ISLAMABAD: Amid opposition from the Sui Southern Gas Company Ltd (SSGCL) on Thursday, the Oil & Gas Regulatory Authority (Ogra) granted a licence to K-Electric to construct and operate a 2.4km pipeline for transportation of natural gas/liquefied natural gas to its upcoming 900mw power plat at Bin Qasim.

“The applicant (KE) fulfils the legal requirements and is entitled to the requisite licence,” the regulator concluded after hearing the arguments of both sides. “The subject project is of much importance and should be completed well in time to mitigate the electricity shortfall in provinces of Sindh,” it added.

Under the licence, KE is now entitled to construct and operate 14-inch diameter gas pipeline of 2.4km for transmission of natural gas or regasified LNG from tie-in point in SSGCL’s custody transfer station at Port Qasim to its Bin Qasim Power Complex. The licence will be valid for an initial period of 25 years with effect from Jan 6, 2021 unless revoked or modified by the regulator. The pipeline would have the capacity to transport 250 mmcfd of gas with an estimated capital expenditure of $4million.

The SSGCL management had opposed the licence to KE. It said the KE was a major defaulter of SSGCL with Rs116bn payables including Rs86.3bn late payment surcharge build over July 2012 to July 2020.

“If KE is allowed to lay down and operate this pipeline then it is most likely that they would never pay off the outstanding balance towards SSGCL as they would no longer require SSGCL’s supplies,” the utility said. This would also cause huge financial loss to SSGCL, it added.

It also pleaded that since the location of supply of regasified liquefied natural gas (RLNG) to KE was at the very start of the entire RLNG infrastructure, therefore any abruption or surge due to operational variations of KE will directly affect the RLNG operations and its infrastructure across the country. Moreover, the SSGCL had already demanded 600mmcfd gas from second LNG terminal to meet peak demand in various sectors. However, Ogra overruled these objections.

The KE management welcomed the Ogra decision to have approved its application for a licence to construct and operate a gas pipeline for the upcoming RLNG-based 900 MW BQPS-III power plant and supplementing fuel requirement of the power plants located at its Bin Qasim Power Complex.

“This is a very positive development for KE as the grant of the licence by Ogra is a first ever licence obtained by KE in the oil & gas sector and is a key step in ensuring that the upcoming BQPS-III power plant receives the right amount of gas, at the right pressure. This milestone will go a long way in helping bridge the supply-demand gap in Karachi in the years to come,” KE said in a statement.

The EPC contractor and the Owner Engineer for this pipeline project are already on-board, the detail design of is already completed and the pipeline material has already been procured. The addition of the 900MW plant along with proposed decommissioning of older and less efficient units will ultimately increase the power utility’s generation capacity and lead to improved service delivery.

Published in Dawn, January 8th, 2021