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Shifting responsibility Govt plans to privatise LNG-based power plants

Shifting responsibility: Govt plans to privatise LNG-based power plants

ISLAMABAD: The government has decided to privatise liquefied natural gas (LNG) based power plants of 3,600 megawatts that are being set up in Punjab to cope with the persistent electricity shortfall in the country.

In a meeting of the Economic Coordination Committee (ECC) held on June 28, the Ministry of Water and Power said three power plants with a cumulative capacity of approximately 3,600MW were being developed in the public sector at Bhikki, Balloki and Haveli Bahadur Shah in Punjab. They will consume imported LNG as fuel for power generation and help ease the shortfall.

The Bhikki plant is being constructed by Quaid-e-Azam Thermal Power Private Limited, a company wholly owned and controlled by the government of Punjab.

The remaining two projects at Balloki and Haveli Bahadur Shah are being implemented by National Power Park Management Company Limited, which is wholly owned and controlled by the federal government and is being financed through the Public Sector Development Programme.

“In case of privatisation of Haveli Bahadur Shah and Balloki projects, the Privatisation Commission before discharging the responsibility under applicable laws and in case of privatisation of Bhikki project, the ECC will review and adjust the risk allocation under the implementation agreement,” the ECC said.

The implementation agreement “is meant exclusively for the above public sector projects in the light of the then prevailing policy for the independent power producers (IPPs),” it said.

The ECC also decided to allow LNG-based plants to operate outside of the merit order – which entails gas supply to the cheaper power plants first – in accordance with the concept of take-or-pay liability and the gas sales agreement with the LNG supplier Qatar.

A long-term supply contract between Qatar and Pakistan State Oil (PSO) also contained the take-or-pay provision and hence all enterprises within the supply chain including PSO, Sui gas companies, IPPs and the Central Power Purchasing Agency would take their part of risk for failing to consume the ordered gas.

During the meeting, the Ministry of Water and Power revealed that according to the gas ordering mechanism, a firm order had to be placed for every calendar year months before the start of the year and then the entire volume should be consumed, otherwise losses would have to be paid.

“This means that the power purchaser will not like to make capacity payments to the producer with the utilisation of gas,” the ministry said. “Although the LNG plants are amongst the most efficient, there is a remote possibility they do not come on top in the merit order.”

Courtesy : Express Tribune



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