Who’s responsible for power, gas crisis? —II: Hammad, Miftah face off in Geo News talk show

ISLAMABAD: Energy Minister said the PML-N government had made a contact for purchasing LNG for 13.7% above the Brent rate, but the PTI government purchased it only for 10.4%. In the Brent stays constant, Pakistan would save Rs510 billion in next 10 years. He said only 0.003% diesel was used this month (June), and furnace oil utilisation had been slashed by one-fourth compared with the previous government. The minister said if he divulged all details given in the documents of the previous government’s misappropriation of national funds, he feared NAB would lodge another case against Miftah Ismael and Shahid Khaqan Abbasi.

Hammad Azhar said the PTI government had to resign the IGA [inter-governmental agreement] with Russia as the one signed by the PML-N government was totally ambiguous. He said the North-South Pipeline agreement, which was signed by the PML-N government in 2015 had also to be resigned, as the previous government failed to initiate work on it in three years. He advised Miftah Ismael to shun political point scoring and talk of only statistics and data.

However, the PML-N leader said the PTI government had no long-term contract so far, and the gas purchased under 10.4% contract had not reached the country so far. It was only an agreement on paper so far and the gas would arrive in 2022. He said the 13.37% contract was awarded through open bidding and to the lowest bidder.

In reply, Hammad Azhar said: “Miftah had taken four minutes to say that gas is not being supplied. The reason for this is that our contract starts in January 2022. Before this, their contract was attached to us. I have compared their long-term contract with our long-term contract. I have not compared dollar, percentage or spot with the long-term contract. Their long-term contract was based on 13.7 per cent, whereas ours is on 10.4 per cent. In the next 10 years, Pakistan will save Rs500 billion. If it is said that our contract with the Qatari government is just a piece of paper and the letter of Qatari prince is sacred and our sovereign guarantee contract has no value, it will be a surprise. We are following the merit order. I can give you in writing that our merit order and its protection is far better than their system. Since 2016, this capacity had been present, but LNG was not ordered and furnace oil was used. In their era, furnace oil worth Rs 30-40 lakh was burnt and in our government, 10 lakh tonne was used in one year. What else I can say, the rest is politics.”

Shahzeb Khanzada asked Miftah Ismael to come forward and apprise viewers of their plants which were set up with costly amounts. The other thing he is saying that we are following the merit order. So we are running the plants under the merit order, but you are saying that the cheaper plants are not being run.

Miftah Ismael said he might believe Hammad, but the NEPRA is saying something else. The NEPRA says “it is noted on various occasions that the efficient power plants or either not utilised or under-utilised while giving dispatch to the power plants with lesser efficiency which cost increasing and increase in per unit cost of electricity for end consumer”. This is NEPRA’s 2020 report in which it has been said this is a violation of the merit order.

Hammad Azhar told Miftah that half truth was a lie.

Miftah said: “As there is supply of gas on a long-term basis and you are taking short-term gas supply. You can compare how costly gas you are getting. The gas was cheaper in PMLN contracts whether it was from GNOR, ENI or Qatar. When your long-term contract is signed in 2022, you will be able to say something. For the time being, you are getting gas on a short-term basis. At the moment, the government is getting LNG and furnace oil at higher rates.”

Shahzeb Khanzada asked: “Hammad Sahib if it was true that the government thought of buying furnace oil at the last moment. On June 23, your ministry dispatched letters to the K-Electric and other IPPs. Because of this, furnace oil had to be bought at higher rates.”

Hammad Azhar replied: It was not true. The K-Electric is a private company. It buys its furnace oil and we are also supplying gas and extra electricity to it. First, I should clear the NEPRA point. We set our terms according to the British law. It is written in the NEPRA report he showed that the merit order was violated about 1.25 per cent. They should look at the flagrant violations of their merit order. Secondly, he said that we are making imports at higher rates, but we will make imports at these very rates. There will be an open tender in the international market. For dry docking, we have furnace oil from local refineries for dry docking. We are not using even one-fourth of the furnace oil. Miftah Ismael is reading half of the report and saying that there is a violation of the merit order. He is not saying that the violation is only 1.25 per cent. In the PMLN government, the violation was much higher.”

Shahzeb Khanzada said: “The second allegation was that you signed costlier electricity contracts and that they were surplus.”

