FKPCL wants a secure and uninterrupted gas supply – Markets
ISLAMABAD: Describing the Tripartite Agreement (TPA), an interim arrangement for the supply of RLNG, as a violation of federal government guidelines, Fauji Kabirwala Power Company Limited (FKPCL) has demanded uninterrupted and firm supply of gas as part of Implementation Agreement (IA), PPIB sources said company registrar.
In a letter to the Director General of PPIB, FKPCL Secretary Brig Tariq Javed (Retired) explained the case and proposed a future course of action regarding gas supply to the power station.
FKPCL is an Independent Power Producer (IPP) under the Energy Policy of 1994 with an installed capacity of 157 MW in combined cycle steam turbine mode located near Kabirwala in Khanewal district. The power plant consumes the low-BTU gas mixed with pipeline-grade gas, in some reports.
The project reached financial close on June 2, 1996 and commercial operations date on October 21, 1999.
The duration of the PPA and IA is 30 years from COD, whereas the duration of the GSA was 15 years from COD and there was an inherent mismatch of duration between the contract documents due to the non -commitment to the availability and supply of gas by the gas producer and the gas supplier.
The term of the GSA (when extended by the ECC) has expired since March 31, 2015 and it has been replaced by a Tripartite Agreement (TPA) which is a stopgap/interim agreement between the company, the gas suppliers and the purchaser of electricity until such time as the gas supply agreement is executed for the remainder of the term of the PPA. The GoP, through the TPA, allocated the RLNG as it became available.
According to the power company, between the years 2000, 2006 and 2015, from time to time, the ECC/GoP and its entities deliberated and allocated additional gas supplies from alternative sources like the Bahu gas field, the Qadirpur gas field, as well as pipeline-grade gas for the project to maintain the prescribed calorific/heating value to ensure guaranteed efficiency.
Several one-year term MoUs have been signed between the Company and OGDCL for the allocation of low BTU gas from its gas fields, but no long-term/sustainable solution appears. materialize in the form of gas allocation or extension of GSA.
The company claimed that it had also been recommended by the Power Division/GoP that the GSA be extended for another fifteen-year term to match the duration of the PPA; however, to no avail.
The ECC, in its decision dated July 23, 2014, allocated low BTU gas from the OGDCL gas fields and pipeline quality gas from the SNGPL network for the remaining term of the PPA with the direction of execute the GSA on said terms of the award and subsequently the ECC again on 23 January 2015 directed the full gas supply on a firm basis and extension of the GSA, but this apparently was not implemented or partially implemented and somehow the company was reassigned RLNG.
The utility noted that the gas supply outage, meaning the unavailability of low BTUs from gas fields and/or pipeline quality gas in the quantities required for operation and the shipment of the complex is a political force majeure event in Pakistan under the IA and PPA. . In accordance with clause F(3) of the Energy Policy 1994, in the event that the fuel is to be supplied by a public sector organisation, the performance of the fuel supplier will be guaranteed by the GoP under the terms of the supply agreement. fuel supply (FSA).
The Company Secretary, in his letter, also affirmed that the parties further acknowledge and agree to the duration of the GSA in the event of a gas supply outage which commences when the resort is unable to operate at the required availability due to non-availability of gas in the quantities required under the GSA due to insufficient reserves (depletion of Nandpur field and Panjpir field) and/or national shortage of supply in quantity of gas pipeline.
He further asserted that the parties have agreed to identify alternate or additional supplies of low BTU gas from future reserves that are developed by the gas supplier or other federal entity in the area of the Complex or to secure additional gas pipeline quantity supplies. or a combination of both.
According to the utility, TPA being an interim agreement for the supply of RLNG, is void for uncertainty and entered into in violation of GoP instructions for firm allocation on a buy or pay basis, does not fulfill not the required obligations of the GoP under the IA to supply the required quantities of gas or to effect a change in gas supply and it unilaterally modifies a gas supply failure being a Force Majeure Event (FME) policy in Pakistan under IA and PPA in another Force Majeure Event (OFME).
Relying on the provisions of the IA, the Company invoked the relevant applicable provisions of the IA to ensure an uninterrupted firm supply of gas in the quantities required on commercially reasonable terms for the shipment and operation of the Power plant.
The company has requested the PPIB/GoP to convene the expert meeting to deliberate on the gas supply change under the applicable terms of the IA read with the PPA.
Copyright Business Recorder, 2022