muhammadhafeezmalik
SENIOR MEMBER
- Joined
- Jan 21, 2015
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Miftah Ismail on Gas and Power Load-shedding
1. There is now considerable load shedding across Pakistan and particularly acute shortage of power and gas in Karachi. And gas shortage will only increase all over Pakistan as the winter approaches. Let’s see why this is happening. A little background first.
2. When PMLN came to power in 2013 Pakistan’s maximum power producing capacity was of 12,500 MWs. And we had piped local gas of about 3000 million cubic feet of gas per day (mmcfd). Over time gas production from fields depletes and our gas production was depleting too.
3. During our tenure we started gas production in 115 fields, a record, but almost all of these finds were small. We managed to keep supply in SSGC (1300 mmcfd) about the same but supplies decreased across the SNGPL network (from 1700 to 1300 mmcfd).
4. Unless we find one or two new Sui-like fields, our gas production is expected to keep on decreasing. Hence import of gas is the only viable option. (Gas is the cheapest & cleanest form of thermal energy so it’s better to import gas— Liquified Natural Gas, LNG— than oil.
5. A note on renewables. Given non-uniform production of power from Hydro (summer months), Solar (at night only; storage in batteries is prohibitively expensive), and Wind (windy or summer months), we can’t practically rely on renewables for base load. Thermal is the best option.
6. PMLN increased power production capacity. Pak can now produce, transmit and distribute 25,000 plus MW hours of power. We set up some wind & solar and completed a lot of hydro based power —-Tarbela 4, Neelum Jhelum and Dasu. And set up 3600 MWs of gas & 4000 MWs of coal as base
7. Our 3600 MW gas-fired plants have the lowest total, variable & fixed capacity cost per kWh. They are cheaper than plants set up in 1994 & 2004. This notion by PTI that they are expensive is just a ruse.
وہ حیلہ گر ہیں جو مجبوریاں شمار کریں
چراغ ہم نے جلائے ہوا کے ہوتے ہوئے
8. PMLN set up 2 LNG import terminals in private sector with guaranteed tolling fee. These are the two cheapest terminals in the world and although NAB jailed Shahid Abbasi and me for setting up an LNG terminal, it’s not been able to show a cheaper terminal anywhere on the planet
9. LNG bought by Pak from Qatar in Jan 2016 was at 13.37% of Brent. In Feb, India bought more expensive gas. A year later Bangladesh bought more expensive gas. However as prices were coming down, in 2017 we bought gas from Gunver and ENI for 11.6% & 11.99% for 5 & 10 years.
10. Again Pakistan bought the cheapest long term (LT) gas from Qatar at 13.37% and there isn’t a single cheaper LT contract before that. Also PTI wasted the golden opportunity to do a LT contract for gas when oil and gas were at historic lows.
11. Now it is expected by buy spot LNG 11.39% of Brent, which is only 0.20% cheaper than LNG we bought on a LT basis when gas prices were firmer. (LT contracts are more expensive than spot rates and 75% of all gas is sold on LT contracts).
12. PMLN also set up a pipeline for gas from Khi to Lhe to convey 1200 mmcfd. That’s enough for 2 terminals we set up. Today the gas available in SSGC is 1200 and SNGPL is 1100 mmcfd plus 1200 mmcfd LNG (total 3500 mmcfd) against a requirement of 4000 to 5000 mmcfd. Huge shortage
13. In 2 years PTI has neither set up more terminals nor laid pipelines. Hence the gas shortage. And since more than half of our power comes from gas plants, there is now power shortage also This is dereliction of duty. PTI’s job is not to warn of shortages but to end shortages.
14. The solution is to 1) bring higher capacity FSRUs at the existing terminals 2) build more terminals 3) build pipelines 4) do both short-and long-term contracts to secure more gas, 5) extract and supply gas from fields where gas is already discovered & 6) have OGDC, PPL &
15. other companies invest in fields for exploration. This isn’t rocket science. Shahid Abbasi as petrol minister left a comprehensive plan for these things. PTI just has to act on this instead of blaming others and doing no work. Remember there is no substitute for hard work//
Ali Zaidi's Charges:
Let’s clear some facts now that Miftah Ismail has decided to open the Pandora’s box on LNG/LNG terminals. Firstly, terminals set up under PML-N Gov are not the cheapest. In fact, they are amongst the most expensive globally.
