Sources said that in 1980s the percentage of gas allocation to the power sector was in excess of 40 percent. However, currently it is just 27 percent which has resulted in a switch to furnace oil as an alternate fuel with extremely adverse cost implications amounting to Rs 374 billion during the last four years.
Hagler Bailly, an international consultancy firm, determined the economic impact of natural gas curtailment for power generation, sponsored by Saif Group, which also owns an IPP. The firm has also assessed the economic value of natural gas on various sectors and determined the economic impact of diverting natural gas from the IPPs to other sectors.
The study provided critical inputs to the GoP in reviewing its natural gas allocation policy. The report has considered the cost of following the five power plants which are as follows: Orient Power Plant, 200 MW, Saif Power Plant, 204 MW, Saphire 206 MW, Halmore 206 MW and Kapco gas fired 250 MW.
According to the Ministry of Water and Power, the cost to run these power plants on furnace oil is almost three times the cost of running them on gas. Four IPPs are the most efficient plants in the country with a determined efficiency of 51.2 per cent on gas which is unmatched by any previous IPP running on gas or furnace oil or any public sector thermal power plants.
In addition, Kapco has also a single fired gas plant lying idle with a generation capacity of 250 MW. "If gas is made available to these power plants, 1066 MW cheaper energy can be produced in low hydel generation months, when the country will be in dire need of energy," the sources continued. Water and Power Ministry argues that if gas is not allocated by the government the projects will operate on high Speed Diesel (HSD) as an alternate fuel. It may be pertinent to mention here that 22 mmcfd additional gas already offered by Mari gas and 25 mmcfd gas is available from Tal block of Makori east field.
Ministry of Water and Power has requested that these two gas sources may be allocated to power sector on permanent basis and requested that the Petroleum Ministry may allocate 207 mmcfd gas to five IPPs in lower hydel generation months to overcome the generation gap from now till February 26, 2012. Most of the Ministries have supported the proposal of Water and Power Ministry but Petroleum Ministry is not in favour of this idea, sources concluded.