On Wednesday, The Economic Coordination Committee (ECC) of the Cabinet exempted three Punjab-based power plants of 3,900 megawatts from compulsory purchases of liquefied natural gas (LNG) quantities from January 2022, removed a major power plant from the privatization list, and withdrew customs duty on import of cotton yarn.
Already cleared by the Cabinet Committee on Energy (CCoE) in September last year, the Power Division presented a summary regarding waiver of minimum 66pc take-or-pay commitment in Power Purchase Agreements (PPAs) and Gas Supply Agreements (GSAs) of three RLNG-based public sector power plants. Located in Punjab, these plants included Quaid-e-Azam Thermal Power Plant, Balloki Power Plant, and Haveli Bahadur Shah Power Plant.
The Sui Northern Gas Pipelines Ltd (SNGPL) and Petroleum Division had been opposing the move because it exposes petroleum sector companies — PSO, PLL and SNGPL — to losses.
These proposed amendments would envisage submission of a monthly production plan (MPP) as a binding on the power purchaser and the power seller (National Transmission and Despatch Company and the power plants) wherein the power purchaser shall be entitled to submit demand requirement as needed, at least 75 days before the start of each such month, which will be finalised by the System Operator and Operating Committee under the PPA.
The concept of a monthly delivery plan (MDP) for deliveries of gas under the GSA, has been paired with the monthly schedule as provided under PPA.
The committee approved the summary and noted that the concept of MPP was a cost-effective solution, enabling the power and gas purchasers to make requisite purchases in line with actual requirements instead of following a fixed arrangement.
The Petroleum Division had earlier put on record that the entire LNG supply chain, including 800 million cubic feet per day (mmfcd) imports from Qatar and open market, regasification terminals, PSO and gas network, had been put in place on the basic premise of GPPs and would become unsustainable in the long term just for short term gains of privatisation proceeds. It said the CCoE had in 2019 decided that 66pc obligation on power plants would remain intact until the first LNG price review ie, 2026.
“Any reduction or waiver of minimum take-or-pay commitments of three GPPs will lead to a cascading default of all the three public sector entities of RLNG supply chain which may include encashment of sovereign guarantees and Standby Letters of Credit (SBLCs),” the Petroleum Division
