ECC okays power gen­er­a­tion by 4 IPPs thru RLNG

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The gov­ern­ment has de­cided that four in­de­pen­dent power pro­duc­ers (IPPs) would pro­duce elec­tric­ity on RLNG (re­gasi­fied liq­ue­fied nat­u­ral gas) in­stead of fur­nace oil and high­speed diesel to save bil­lions of dol­lars.

The Eco­nomic Co­or­di­na­tion Com­mit­tee (ECC) of the Cabi­net, which met un­der the chair of Prime Min­is­ter Shahid Khaqan Ab­basi, has au­tho­rised Cen­tral Power Pur­chas­ing Agency (CPPA) to sign an in­terim agree­ment re­gard­ing re­vised pay­ment terms for gen­er­a­tion on RLNG by four IPPs. The IPPs are: M/s Saif Power Ltd., M/s Ori­ent Power Ltd., M/s Saph­hire Elec­tric Com­pany Ltd., and M/s Hal­more Power Gen­er­a­tion Com­pany Ltd. Th­ese IPPs have dual fuel plants, which can be op­er­ated on nat­u­ral gas as pri­mary fuel and High-speed Diesel (HSD) as sec­ondary/al­ter­na­tive fuel. The op­er­a­tions of th­ese IPPs on RLNG would re­sult in sig­nif­i­cant cost sav­ing each month.

Un­der the pro­posed plan, ex­ist­ing power plants run­ning on fur­nace oil and high-speed diesel will switch to re-gasi­fied liq­ue­fied nat­u­ral gas (RLNG) and coal. The plan is be­ing framed in the back­drop of con­sis­tently high oil im­port bill of the coun­try and ex­pen­sive elec­tric­ity gen­er­a­tion. The Min­istry of Petroleum and Nat­u­ral Re­sources ar­gues that RLNG is the only cheaper source of elec­tric­ity gen­er­a­tion and is seek­ing a ban on the con­sump­tion of fur­nace oil, coal and diesel in power plants in or­der to im­prove plant ef­fi­ciency and save bil­lions of dol­lars.

Ac­cord­ing to a com­par­i­son of fuel cost com­po­nent, Saif Power pro­duces elec­tric­ity at Rs 12.75 per unit by con­sum­ing HSD whereas the cost of RLNG was Rs 6.64 per unit. Like­wise, Ori­ent Power, Sap­phire Elec­tric and Hal­more Power Gen pro­duce elec­tric­ity at Rs 12.67, Rs 12.58 and Rs 12.54 by con­sum­ing HSD while the cost of elec­tric­ity be­ing pro­duced through RLNG was Rs 6.64 per unit. This im­plies that the cost of elec­tric­ity be­ing pro­duced on RLNG is al­most half of the elec­tric­ity be­ing pro­duced on HSD.

The gov­ern­ment wants to in­crease power pro­duc­tion on RLNG. At present, hy­dro­elec­tric power has a share of 34 per­cent in power gen­er­a­tion mix, fur­nace oil 29 per­cent, lo­cally pro­duced nat­u­ral gas 19 per­cent, RLNG 8 per­cent and re­new­able and nu­clear en­ergy 5 per­cent each.

Mean­while, the ECC has also per­mit­ted ex­ten­sion in the dead­line of ex­port of 41,000MT sur­plus urea till 28th Fe­bru­ary 2018. A pro­posal to ex­port an ad­di­tional quan­tity of 35,000MT urea to Sri Lanka was also ap­proved. Sri Lankan Pres­i­dent Maithri­pala Sirisena had re­cently re­quested Prime Min­is­ter Shahid Khaqan Ab­basi to send 75,000MT of fer­tiliser to Sri Lanka.

The ECC ap­proved a pro­posal of al­low­ing United Towel Ex­porters Lim­ited to re­mit € 8.425m from its special for­eign cur­rency ac­count to ac­quire 70% shares of Ve­spo Group B.V. Nether­lands. The ECC also ap­proved a pro­posal for ex­ten­sion in the date for ap­pli­ca­bil­ity of re­duced with­hold­ing tax rate @ 0.4% for non-fil­ers till 30th June 2018 un­der sec­tion 236P of the In­come Tax Or­di­nance, 2001.

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