KARACHI: Engro Energy has started supplying 217 mw of electricity to national electricity grid from its power plant, which uses low BTU gas from Qadirpur field, the company said on Tuesday.
The $205 million power plant, which runs on gas that was being flared by OGDC as useless, has been designed by Engro engineers with help from foreign contractors, CEO Khalid Mansoor said.
“We did not find any benchmark for this kind of power plant anywhere in the world,” he claimed. “The plant has not been imported and the technology is pretty much ours.” Using low BTU gas has also helped Engro bring down cost of production, he said, adding his company’s tariff is close to 6.25 cents per kWh against other oil-run IPP’s rate of 15 cents.
The perception about power-deficient Pakistan being not the right place to invest in energy sector because of recurring inter-corporate circular debt was not correct, Mansoor insisted. “Tell me if there is one IPP which has said it’s going to close down business here?” he said, adding that power producers enjoy sufficient fiscal protection under the regulations.
“Because of circular debt, IPPs had to borrow from banks at Kibor plus 2 percent. But WAPDA has to pay a penalty of Kibor plus 4 percent for delaying payments against power purchases.” The independent power producers like Hub Power and Kot Addu Power Company often face delays in receiving sale proceeds from WAPDA. The circular debt, they say, increase finance cost as they borrow from banks to bridge the cash shortfall. Engro Energy, a subsidiary of Engro Corporation, is also actively engage in exploring the prospects of using coal reserves in Tharparkar district for making electricity.
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