Attached is a comparative chart on global LNG terminals (land based & FSRUs) from worlds leading LNG consultants WoodMackenzie. It clearly shows dozens of terminals cheaper than the 2 developed by PMLN. Miftah is caught mis representing facts, just like his corrupt leadership
Miftah’s claim: Tariff on terminals is guaranteed! Below is OGRA determination of Mar 2020 of terminal tariff charged to customers. It clearly states $2.2895/MMBTU & not $0.44 cents/MMBTU. This is called capacity charge, payable to operators irrespective that we use them OR NOT
Thirdly, will Miftah care to explain why Azam Sufi (Soofi) the then head of PLTL was asked to resign? Facts are that he was rightly not budging on liquidated damages assessed on the 2nd terminal set up by PGPCL & some other illegal orders of Miftah & his boss Khakan Abbasi.
Lastly, can Miftah enlighten if a certain “son in law” met Petroleum Ministry officials to negotiate a side settlement with the PMLN Gov to waive the LD Charges on PGPCL of approx $50 million?
Miftah Ismail's reply:
A 5 million dollar question is why is Ali Zaidi the Ports minister tweeting about LNG terminals which are the responsibility of the Petroleum ministry. Of course in character for PTI Ministers, his tweets are full of innuendoes & falsehoods. Why this personal attack on me?
Because I recently said that the Ports Ministry is delaying grant of permission to companies at Port Qasim to set up LNG terminals by demanding both legal and illegal ‘compensation’. This is now common knowledge and a source of frustration for the Petroleum Ministry officials and potential investors. In 2 years PTI has not been able to set up a single new LNG terminal and Pakistan is experiencing gas shortages that will only get worse. Now to his accusations. He says the LNG terminals that the PMLN set up are some of the most expensive in the world and not the cheapest as I claim. And he shows two documents in his support which I have also attached with markings. In the (4 year old) Wood McKenzie magazine picture he claims that the Engro LNG terminal charges at 66 cents were among the highest in the world. False.
The truth is that even in the first year of operations when we operated at reduced capacity as per the contract and market conditions, the Engro LNG terminal was one of the cheapest in the world in a like-for-like comparison. From the second year of operations when we went to 6 LNG cargoes per month we become the cheapest LNG terminal in the world and remain the cheapest today. His second picture shows terminal charges of $2.29 for the PGPL terminal; if he just looks at the top of the same table he would see this was because in March 20, the PTI government brought only one cargo from this terminal. Is he not aware that this was only due to PTI Govt’s failure to bring in more LNG cargoes, thus causing huge gas shortages in Pakistan. The question is that why did the PTI Govt fail to procure LNG cargoes causing a loss of tens of billions of rupees. The charges for the Engro terminal in the same period were 41 cents where 6 LNG cargoes per month were regasified. Again this is the cheapest LNG regasification rate in the world.
Ali shows the OGRA worksheet from March 2020; I am also attaching the OGRA worksheet from June 2020 where 6 LNG cargoes were regasified at both LNG terminals and the regasification rates were 39 cents and 40 cents. This clearly proves Ali’s falsehoods.
Ali’s incompetence and/or ill-intentions are clear when he asks why did we agree to a minimum capacity charge; an absurd statement from a Minister who has been claiming for 2 years that he is putting up 3 more LNG Terminals! Every tolling project around the world including all IPPs in Pakistan are based on a minimum capacity charge. Why would anyone invest in a dedicated facility with no alternate use unless they have a guarantee for minimum usage? (Pls are Wood McKenzie pic again now knowing from OGRA that Pak terminals costs only 40 cents).
Then Ali gets more personal and says I gave an illegal order to one Mr Azam Soofi, MD PLTL, to cover up losses at PLTL and that’s why he resigned. One, there was no loss at PLTL till PMLN was in charge. Two, Mr Soofi as MD PLTL did not report to me.
Now look at the attached picture. PQA under PMLN gave permission for 2 LNG terminals without hiring a consultant but PQA under PTI advertised to hire one “individual consultant”. And guess what? The same Mr Soofi was finalised but fortunately never hired at a monthly pay of $20,000 plus car/fuel & furnished apartment plus an annual bonus of $80,000. And if his services were terminated during the contract period, he would be given a severance package of $240,000. All this to a consultant because PQA has to just give space for an LNG terminal?
Then he makes an accusation about some “damaad” meeting Petroleum Ministry officials on behalf of PGPL for some charges. I can only laugh at his absurdity and will let PGPL answer this falsehood it they wish to. CC: Atif, Mehmood Moulvi.
