ISLAMABAD - The National Electric Power Regulatory Authority (NEPRA) will conduct public hearing on K-Electric petition for using Re-Gasified Liquefied Natural Gas (RLNG) as an alternate fuel for its existing power plants next week, which is likely increase the price for the electricity for the Karachites.

The decision to use RLNG as an alternate fuel will increase the price of electricity for Karachites, as the imported gas is thrice expensive than local natural gas. The Nepra has set 16 August for the hearing on K-Electric request for Modification of Generation Licence.

The Nepra will conduct hearing on around nine points and the important one are whether KE has taken any steps to ensure the minimum supply of natural gas quantity of 180MMCFD as committee by concerned government entities and SSGC? Whether the Gas Supply Agreements (GSAs) or any interim arrangement with SSGC is in place which includes specifications of delivered RLNG and natural gas like pressure, quota and duration of agreements etc.? and how will KE ensure that due to any change in gas supply mix, the resulting increase in overall fuel cost is not passed on to the consumers?

K-Electric vide letter dated April 30, 2018, requested the authority to allow RLNG as an alternate fuel for its existing power plants. According to KE, the request has been filed in purview of the Cabinet Committee on Energy’s (CCoE) directives dated April 23, 2018, wherein Sui Southern Gas Company (SSGC) was directed to increase gas supply to KE under an arrangement of 130 MMCFD of natural gas and 60 MMCFD of RLNG to meet KE’s minimum gas requirement of 190 MMCM).

In its letter for the Modification of Generation Licence, KE said that the proposed change will improve availability of generation plants due to option of RLNG, however, the same will be achieved at the cost of increase in tariff to consumers, as it is thrice as expensive as Natural Gas.

In view of existing situation affecting consumers, no other cheaper option is available to KE, hence we request NEPRA to approve our request for modification with immediate effect to include RLNG as an alternate fuel source for existing plants as mentioned in the enclosed document.

KE’s generation fleet has a total available capacity of 1,902 MW, out of which around 913 MW depends on gas and requires at least 180 MMCFD to operate, while BQPS 1 is the only plant that can operate on dual fuel (Gas and Furnace Oil). Year on year, the gas being provided to KE by SSGC for power production has been declining thereby hindering KE’s ability to generate ample power from its gas fired plants in order to meet the power demand of Karachi and its adjoining areas.

The current issue of erratic and reduced supply of gas received from SSGC, has seriously impaired the availability of KE’s generation fleet. While, KE is evaluating the option of High Speed Diesel (HSD) as an alternate fuel for BQPS II and KCCPP, we have also evaluated the possibility of operating the power plants on RLNG subject to certain modifications/ alterations at Plant sites. Hence, in view of aforementioned, we request NEPRA to also include RLNG as an alternate Fuel Source for KE’s Power Plants in Schedule I of KE’s Generation Licence.

Further, in future KE would also evaluate option of dedicated RLNG line to ensure optimum cost and benefits for consumers. In meetings with Government for resolution of gas supply issues, both SSGC and Federal government has confirmed availability of RLNG and in this regard agreement is expected to be finalized soon and will be submitted to Nepra accordingly.

In view of current scenario, where SSGCL has unilaterally reduced the gas supply to KE’s power plants and resulted in their redundancy, no other cheaper option is available to KE rather than operating them on RLNG. Additionally, as compared to High Speed Diesel (HSD) and Furnace Oil, RLNG is comparatively cheaper, hence a more viable option. Further RLNG shall only be used after full utilization of available Natural Gas.

Therefore the proposed changes would result in lower tariff for consumers as opposed to usage of HSD or FO at these plants.

It is pertinent to mention here that in June Nepra had allowed K-Electric to use Re-Liquefied Natural Gas (RLNG) as an alternative fuel to overcome the supply demand gap and to provide relief to people of Karachi.

In order to bridge the demand and supply gap and to provide immediate relief to end-consumers, the authority has decided to allow immediate application of RLNG as alternative fuel in the instant case subject to an order of refund for the protection of the consumers, while the proceedings are pending before the authority.