Daily Times

KARACHI: The National Electric Power Regulatory Authority (Nepra) on Tuesday allowed K-Electric (KE) to utilize Re-Gasified Liquefied Natural Gas (RLNG) as an alternative fuel for its existing power plants.

Since RLNG is thrice as expensive as natural gas, electricity rates in Karachi are expected to increase threefold following the decision.

Earlier, considering the current demand/supply situation along with growing electricity requirements of the city, KE had requested the Nepra to allow RLNG as an alternate fuel for its existing power plants.

According to KE, the request had been filed in purview of the Cabinet Committee on Energy’s directives wherein Sui Southern Gas Company (SSGC) had been directed to increase gas supply to KE under an arrangement of 130 Millions of Cubic Feet per Day (MMCFD) of natural gas and 60 MMCFD of RLNG to meet KE’s minimum gas requirement of 190 MMCFD.

KE had also requested the power regulator to provisionally approve inclusion of RLNG as an alternate fuel with effect from the date of Cabinet Committee’s directives.

According to KE, it had started operating its power plants on RLNG with effect from the date of Cabinet Committee’s directives.

Nepra admitted the application of KE in May 2018 and decided to initiate proceedings to modify the existing mechanism of fuel cost component on account of RLNG.

The Authority also considered the request of KE for immediate application of RLNG as alternative fuel.

“In order to bridge the demand and supply gap and provide immediate relief to the end consumers, Nepra has decided to allow immediate application of RLNG as an 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”, announced Nepra in an issued statement.

“This shall also be subject to utilization of minimum quota of 180 MMCFD of gas for KE,” the statement read further.

The power regulator also directed KE to execute Gas Supply Agreement (GSA) with the SSGC as soon as possible.

“Utilization of RLNG shall only be allowed after utilization of the minimum quota of 180 MMCFD of local gas. The dispatch shall be strictly in accordance with the economic merit order,” Nepra instructed KE in its statement.

“Operation on simple cycle shall not be allowed and reference fuel price on gas and RLNG shall be the same,” the statement added.

The KE stated that the allowed change will improve availability of generation plants but this improvement will be achieved at the cost of increase in tariff to consumers, as RLNG was thrice as expensive as natural gas.

The KE said that in view of existing situation affecting consumers, no other cheaper option was available to KE.

KE’s generation fleet has a total capacity of 1,902 Megawatts (MW), out of which around 913 MW depend on gas and require at least 180 MMCFD to operate. Bin Qasim Power Station Project (BQSP) 1 is the only plant that can operate on dual fuel (gas and furnace oil).

Published in Daily Times, June 20^th 2018.