1. There is now considerable load shedding across Pakistan and particularly acute shortage of power and gas in Karachi. And gas shortage will only increase all over Pakistan as the winter approaches. Let’s see why this is happening. A little background first.
2. When PMLN came to power in 2013 Pakistan’s maximum power producing capacity was of 12,500 MWs. And we had piped local gas of about 3000 million cubic feet of gas per day (mmcfd). Over time gas production from fields depletes and our gas production was depleting too.
3. During our tenure we started gas production in 115 fields, a record, but almost all of these finds were small. We managed to keep supply in SSGC (1300 mmcfd) about the same but supplies decreased across the SNGPL network (from 1700 to 1300 mmcfd).
4. Unless we find one or two new Sui-like fields, our gas production is expected to keep on decreasing. Hence import of gas is the only viable option. (Gas is the cheapest & cleanest form of thermal energy so it’s better to import gas— Liquified Natural Gas, LNG— than oil.
5. A note on renewables. Given non-uniform production of power from Hydro (summer months), Solar (at night only; storage in batteries is prohibitively expensive), and Wind (windy or summer months), we can’t practically rely on renewables for base load. Thermal is the best option.
6. PMLN increased power production capacity. Pak can now produce, transmit and distribute 25,000 plus MW hours of power. We set up some wind & solar and completed a lot of hydro based power —-Tarbela 4, Neelum Jhelum and Dasu. And set up 3600 MWs of gas & 4000 MWs of coal as base
7. Our 3600 MW gas-fired plants have the lowest total, variable & fixed capacity cost per kWh. They are cheaper than plants set up in 1994 & 2004. This notion by PTI that they are expensive is just a ruse.
وہ حیلہ گر ہیں جو مجبوریاں شمار کریں
چراغ ہم نے جلائے ہوا کے ہوتے ہوئے
8. PMLN set up 2 LNG import terminals in private sector with guaranteed tolling fee. These are the two cheapest terminals in the world and although NAB jailed Shahid Abbasi and me for setting up an LNG terminal, it’s not been able to show a cheaper terminal anywhere on the planet
9. LNG bought by Pak from Qatar in Jan 2016 was at 13.37% of Brent. In Feb, India bought more expensive gas. A year later Bangladesh bought more expensive gas. However as prices were coming down, in 2017 we bought gas from Gunver and ENI for 11.6% & 11.99% for 5 & 10 years.
10. Again Pakistan bought the cheapest long term (LT) gas from Qatar at 13.37% and there isn’t a single cheaper LT contract before that. Also PTI wasted the golden opportunity to do a LT contract for gas when oil and gas were at historic lows.
11. Now it is expected by buy spot LNG 11.39% of Brent, which is only 0.20% cheaper than LNG we bought on a LT basis when gas prices were firmer. (LT contracts are more expensive than spot rates and 75% of all gas is sold on LT contracts).
12. PMLN also set up a pipeline for gas from Khi to Lhe to convey 1200 mmcfd. That’s enough for 2 terminals we set up. Today the gas available in SSGC is 1200 and SNGPL is 1100 mmcfd plus 1200 mmcfd LNG (total 3500 mmcfd) against a requirement of 4000 to 5000 mmcfd. Huge shortage
13. In 2 years PTI has neither set up more terminals nor laid pipelines. Hence the gas shortage. And since more than half of our power comes from gas plants, there is now power shortage also This is dereliction of duty. PTI’s job is not to warn of shortages but to end shortages.
14. The solution is to 1) bring higher capacity FSRUs at the existing terminals 2) build more terminals 3) build pipelines 4) do both short-and long-term contracts to secure more gas, 5) extract and supply gas from fields where gas is already discovered & 6) have OGDC, PPL &
15. other companies invest in fields for exploration. This isn’t rocket science. Shahid Abbasi as petrol minister left a comprehensive plan for these things. PTI just has to act on this instead of blaming others and doing no work. Remember there is no substitute for hard work//
Ali Zaidi's Charges:
Let’s clear some facts now that Miftah Ismail has decided to open the Pandora’s box on LNG/LNG terminals. Firstly, terminals set up under PML-N Gov are not the cheapest. In fact, they are amongst the most expensive globally.
