Guddu thermal plant deprived of 35 mmcfd gas supply to favor influential businesses

[Naveed Yaseen]

MUSHTAQ GHUMMAN
ISLAMABAD (February 14 2009): The Economic Co-ordination Committee (ECC) of the Cabinet has deprived Guddu thermal power plant of 35 mmcfd natural gas to accommodate Fatima Fertiliser plant, a joint venture of Fatima Group and Arif Habib Group, sources in Industries Ministry told Business Recorder.

The Ministry of Water and Power had tried to block the proposal with the argument that diversion of 35 mmcfd gas to Fatima Fertiliser Company Limited (FFCL) would directly impact the provision of gas for generation of electricity. But ECC members, including Minister for Industries and Production Manzoor Ahamd Wattoo, said that they were diverting the gas supply on the instructions of Prime Minister's Secretariat.

According to sources, one ECC member suggested that the proposal should be accepted subject to the condition that in case gas from alternative source was not supplied by the Petroleum Ministry to run Guddu power plant, furnace oil would be used. Official documents, available with this newspaper, show that the Industries Ministry had submitted a summary to the ECC in September 2008 regarding allocation of 35 mmcfd gas from Mari gas field to FFCL. The ECC considered the proposal and constituted a committee under the chairmanship of Minister for Industries and Production for further examination of the proposal.

The committee deliberated and made the following proposal: 35 mmcfd gas from Mari gas field, requested by Fatima Fertiliser, be allocated to them; (ii) Ministry of Petroleum will arrange alternative source of gas to Guddu power station from October 2009.

Sources said the ECC approved the proposal subject to the condition that in case arrangement for the supply of gas from alternative sources is not firmed up by September 2009 by the Petroleum Ministry to run Guddu power plant, it may be clearly understood that furnace oil would be used as alternative fuel and this arrangement must be made in writing by the Ministries of Petroleum, Industries and Water and Power.

According to an insider, Industries and Production Ministry was reportedly under pressure to allocate additional 35 mmcfd gas to the much-delayed Fatima Fertiliser plant.

Sources said the government had already given extension in the deadline thrice to the project. The ECC in its meeting on August 24, 2004 approved allocation of 75 mmcfd gas to Fatima Fertiliser Company Limited from Mari gas field, subject to the condition that the unit would come into production within two years of approval.

The company had indicated in its communication to the ministry that the first phase would be completed by March 2008, while the remaining portion would be completed by August, 2008 which, according to sources, had not been completed. Keeping in view the hardships faced by the company, the government further extended the deadline to the middle of 2009, which again might not be achieved, the sources further added.

According to an official statement, on February 3, 2009, Minister for Industries chaired a meeting of the committee constituted in pursuance of the ECC decision of September 23, 2008 on directive of the Prime Minister to review the allocation of additional 35mmcfd natural gas from Mari gas field to FFCL, Sadiqabad.

Minister said the case for additional demand of the Fatima Fertiliser is under consideration by the Ministry of Petroleum and Natural Resources for feasibility study and on receiving their recommendation the demand would be finalised.

According to the statement, Fatima Fertiliser had applied for 110 mmcfd but the ECC in its meeting held in August 2004 had approved allocation of 75 mmcfd. As per ECC decision, the plant was to come up into production within two years. Ministry of Industry and Production is monitoring the implementation of the project.

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