more economically feasible option to identify new sources of gas supply to set up an additional fertilizer unit in the country.
Qadirpur gas field of Oil and Gas Development Company (OGDC) was identified as a possible gas source for the purpose. It was noticed that by enhancing its capacity and increasing the gas plateau, sufficient inert-rich gas would also be produced which should be utilized for a fertilizer and power plant.
The gas supply to Compressed Natural Gas (CNG) stations will continue as per existing arrangement on priority to maintain government’s policy of oil import substitution.
The official said following an earlier government decision to allow captive power production (CPP) to industrial units for self-consumption, a lot of applications had been received by SNGPL and SSGCL but the bulk of self-power generation was being carried out with low gas use efficiency technology leading to uneconomic utilization of scarce gas resources.
A need was thus felt to develop a rational policy ensuring optimum utilization of gas by encouraging combined cycle gas turbines, co-generation technology and dual fuel fired power generation systems.
The ECC allowed the gas companies to supply surplus gas for self-power generation after fist meeting the requirements of domestic, fertilizer, commercial, industrial including cement, and power (both in Wapda and KESC systems and IPPs) sectors.
After meeting the above requirements, the CPPs would be supplied gas on “as and when available basis” at different locations and the pipeline extension, if required, would be at the cost of the sponsor of the industrial unit and not the gas supplier.
The gas supply to CPPs would also be subject to the condition that those dual fired power plants with a capacity of up to 50-mw which employ combined cycle and co-generation technology shall be encouraged for allocation of gas.
Similarly, in order to ensure the optimal gas use for power generation, industrial units collectively setting up merchant power plants for self-consumption only will also be included in this category. This means they would not be allowed to sell power to outside consumers.
A gas commitment fee would be charged to all the new and large consumers for allocation of gas ahead of commercial operations, except IPPs who are already subject to a composite charge at the state of issuance of letters of intent and support.