Attached is a comparative chart on global LNG terminals (land based & FSRUs) from worlds leading LNG consultants WoodMackenzie. It clearly shows dozens of terminals cheaper than the 2 developed by PMLN. Miftah is caught mis representing facts, just like his corrupt leadership
Miftah’s claim: Tariff on terminals is guaranteed! Below is OGRA determination of Mar 2020 of terminal tariff charged to customers. It clearly states $2.2895/MMBTU & not $0.44 cents/MMBTU. This is called capacity charge, payable to operators irrespective that we use them OR NOT
Thirdly, will Miftah care to explain why Azam Sufi (Soofi) the then head of PLTL was asked to resign? Facts are that he was rightly not budging on liquidated damages assessed on the 2nd terminal set up by PGPCL & some other illegal orders of Miftah & his boss Khakan Abbasi.
Lastly, can Miftah enlighten if a certain “son in law” met Petroleum Ministry officials to negotiate a side settlement with the PMLN Gov to waive the LD Charges on PGPCL of approx $50 million?
Miftah Ismail's reply:
A 5 million dollar question is why is Ali Zaidi the Ports minister tweeting about LNG terminals which are the responsibility of the Petroleum ministry. Of course in character for PTI Ministers, his tweets are full of innuendoes & falsehoods. Why this personal attack on me?
Because I recently said that the Ports Ministry is delaying grant of permission to companies at Port Qasim to set up LNG terminals by demanding both legal and illegal ‘compensation’. This is now common knowledge and a source of frustration for the Petroleum Ministry officials and potential investors. In 2 years PTI has not been able to set up a single new LNG terminal and Pakistan is experiencing gas shortages that will only get worse. Now to his accusations. He says the LNG terminals that the PMLN set up are some of the most expensive in the world and not the cheapest as I claim. And he shows two documents in his support which I have also attached with markings. In the (4 year old) Wood McKenzie magazine picture he claims that the Engro LNG terminal charges at 66 cents were among the highest in the world. False.
The truth is that even in the first year of operations when we operated at reduced capacity as per the contract and market conditions, the Engro LNG terminal was one of the cheapest in the world in a like-for-like comparison. From the second year of operations when we went to 6 LNG cargoes per month we become the cheapest LNG terminal in the world and remain the cheapest today. His second picture shows terminal charges of $2.29 for the PGPL terminal; if he just looks at the top of the same table he would see this was because in March 20, the PTI government brought only one cargo from this terminal. Is he not aware that this was only due to PTI Govt’s failure to bring in more LNG cargoes, thus causing huge gas shortages in Pakistan. The question is that why did the PTI Govt fail to procure LNG cargoes causing a loss of tens of billions of rupees. The charges for the Engro terminal in the same period were 41 cents where 6 LNG cargoes per month were regasified. Again this is the cheapest LNG regasification rate in the world.
Ali shows the OGRA worksheet from March 2020; I am also attaching the OGRA worksheet from June 2020 where 6 LNG cargoes were regasified at both LNG terminals and the regasification rates were 39 cents and 40 cents. This clearly proves Ali’s falsehoods.
Ali’s incompetence and/or ill-intentions are clear when he asks why did we agree to a minimum capacity charge; an absurd statement from a Minister who has been claiming for 2 years that he is putting up 3 more LNG Terminals! Every tolling project around the world including all IPPs in Pakistan are based on a minimum capacity charge. Why would anyone invest in a dedicated facility with no alternate use unless they have a guarantee for minimum usage? (Pls are Wood McKenzie pic again now knowing from OGRA that Pak terminals costs only 40 cents).
Then Ali gets more personal and says I gave an illegal order to one Mr Azam Soofi, MD PLTL, to cover up losses at PLTL and that’s why he resigned. One, there was no loss at PLTL till PMLN was in charge. Two, Mr Soofi as MD PLTL did not report to me.
Now look at the attached picture. PQA under PMLN gave permission for 2 LNG terminals without hiring a consultant but PQA under PTI advertised to hire one “individual consultant”. And guess what? The same Mr Soofi was finalised but fortunately never hired at a monthly pay of $20,000 plus car/fuel & furnished apartment plus an annual bonus of $80,000. And if his services were terminated during the contract period, he would be given a severance package of $240,000. All this to a consultant because PQA has to just give space for an LNG terminal?
Then he makes an accusation about some “damaad” meeting Petroleum Ministry officials on behalf of PGPL for some charges. I can only laugh at his absurdity and will let PGPL answer this falsehood it they wish to. CC: Atif, Mehmood Moulvi.
