Imported LNG to reduce power generation cost by 17pc

Imported LNG to reduce power generation cost by 17pc


ISLAMABAD: In order to meet the prevailing energy shortage in the country, government has decided to allocate imported LNG to power sector, due to which, electricity generation cost would come down by 17 percent.

This was revealed by the Sui Southern Gas Pipeline Company, Managing Director, Shoaib Warsi in Islamabad during an informal meeting with media.

In order to meet the energy crunch government has decided to allocate 200 mmcfd LNG to power sector, to run inefficient and plants, presently running on furnace oil. By this replacement electricity generation cost would come down by 17 percent, he said. Answering a question MD said that Pakistan has appointed a consultant with the help of United Nations, who is negotiating with world LNG exporters. He said that due to market uncertainty and forecasted slump in LNG market in coming days, government wants to ink a short-term agreement with gas exporting companies so if the prices drop in two or three years, its advantage could be reaped. It is the policy of government that Qatar LPG, which has been reluctant to offer any price below $16 per mmbtu, is now talking about $10 per mmbtu. (Spot rate $10, adding expense it becomes $15-16). He was hopeful that by December LNG import arrangements and facilities would be finalised. He said government was not only negotiating with Qatar and Malaysia for the government-to-government contract but also considering small quantity spot purchases through the consultant.

He said his company has almost completed all infrastructures to inject and supply LNG.

We have bought an 11-acre plot near Bin Qasim to install a hub, which will get LNG from Engro and will inject to the national pipeline system.

He said his company would supply gas till Sawan gas fields and SNGPL would supply it till Lahore through a 42-inch diameter gas pipeline.

He said that Engro, which has built a terminal at Port Qasim, was now asking for permission to import 600 mmcfd. Elengy Terminal Pakistan Limited has started construction of a terminal for the handling, regasification, storage, treatment and processing of Liquefied Natural Gas in Port Qasim Area.

Engro has been saying that a ship carries up to 600 mmcfd so they should be allowed to import 600 mmcfd. According to the agreement, government allowed Engro to import 200 mmcfd on fast track basis, which would increase to 400 mmcfd by next year, with additional 200 mmcfd.

The Managing Director said that government was also set to regulate LPG prices, which would bring down the prevailing rates. In order to meet the energy shortage LPG would be regulated soon and its price would come down shortly, he said adding, this economical fuel would be ideal to be used in automobiles. It has been learnt through sources that after Engro, government has also allowed three other companies to build their own terminals at the port. It was learnt that government allowed these companies to avoid criticism, which it faced while granting licence to Engro.

According to reports, Ogra granted construction licence to Engro on incomplete documents.

Is generous allocation of new gas connections despite severe crunch, continuous supply to fertilizer sector, and recent suspension of natural gas to industry and CNG is just to create an artificial shortage to make the case of LNG import strong, and how costly LNG is solution to the problems of resources rich country, these question remained unanswered and SSGC, who has got an experience of 37 years in gas distribution and management business referred journalists to consult Ministry of Petroleum and Natural Resources. However, MD said that his company was in profit and gas losses conveniently known as Unaccounted for Gas (UfG) has been maintained at 8 percent. He said that in main supply line losses were very nominal and were around or less than one percent. It is pertinent to mention that SNGPL line losses are 18 percent. He said his company was having a demand and supply gap of 125 mmcfd in summer, whereas in winters this grows to 400 mmcfd.

He said that despite gas shortage his company was supplying 55 mmcfd to Fouji Fertilizer.

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