The state-owned Pakistan LNG Ltd (PLL) and private power utility K-Electric on Tuesday signed a formal agreement under which the former would supply 150 million cubic feet per day of regasified liquefied natural gas (RLNG) to the KE’s upcoming 900-megawatt power plant at Bin Qasim.
The gas supply agreement (GSA) was signed by KE Chief Executive Officer Moonis Alvi and PLL Chief Executive Masood Nabi. Energy Minister Hammad Azhar, SAPM on Power and Petroleum Tabish Gauhar and Petroleum Secretary Dr Arshad Mahmood also attended the signing ceremony.
The agreement would allow KE to start testing its first 450MW unit in the first week of September that will come into commercial operations by end of September or early October, depending on successful testing. This would be followed by commercial operations of second 450MW unit by end-December of the 900MW Bin Qasim Power Station (BQPS) III. The RLNG sale price would be as per monthly RLNG price notified by the Oil & Gas Regulatory Authority (Ogra).
Mr Gauhar said the signing of the agreement demonstrated the federal government’s commitment to Karachi through this additional gas and more power supply to KE while addressing various systemic issues on a sustainable basis in the interest of the all stakeholders, particularly its consumers.
Mr Azhar said this was the first agreement of its kind where RLNG was being directly supplied by a government entity to a private sector company. He lauded both organisations on this milestone, calling it “a step in the right direction for the future of Karachi and a positive move for both KE and PLL,” he said adding it would ensure interests of both parties as well as Karachi.
BQPS-III is KE’s flagship project valued at over $600 million that will add 900MW to KE’s generation supply and meet Karachi’s growing power demands, the ministry of energy said.
The BQPS-III’s first unit was originally targeted to be commissioned in March 2021, followed by second unit in November 2021, respectively. The PLL will supply up to 150mmcfd RLNG to these power plants.
According to the details provided by KE, the BQPS-III is a hi-tech and state-of-the-art combined cycle power plant located inside Bin Qasim Power Complex. The plant will be run on dual fuel as it may be fired on RLNG or high-speed diesel. The power plant will improve overall fleet efficiency, availability and reliability.
Under revised timeline, the project was planned to be completed ahead of current summer season to support power shortage in the country’s largest city and industrial capital but was delayed due to Covid-19 related closure of factories in the Middle East and resultant delays in arrival of some critical equipment.
Speaking on the occasion KE’s Moonis Alvi thanked the Ministry of Energy for the support and commitment to Karachi. “Work on BQPS-III is progressing swiftly and this is the fastest commissioning of a project in recent times. The addition of this plant will go a long way in supporting Karachi’s continued socioeconomic growth,” he added.
PLL chief Masood Nabi said the agreement signing will remain a key moment in the public-private collaborative efforts towards the country’s sustained growth.
In October last year, the two entities had signed a heads of agreement for supply of 150MMCFD RLNG to 900MW BQPS-III. The heads of agreement was supposed to be followed by a gas supply agreement in December or January but was also delayed due to related unsettled issues between KE and Sui Southern Gas Pipelines Ltd (SSGCL). The PLL has to use SSGCL network for gas supply to KE.The federal government had early this year decided to ring-fence outstanding issues of payables and receivables among state-owned entities and KE for settlement through arbitration and move on with fresh supply and payment arrangements for future to protect consumers from adverse implications of power shortages and outages.
The federal government also agreed to increase power supply to KE from the national grid to 1,400MW. Ahead of peak summer a couple of months ago, the National Transmission and Despatch Company (NTDC) enhanced power supply to KE by about 450MW as shortages hit the city.
Earlier, legal arrangements for additional electricity and gas supplies to K-Electric from the national networks had been stalled owing to non-settlement of over Rs253 billion receivables of the NTDC and the Sui Southern Gas Company (SSGCL). The KE had agreed to make timely payments through revolving standby financial instruments to both NTDC and PLL for all future supply. There is no progress yet on arbitration of outstanding payments among various parties.