WEB DESK: While presiding over a meeting on special initiatives and fast track execution of projects, the Chief Minister of Khyber Pakhtunkhwa (KPK), Pervez Khattak, stated that surplus KPK gas, defined in this case as over and above what the province consumes, would be diverted for power generation.
This would enable the province to boost industrial growth and thereby become a viable unit of the federation. He added “we are quick learners from our past interactions with Wapda and, therefore, we rationalised our approach to reduce dependence on Wapda because it is reluctant to give us our share of electricity”.
In the overall context, the country’s total gas output is around 4 bcf with Sindh’s share at around 67 to 70 percent, Balochistan at 17 percent followed by KPK at around 10 percent with Punjab at 5 to 6 percent. But with Punjab accounting for over 55 percent of the entire population it stands to reason that it is unable to meet its requirement for gas from its own available resources. In this context, it is relevant to note that in 2014 the KPK government requested the Economic Co-ordination Committee (ECC) of the Cabinet to allow it to use its surplus gas for electricity generation.
The Ministry of Finance, however, contested this request. It argued, that under the 18th Amendment, the stipulation Article 158 of the constitution that “the province in which a wellhead of natural gas is situated shall have precedence over other parts of Pakistan…” is subject to “commitments and obligations as on the commencing day”. Any deviation would open the proverbial ‘Pandora’s box’, if other provinces followed suit and sought implementation of this clause. The Ministry further contended that this would result in a crippling gas shortage in Punjab.
The question is whether KPK has sufficient gas resources over and above its demand to set up gas-based power plants? KPK produces on average 370 mmcfd – which on occasion declines to 350 mmcfd in the event of technical problems – while demand is around 260 mmcfd, with the assumption that it continues to be managed, though during the winter months demand equals supply.
Thus around 100 mmcfd is surplus during the year sans three to four winter months. On 25th March 2016, the Minister for Petroleum and Natural Resources, Shahid Khaqan Abbasi, while briefing the Senate Standing Committee on Petroleum and Natural Resources, revealed that 100 million cubic feet per day has been allocated to KPK government for power generation. This has been done to set up two plants of 400MW each. He also revealed that as per the KPK government’s request the Private Power Infrastructure Board would have no role in installing a gas-based power project in the province. It is unclear when this approval was granted, but to-date the provincial government has been unable to implement it.
Wapda has been unable to meet the hydel arrears due to KPK government that are estimated at Rs 70 billion. On 5th May 2016, Wapda filed a supplementary tariff petition with National Electric Power Regulatory Authority (Nepra), seeking an increase in hydel tariff of 1.50 rupees per unit that would raise the cost per unit by 55 paisa. The projected amount from this raise was Rs 51 billion that would enable Wapda to clear its dues to KPK.
The petition was filed subsequent to the signing of a formal memorandum of understanding by Water and Power Minister Khawaja Asif, Finance Minister Ishaq Dar and KPK Chief Minister Pervez Khattak on 25th February 2016 and approved by the Council of Common Interests (CCI) on 29th February committing Wapda to clear its dues to KPK in four years.
This proposal was opposed by other stakeholders, notwithstanding the CCI approval, while Nepra has reserved its judgement on this issue. What is extremely unfortunate about the agreement is that Wapda’s inefficiencies, like those of other public sector entities, would be borne by consumers in terms of higher costs. One would hope that this practice be abandoned in favour of improving governance in all public sector entities rather than in compelling consumers to pay for them.
Source: Business Recorder