960415

ERG concerned over

unsure supply of gas

from Kandhkot field

RECORDER REPORT

KARACHI: The energy review group (ERG) has expressed grave concern over the undependable estimates of Kandhkot East and Sara gas fields, designated to feed a 470 mw power plant being set up by a foreign party.

It might bring a bad name to Pakistan, if at the end it was found that these two fields were not capable of meeting the gas requirement of the power generation plant, a highly placed source told Business Recorder.

Kandhkot East gas field comprising Sara and Chachar blocks had been, by a strange decision, allocated to a US based company, Infrastructural Capital Group (ICG). Generally, a gas or oil supply agreement is made with a private power project sponsor The ICG, banking on this allocation, is embarking upon its Liberty Power Project having a capacity of 470 mw.

The ERG which met last month, observed that the power project could not achieve financial close, which was due in September 1995. Although, physical work on the project had been started, the completion of the power complex has been postponed from October 1996 to August 1997.

Sources attributed this slippage to the strong misgivings about the production potential of these fields, which had not been established. Subsequently it is feared that the project might face shortfall of gas availability problem.

Sources said, the Director General, Petroleum Concessions (PC), was of the view that the sponsors had been given an understanding by the government that in case of lower production from the fields, new low quality gas would be allocated to them to meet the shortfall, but no firm commitment has been given to the sponsors in this regard.

The ERG, has asked the DGPC, DG (Gas), Private Power and Infrastructure Board (PPIB), and Energy Wing of the Planning Commission to examine the issue of availability of gas for Liberty Power Project.

The risk of gas supply was, however, being taken entirely by ICG. The ICG had ambitiously planned the financial close in record time of one month, after the signing of the agreement, since it was financing the first phase of the project wholly from its own pocket without the involvement of lenders.