Miftah Ismael said: “If a merit order was violated 15 per cent, it means 15 per cent meat in the cauldron is Haram and the rest is Halal. About shortage, they ran the plants on diesel, which could be run on gas. If you run the plants on gas or LNG, the cost will be Rs 6-7 per unit. If you run the plants on diesel, it costs Rs 20 per unit. When your electricity cost is Rs 13-20 per unit, how you can talk of one rupee per unit. We are still telling you that the cheapest electricity was produced by the thermal plants set up by Nawaz Sharif. You show me plants efficient and cheaper than Bhikki, Balloki and Haveli Bahadur Shah plants. Doing politics and levelling allegations is easy. You show me plants producing cheaper electricity than the coal plants established in Pakistan.”

Shahzeb Khanzada asked Hammad that he was saying they set up the cheapest plants.

Hammad Azhar replied: “Those plants were very good, but the problem is that we had to pay higher costs for these plants. The cost of these plants was 25 per cent higher. In our government, the capacity utilisation of RLNG terminals is 83 per cent. In your era, it was 66 per cent. You tell me 66 is bigger or 83. In this heat wave, we have produced maximum electricity through two plants of 0.03 per cent. When you say there is the use of diesel, let’s see how less is percentage of these plants.”

Miftah Ismael told Hammad that he said in a press conference the other day that in 2016-17, the Bhikki, Balloki and Haveli plants were operational, which is not correct.

Hammad Azhar said he had talked about FSRU terminals.

Miftah Ismael said that before 2018, he had said the plants were operational. They didn’t get operational before 2018. There was no pipeline in the terminal which was established in the first year.

Shahzeb Khanzada asked Miftah: “There was a genie of circular debt. These people say you produced surplus capacity which created problems for the PTI government. Pakistan didn’t need that capacity.”

Miftah Ismael asked which plant was surplus and was using Rs13 furnace oil, and added: “The plants which are not economically viable should be closed. The Jamshoro plant, the Muffargarh plant and the Kotri plant should be closed. The World Bank says Pakistan’s usage is 31,000 megawatts and the capacity is 34,000 megawatts. Today Pakistan is facing load-shedding. Yesterday I was talking to my friend in Taxila and there was load-shedding.”

Shahzeb Khanzada asked Hammad Azhar: “There is a problem of load-shedding. We talked to our reporters who said there is load-shedding in rural areas as well as urban areas.”

Hammad Azhar replied: “I want to say two things about the surplus capacity. I hope Miftah Sahib will also listen to me patiently. Pakistan’s average electricity consumption is 16,000 megawatts. There are about two months when there is a demand of 23,000 to 25,000 megawatts. We will add 26,000 megawatts to the system in the next eight years.”

Miftah Ismael said in his last comment that if the government purchased a plant, it will have to bear the expenses. There will also be the bank interest. Bhikki, Balloki and Haveli plants belonged to both Punjab and federal governments.

Hammad Azhar said the PMLN government spent the government money on a place where rent for two months is to be paid, and not for the remaining 10 months.

Miftah Ismael said: “I know that minister’s democratic history was not long, but he will have to listen to me as you are a good man. I say money will be spent if a plant is established by the government or the private sector. If there is a demand of 27,000 megawatts electricity in the summer, you will have to produce this quantity. You are not meeting the requirement at this moment. Tell me which plant is surplus.”

Shahzeb Khanzada asked Hammad to name a single plant which was surplus.

Hammad Azhar said there is a power shortage because the biggest dam in Pakistan is running on 20 per cent capacity. Despite that, people are not facing long hours of load-shedding.

Shahzeb Khanzada asked Hammad there is load-shedding in rural as well as urban areas.

Hammad replied that the reason behind load-shedding was that snow was not melt in this season and the Tarbela Dam, which has the capacity to produce 5,000 megawatts electricity, is generating only 1,300 or 1,000 megawatts.

Miftah Ismael said: “The Neelum-Jhelum project gives hydro power. Musharraf Sahib started it. Zardari Sahib could not complete it and Nawaz Sharif did it. The expansion work of the Tarbela Dam was also done by Nawaz Sharif. Pakistan got the cheapest electricity from thermal plants which were also established by Nawaz Sharif. Hammad says the cheapest LNG plants are 25 per cent costlier. I will quit politics, I place a bet if you show me a plant cheaper than that of Bhikki, Balloki and Haveli the world over. If you have any proof, bring it forward. You people have been levelling allegations for three years. Put forward the proof and don’t raise mere allegations. You people brought costlier furnace oil and costlier LNG. India is producing electricity cheaper than you.” —Concluded