NEPRA will be hearing a case on 16 August 2018 regarding K-Electric’s request to the National Electric Power Regulatory Authority (NEPRA) to allow it to use Re-Gasified Liquefied Natural Gas (RLNG), an imported resource, as an alternate fuel for its existing power plants.
In the hearing scheduled on Thursday next week, NEPRA will be probing into whether KE has taken any steps to ensure the minimum supply of a quantity of 180 million cubic feet per day (mmcfd) of locally produced natural gas, which had been decided by the regulator previously.
K-Electric, in its application to the power regulator, had sought its permission to use 130 mmcfd of locally produced gas and change the gas supply mix to include 60 mmcfd of RLNG to meet its daily requirement of 190 mmcfd. The request was made after Sui Southern Gas Company (SSGC) had cut K-Electric’s supply of natural gas substantially, leading to massive power outages by the power utility in April.
Via an interim order, NEPRA had however supported K-Electric’s earlier demand of providing 180-190 mmcfd of local gas, as it was relatively cheaper when compared to the rate of RLNG in Pakistan and had granted K-Electric the permission to use RLNG as alternate fuel, provided it only used the imported gas after meeting a quota of 180 mmcfd of local gas.
In addition to that, it will also be looking into whether the Gas Supply Agreements or any interim arrangement with SSGC is in place and if those arrangements include specifications of delivered RLNG and natural gas. The hearing would also take into account things like pressure, quota and the duration of the agreement, among others.
NEPRA had previously directed K-Electric to execute its Gas Supply Agreement with Sui Southern Gas Supply Company (SSGC) whereby it would be mandatory for SSGC to supply the agreed volume of gas to K-Electric. The two utilities were however in a disagreement on the terms and conditions of the agreement and were yet to form a consensus on that.
Furthermore, the hearing would also discuss whether the option of allocation of RLNG from private fuel suppliers on competitive rates has been explored or not since it will be in the interests of the end consumers if K-Electric is able to secure cheaper rates for RLNG when compared to the supply from SSGC. In line with this thought, NEPRA will be hearing as to how K-Electric plans to ensure that the resulting increase in fuel cost is not passed on to the consumers.
Among other things, the hearing will determine operational issues such as if the use of RLNG will have an impact on operational parameters of KE power plants like thermal efficiency, net capacity, auxiliary consumption, availability along with outages, fixed and variable expenses, plant capacity factor, degradation and partial loading.
It will also try to determine if the availability of fuel will impact K-Electric’s decision on the induction of new generation facilities.