Petroleum Ministry placed its proposal twice before the Economic Co-ordination Committee (ECC) of the Cabinet--on December 15, 2009, and January 12, 2010--for diversion of natural gas from cement industry to this project. Walters Power International (WPI), based in Oklahoma, is the project's sponsor and has expressed concern over the reported statements of Finance Minister Shaukat Tarin on rental power. "Of course, we are deeply concerned about the statements being attributed to the Finance Minister of Pakistan," said WPI spokesman in a press communiqué.
"Given the fact that the government-appointed third party advisor, ADB, has yet to provide the relevant Ministries with its report on rental power, media stories on the subject are highly speculative, at best," he said. "According to our own information, ADB has validated the 51MW Naudero power plant, which was approved by the ECC in a meeting chaired by Mr Tarin," the spokesman added.
Official documents, available with this correspondent, show that the ECC in its meeting on February 10, 2009 had decided to place 12 million cubic feet per day (MMCFD) gas from Sui Southern Gas Company (SSGC) at the disposal of Private Power Infrastructure Board (PPIB), a subsidiary of Water and Power Ministry, for five years for power generation in accordance with the natural gas allocation and management policy 2005.
The Ministry of Water and Power informed the ECC that project sponsors had requested for enhancement of gas allocation of 15 MMCFD for additional capacity of 49.52 MW. Accordingly, SSGC revised its pipeline design to ensure supply of gas at 500 psig, instead of earlier committed 150 psig. Therefore, installation of compressors by project sponsor and 3.5 MMCFD gas for compressors was not required any longer. For additional capacity of 49.52 MW, SSGC agreed to provide 15 MMCFD gas from its system.
The ECC was further informed that the proposed equipment for RPPs was based on aero-derivative open cycle gas turbines, the design which operates on gas fuel. The rental services contract does not provide for dual firing arrangement and conversion to combined cycle plant.
Petroleum Ministry had proposed that 15 MMCFD additional gas from SSGC's system may be placed at the disposal of PPIB, up to October 2014, for power generation, subject to: ( i) signing of Gas Sales Agreement(GSA) between the project sponsor and SSGC within six months of gas allocation, or any other time specified by the Ministry, failing which the allocation shall become 'null and void'; (ii) total cost of the pipeline system and measuring station shall be borne by the project sponsors; and (iii) gas allocation/supply would be under natural gas allocation and management policy 2005. However, conditions of combined cycle and dual fired technology would be waived off in case of RPPs.
In the ECC meeting on December 15, 2009, it was pointed out that Naudero-II project was not approved by that time. Follow-up decision could be taken only if basic decision was there. While appreciating the requirement, the Finance Minister had suggested that a transparent process should be adopted to avoid controversy.
Petroleum Ministry, sources said, was of the view that allocation of gas to Naudero-II project was required at this stage as it would facilitate advance planning for laying of pipeline, catering for the proposed extension. Sources said that when the ECC exerted pressure on Petroleum Ministry for proposing gas allocation for a project which was yet to be approved, the latter withdrew the summary, but resubmitted it again after two weeks.