SNGPL, SSCGC facing default prospects due to non-clearance of dues by power sector

To ensure appropriate figure of RLNG demand is put forth to Pakistan LNG Limited (PLL) for July-September 2018, the Power Division has been asked to provide a proper confirmation to off-take from RLNG volumes on a take or pay basis

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ISLAMABAD: State-owned gas companies Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) are said to be facing the prospect of default against international suppliers of RLNG due to non-clearance of dues by the power sector.

According to sources in the Petroleum Division, the situation is exacerbating, and the Power Division has been ensuring supplies of RLNG to power plants since last year and LNG imports were being ensured to meet power demand.

The power division is responsible for arranging the fuel supplies for the power sector whether it is furnace oil, gas or RLNG, reported Business Recorder.

Since government sector generation companies (Gencos) like National Power Control Centre (NPCC), National Transmission and Despatch Company (NTDC), Power Private and Infrastructure Board (PPIB), Central Power Purchasing Agency-Guaranteed (CPPA-G) come under the purview of the Power Division, hence the Petroleum division cannot ask for fuel from firms under control of power division.

Assistant Director (Technical) Directorate General Gas Salahuddin Khan believes a major share of electricity was being generated by RLNG-fired power plants and the installation and operation of these plants come under the purview of Power Division.

The Petroleum Division in a letter addressed to Secretary Power Division has repeated its previous opinion via several written preferences in the past that fuel arrangement for power plants is being arranged after receipt of demand from the Power Division.

And the fuel demand of the power sector has been a subject of various meetings of Cabinet Committee on Energy (CCoE) and in several coordination meetings chaired by ex-PM in last few months.

Also, the Petroleum Division contended in the dearth of a firm demand of RLNG, LNG imports could be hampered which would affect power generation in the following summer months causing electricity shortage.

The non-clearance of SSGC, SNGPL dues by the power sector for RLNG supplies was creating default like situation for the state-owned gas companies.

The problem needs addressing by the Power Division on an immediate basis.

However, during a meeting of the price negotiation committee presided over by Secretary Petroleum about the sale and purchase agreements were apprised RLNG consumption in power was much below against indicated requirement as per the advice of Power Division in previous months.

The SSGC informed that during June 1st to June 24th, LNG consumption stood at 836 MMCFD compared to the nomination of 1,077 MMCFD.

To ensure appropriate figure of RLNG demand is put forth Pakistan LNG Limited (PLL) for July-September 2018, the Power Division has been asked to provide a proper confirmation to off-take from RLNG volumes on a take or pay basis.

“SNGPL is not in a position to confirm RLNG requirement to Pakistan LNG Limited (PLL) owing to such erratic RLNG consumption by power sector till confirmation of off-take firm volumes on a take or pay basis by Power Division is explicitly communicated,” the official added.

 

 

 

 

 

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