ENERGY
NEWS COVERAGE PERIOD FROM JAN 27 TO FEB 02, 2020
BIODIESEL FROM FOOD WASTE AND USED COOKING OIL
By AKHTAR ALI Published: January 27, 2020
ISLAMABAD: Biofuels have been introduced in most of the advanced countries in the wake of oil crisis of 1973.
Energy security and independence and boosting local agricultural markets have been the main motivation. Later-day benefits have been discovered as well.
Biodiesel is a renewable fuel with reduced environmental footprint as compared to conventional diesel. It has low sulphur content and produces less particulate matter. It has higher lubricity and is biodegradable. Its CO2 footprint is 50-80% of conventional diesel.
For environmental and climate change reasons, developing countries have also been enlisted in these programmes. Admittedly, energy security is also enhanced.
It is said that Rudolf Diesel, the inventor of diesel engines, ran his first diesel engine on vegetable cooking oil. Vegetable oil was the fuel used before the discovery of crude oil and the advent of mineral petroleum fuels.
There are six possible raw material routes for making biodiesel. These are vegetable sources – palm oil, rapeseed, sunflower, cottonseed, canola, jojoba, jatropha and others; waste vegetable oil or used cooking oil as it is called; animal fats like tallow, lard, yellow grease and chicken fat; algae; sewage sludge; and saline agricultural plants.
There is shortage of vegetable oil raw material in Pakistan. Oilseeds and palm oil are imported. Hence, diversion of such sources to non-food energy sources would not be desirable. Animal fat has uses in soap-making and others. Algae, sewage sludge and saline agriculture appear to be futuristic. Thus, the only potential source of biodiesel appears to be used cooking oil and food waste.
Jatropha had been considered as a highly attractive vegetable source. The assumption was that it could be grown in waste land and required very little water.
These assumptions did not prove to be true. With inferior land and less water, it was found that the yield was proportionally low, weakening the production economy of jatropha.
As a result, after more than a decade, jatropha cultivation and its use in making biodiesel is limited. There are no plans and programmes anywhere in the world in this respect, except for some remnant marginal projects.
It has been highly controversial that crops be used for energy or any other non-food purposes. However, crop and other biowastes have been welcomed as not interfering with food supplies, nationally or internationally.
Despite that, both in Europe and the US, corn and other food crops have been used for making industrial and potable ethanol. Ethanol is mixed in various proportions with gasoline for use in conventional and modified vehicles. The idea was to reduce dependency on imports and achieve environmental advantages.
Such production used to be called 1G (first generation) technologies. However, currently, 2G technologies have been developed which utilise crops waste and other biowaste material.
The European Union has prescribed a ban on palm oil by 2021 and a ban on all crop-based biofuels by 2030.
Food waste – both industrial and post-consumer, slaughter house and poultry fat and waste offer a multi-pronged benefit stream into biodiesel production; income and employment in the agriculture sector and general improvement of environment. Newer waste processing avenues are coming up, the latest one is chicken fat out of feathers, which hitherto had been a major pollution load.
Biodiesel is blended with conventional diesel in various proportions. Five per cent blend of biodiesel, which is mostly marketed, is named as B5, 10% as B10 and 20% as B20.
It is reported that up to 20% biodiesel blends, no change in engines is required. However, most vehicle manufacturers allow 5% blend without annulling warranty claims.
In most European Union countries, 5% target has been achieved reportedly. The European parliament has issued RED-II (Renewable Energy Directive) according to which 12% renewable fuels are to be used by the year 2030.
It is relatively simple to make biodiesel, especially from used cooking oil. It is so simple that it is produced at home by the enthusiasts in the US.
Used cooking oil is filtered to remove physical impurities, heated to 60-degree Celsius and is mixed and stirred with methanol or ethanol (15%) in the presence of a catalyst (NaOH). A byproduct glycerol is produced which settles at the bottom. Water and excess methanol are removed.
Ethanol is widely available in Pakistan as a sugar industry byproduct. Glycerol can be used by the soap industry as what used cooking oil is diverted from it in the first place for making biodiesel returns back to the industry.
Pakistan’s cooking oil market is estimated at 4 million tonnes per year. If 10% of the consumption is assumed to be collectable used oil, 400,000 tonnes per annum of used cooking oil can be used for biodiesel production.
Some estimates suggest waste vegetable oil generation of 500,000 litres per day (182,000 tonnes per annum) in Punjab alone. By comparison, diesel consumption in Pakistan is 7 million tonnes. Thus, some 5% biodiesel (B5) can be produced in Pakistan.
Amazingly, diesel and cooking oil prices in Pakistan are somewhat comparable – diesel is at Rs133 per litre and cooking oil sale price in Pakistan is about $1,200 per tonne as opposed to palm oil prices of $60 per tonne. In the US, used cooking oil is sold at $330 per tonne. For reasons similar to Pakistan, the Indian biodiesel programme could not achieve its targets, although its bioethanol programme has been on track.
