K-Electric, PLL enter into agreement

KARACHI: In a major breakthrough, K-Electric and Pakistan LNG Limited (PLL) have entered into an initial Gas Supply Agreement (GSA) for the supply of 150mmcfd RLNG for K-Electric’s flagship 900MW power plant at Port Qasim (BQPS-III). The GSA will be executed promptly after the approval of the Oil & Gas Regulatory Authority (Ogra), sources at KE told the Business Recorder.

“The GSA has been finalized and initialed by KE’s CEO Moonis Abdullah Alvi and PLL’s Managing Director Masood Nabi on June 4, 2021,” they said.

Once fully operational, the $650 million, 900MW plant will bolster Karachi’s power supply as the project is part of KE’s planned initiatives designed to bridge Karachi’s demand-and-supply gap by the end of financial year 2021-22. Currently, the Sui Southern Gas Company (SSGC) holds the gas distribution rights. KE and PLL have entered into the initial GSA at a time when SSGC claims around Rs127 billion outstanding receivables on KE. However sources said both the power company and the SSGC are working with the government on arbitration process to resolve the issue permanently.

They said RLNG supply to KE by PLL is as per the decision of the Cabinet Committee of Energy (CCOE).

The PLL is finalizing interconnection agreement with the SSGC, while “KE does not require any separate agreement with the SSGC for the supply of gas to its BQPS plant”.

They said the SSGC has already allowed the PLL and the KE the access for the construction of pipeline infrastructure and accordingly the pipeline has been completed and tie-in with SSGC pipeline has been established.

The KE system is facing a power shortfall of up to 450MW during the current peak season. In order to mitigate demand-and-supply gap, the power company has been carrying out hours-long load-shedding in the port city, mostly in densely populated neighborhoods and slum areas.

However, the addition of 900MW RLNG power plant will help ease the power woes of Karachiites, besides increasing the power utility’s generation capacity, efficiency and reliability.

The first unit of 450MW of BQPS-III is expected to commence commercial operations shortly as relevant civil structural work has been completed, and gas and steam turbines, generator, and heat recovery boiler have already been installed at the power utility’s Bin Qasim Power Complex.

The GSA between KE and PLL is a major breakthrough in this regard.

When approached SSGC spokesman for comments, he said that PLL is going to supply RLNG to KE for their new 900 MW BQPS power plant. SSGC is allowing PLL for interconnection in its transmission network under Third Party Access (TPA) rules, against Interconnection Service Agreement. SSGC is only facilitating PLL by giving it access to its transmission network under the Third Party Access Regime.

He said as PLL has signed GSA with KE, while SSGC is only extending support to PLL on the directives of the Ministry of Energy (Petroleum Division) and in compliance with CCOE directives.

He said KE approached SSGC for the supply of Gas for their new plant. However, SSGC declined and asked for the settlement of its previous outstanding matters. Previous issues are being sorted out through arbitration and once they are ironed out, a new GSA will be executed.

Interconnection Service Agreement between SSGC and PLL is under deliberation between both the parties. However it must be emphasized that SSGC will take transportation charges to convey PLL-supplied gas to KE.

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