ISLAMABAD: The government is working on a plan to put in place a new gas supply mechanism envisaging diversion of maximum gas available in the system to the power sector without affecting the existing contracts.
Informed sources said that under the new gas allocation policy, priority would be given to the power sector to contain the rising electricity tariff. The cost of gas-based electricity generation is about 70 per cent less than that of the furnace oil-based generation.
A decision has been taken in principle not to reduce gas supply to the power sector and gas utilities will enter into direct sale agreements with power generation companies. Fertiliser factories will be run on furnace oil, but supplies for feedstock production will continue.
Gas supply to defaulters will not be restored while allocation of gas for captive power plants will be stopped till the completion of gas import plans.
The gas so saved will also be diverted to the power sector. The gas pricing for public sector generation companies will be rationalised on the pattern of captive power plants and independent power producers (IPPs).
The sources said that efforts were being made to expedite the commissioning of delayed IPPs. Since the allocation of gas for IPPs is not available for the lifetime of a project, these plants will have to be run on high speed diesel after the expiry of gas allocation term. Therefore, the government will prioritise new gas finds to the IPPs first and then to any other consumer category.
A meeting presided over by Petroleum Minister Syed Naveed Qamar decided on Tuesday to ensure uninterrupted gas supply to domestic and commercial consumers during winter.
It also decided to meet all contractual commitments and encourage industrial consumers to use alternative fuels wherever possible. A winter gas load management plan is expected to be approved by the Economic Coordination Committee of the cabinet on Friday.
The sources said that almost all rental power projects had missed the deadline for contractual commercial operations for one reason or the other, even though some of them had now started production.
They said that 62MW Gulf Rental had started production in April this year against its original deadline of December last year.
The 150MW Sumundri Rental started partial production in June this year against its contractual deadline of July 2007. Naudero-1 Rental (50MW) of Walters Power was behind schedule by about three months. Karkay Rental project (232MW) is expected to start production next month against the deadline of April this year.
The 201MW Reshma Power will start production next month against its deadline of Dec 2009. The 110MW Guddu Rental is behind schedule by about 10 months and the 150MW Sahuwal project by over 10 months. The original deadline for Satiana Faisalabad Rental (200MW) was November last year, but it is yet to start operation.
Likewise, five IPPs with a combined capacity of about 1,075MW are also behind schedule. They are: Foundation Power, Sapphire Electric, Hub Power, Halmore Power and Liberty power.
Officials said that gas shortfalls had been estimated to increase by 50 per cent to about 1.5 billion cubic feet per day (bcfd) this year.