IPPs, fertiliser companies agree on gas swap to overcome shortage


The Independent Power Producers (IPPs) and fertiliser companies have agreed on a gas swap arrangement to overcome gas shortage, which has nearly jeopardised their functionality, and have decided to abolish subsidy on feedstock gas for the fertiliser sector while power generation would be shifted to furnace oil. An official source said that the agreement was reached at a specially convened meeting to formulate solutions for operations of fertiliser and power plants. The meeting was chaired by the Minister for Water and Power Syed Naveed Qamar. The Sui Northern Gas Pipelines Limited (SNGPL) had showed no signs of ending the two days gas load-shedding and, instead, was considering adding up on the off-days to gas supplies. The IPPs agreed to initially swap 50mmcfd, out of their gas supplies of 120 mmcfd. It would allow the fertiliser plants to operate with a 20 percent curtailment. IPPs would completely swap their gas share with the increase in fuel supplies.
The IPPs demanded that their fuel requirements should be addressed immediately so that they could spare their gas share. The power sector has demanded 27,000 tonnes of fuel daily. However, the sector is receiving a meager 10,000 tonnes. The government had recently directed the state owned oil marketing company, Pakistan State Oil (PSO), to take immediate steps for increasing fuel supplies to at least 17,000 tonnes per day. IPPs demanded that provision of subsidised feedstock gas to fertiliser sector should be abolished and fertiliser companies had agreed with the proposal. It would provide a level playing field to both sectors. The proposal is likely to be finalised in the next few days, a source said.
A statement, issued by the Power Ministry, said that the minister asked power and fertiliser sectors, ministries of power and petroleum to work out a viable solution to ensure continuity of fertiliser and power plants. He said that provision of gas supply to the power sector was a priority, as the country was in need of maximum power generation in the summer season. However, production of fertiliser to meet the agricultural requirements was also important. All sectors were faced with a cut in their gas supplies and there was urgent need to find out a solution for accommodating both sectors.