PROGAS PAKISTAN LTD SET UP LPG BASED POWER PLANT OF 345MW

POWER STRESSES WOULD BE EASED BY 2010-11 BUT ON LONG TERMS CONSTRUCTION OF KALA BAGH DAM & DEVELOPMENT OF COAL FIELDS WOULD BE IMPERATIVE

INTER VIEW: ABBAS BILGRAMI, MANAGING DIRECTOR PROGAS PAKISTAN LIMITED

AMANULLAH BASHAR
Nov 03 - 09, 2008

Karachi would be lucky to have a few power plants in near future which would have the capacity to ease the power stresses to a great extent. One of such power plant of 345mw at a cost of $340 million is being raised by Progas Pakistan Limited near Port Qasim.

This forthcoming power projects would be first of its kind based on LPG as a fuel for power generation. In fact, the current power crisis faced by the industrial hub of Pakistan primarily attributable to what it may be described to cold shoulder given by the KESC in the past to cater to the power needs of this mega city. When KESC has done everything now and coming out with additional power plants why it was not allowed to happen in the past? Had the KESC done it in the past, the situation regarding power supplies would present a totally different picture of this city.

Abbas Bilgrami, Managing Director Progas Pakistan Limited while sharing details about the project told PAGE that Progas project has been given a deadline of 18 month will come on line, he without a pause replied sharply "NO" under the prevailing circumstances it is next impossible to meet the deadline. However, we are committed to bring up on the ground in the shortest possible time. Since banks have limited liquidity they are not will to help meeting the financial close. This will lead no option but to go for multilateral financial companies for meeting the financial close. When asked to share information regarding sources to meet financial close, he said that at present the most comfortably settled country is China on the back of adequate liquidity so we have decided to go China for financial arrangements. The plant will be supplied from China as well as the United States . This plant would be GE based plant (General Electric) Actually the delay could be possible for meeting the financial close, otherwise technically speaking it is well within reach. The pant and equity is lined up. The debt financing is estimated at $270 million out of $340 million dollar of total cost. Since Pakistan market is currently in crisis, most of the Pakistani banks are already reached to their limit for power projects. Hence we are looking towards multilateral companies for financial arrangements

Despite persistent recession and a gloomy economic picture, it is great on the part of the private sector bidders responded to the call of the government with the intention of providing 4000mw of power recently. However, after screening and shorting listing of the bidders the relevant authorities accepted bids of around 970 to 1000 mw as responsible bidders.

Out of the total approved megawatt some 800 mw would be LPG based which is the first experience of using LPG for power generation in Pakistan . The Progas will be generating some 345mw while remaining amount of proposed power will be contributed by to the Cavalier Energy while the task for generation another 170mw has been assigned to Ruba Energy. Another two small rental power projects have also been approved one of them is from Turkey while the other one is a local based company. Out of these projects two are IPPs located at Port Qasim while two rental power projects will also be located in Karachi one at Port Qasim while the other in Korangi area. Two more power projects are to be located somewhere near Lahore .

The power purchase agreement has been signed with PEPCO. When asked why not with KESC?, he said that since KESC has not managed its franchise area so far PEPCO agreed to enter into power purchase agreements because under the law PEPCO or WAPDA have to cater at least 700mw to KESC till 2013. Currently PEPCO buys power from HUBCO and then supplies it to KESC. Supplying power from Port Qasim would be much easier as compared to complex system of taking power all the way from Hubco to Jamshoro and put it back into KESC system.

Abbas having a rich background of dealing with the energy business and already engaged with the power generation activity. Currently, he is involved in producing 1000mw of power out of that 650mw are being generated through hydel resources.

Responding to a question regarding fuel arrangement for the upcoming power plant and they preferred to opt LPG as a fuel while natural gas must be cheaper than LPG? Abbas had a valid point for decided LPG as the fuel on the back of capacity constraints of the SSGC that does not have the capacity to cater to needs of incoming projects. Though natural gas in terms of price comes to 30 percent compared LPG yet it is more efficient fuel and will produce more as compared to natural gas because LPG is much effective in terms of its heating values its BTU value is four time more vs. natural gas. Hence it was thought fit to enter into fuel purchase agreement with the private party to ensure sustainable supplies.

When asked to comment on what it is said that LPG being highly combustible fuel as compared to others hence carries hazards, he brushed aside the idea and said that Japan has been using LPG since 1964 for its power sector hence it's a proven fuel for power generating hence it is not the issue of using LPG as power generating fuel he remarked and added that going forward the world will be facing a shortfall in fuel oil because the new refineries coming into business not excited for fuel oil.

It is unfortunate that we could not focus on alternative fuel operations because of our economic circumstances. We neither developed our coal reserves nor the hydel resources consequently we have to pay for enormously expensive electricity. Under the present situation those projects which are in the pipeline if completed by 2010-2011 the pressures on power sector would be eased but it would be a temporary cushion in the long run we have to go for Kalabagh dam as early as possible irrespective to the political and social pressures either from NWFP, Sindh or Balochistan because we cannot survive as a viable economy with out tapping the available hydel resources, he said in a firm tone.

He said that when Ayub Khan had developed Tarbela dam he did not politicized the issue he decided to make it and he did it.