In India, public-sector oil companies have been recently assigned the task of introducing biodiesel based on used cooking oil. They have announced a biodiesel purchase price of INR51 per litre as against high-speed diesel retail price of INR68-73 per litre. Also, in India, McDonald’s and other similar companies have launched their own recycling programmes to turn used cooking oil into biodiesel to run their refrigerated trucks.
High-level restaurants use cooking/frying oil only twice and discard it after that. Used cooking oil is collected from high-level restaurants and is resold to low-level and street restaurants without any processing or cleaning.
Legally, used cooking oil cannot be used again in cooking. It is not known as to how much of it is diverted for non-cooking purposes such as soap-making.
Used cooking oil should be a regulated product. Its sale, collection and resale should all be a licensed activity. The Punjab Food Authority has taken some action in this regard.
Biodiesel industry may provide an alternative outlet for used cooking oil, reducing the opportunity for its diversion to illegal cooking uses in the commercial market.
High-level restaurants may be encouraged to organise a collection system. Their associate companies can install a biodiesel plant and may export it before the development of a local market and the associated legal framework.
Biofuel initiative was taken in Pakistan in 2007 with a lot of enthusiasm. Biodiesel blending target was B5 by 2015 and B10 by 2025. PSO and all relevant public-sector organisations took a lot of interest.
The programme was almost totally based on jatropha. However, as mentioned earlier, jatropha plantation efforts and yield did not come up to expectations in almost all parts of the world.
It would be advisable that PSO rediscover its earlier programme based on used cooking oil. Bioethanol programme did not go ahead despite a significant raw material base.
An interesting development has emerged in case of palm oil and biodiesel. India has stopped buying palm oil from Malaysia due to the forthright stand of PM Mahathir Mohamad on the Kashmir issue.
Pakistan can invite Malaysian investors to install biodiesel plants in the country. This would be mutually beneficial for the two countries.
The writer is former member energy of the Planning Commission
Published in The Express Tribune, January 27th, 2020.
https://tribune.com.pk/story/2144720/2-biodiesel-food-waste-used-cooking-oil/
12 FIRMS PRE-QUALIFY TO BID FOR POWER PLANTS
By Shahbaz Rana Published: January 29, 2020
ISLAMABAD: The Privatisation Commission board on Tuesday pre-qualified 12 firms to bid for multi-billion dollar power plants and approved to hire financial advisers to sell stakes of Pakistan’s two blue-chip firms aimed at raising around Rs400 billion to meet the budget deficit reduction target.
The board also approved to sell 27 government-owned unproductive properties through an open auction and set the minimum reserve price at Rs6.7 billion for all these assets. Only one property is assessed at the value of over Rs5 billion by the financial advisers while the value of the rest of the 26 properties is Rs1.7 billion.
Prime Minister Imran Khan wants to sell these properties in order to pay off public debt, which is increasing at a rate of nearly Rs14 billion a day.
Headed by the privatisation minister, the PC Board pre-qualified all 12 parties that had submitted statements of qualifications for the acquisition of two LNG-fired power plants.
Investors from Japan, Thailand, the United Kingdom, Malaysia and Pakistan have submitted documents. A few renowned global parties have also shown interest in acquiring the power plants.
The National Power Parks Management Company Limited (NPPMCL) owns the two power plants located at Balloki and Haveli Bahadur Shah, which have a combined generation capacity of 2,453 megawatts. The government wants to sell NPPMCL in the hopes of fetching a minimum of Rs300 billion or $1.5 billion in non-tax revenue.
The board has prequalified all the 12 parties and now these companies will start due diligence process, Privatisation Secretary Rizwan Malik told The Express Tribune.
The board approved to hire a consortium of financial advisers to sell up to 7% stakes of the Oil and Gas Development Company (OGDC) and 10% shares of Pakistan Petroleum Limited (PPL), informed the privatisation secretary.
The money raised through privatisation of power plants and capital market transactions will be used to reduce the budget deficit that is expected to remain far above the official target due to massive shortfall in tax collection.
The board approved to hire a consortium of Credit Suisse, Arif Habib Limited and AKD Securities as financial advisers to sell up to 7% stakes of OGDCL. The Arib Habib consortium beat the other consortium comprising of Citibank, HBL and Next Capital.
The Credit Suisse consortium would charge maximum Rs77.5 million out of pocket expenses and 0.8% of the transaction value as a success fee that has been notionally determined at Rs358.9 million. The total fee that the Credit Suisse consortium offered to charge was Rs436.3 million. The Citibank consortium had offered Rs788.7 million as total fee to handle the transaction. It sought to charge Rs116 million as out of pocket expenses and 1.5% of the transaction value as success fee.
The Pakistan Tehreek-e-Insaf (PTI) government wants to divest 7% or 301 million shares and is anticipating earning a minimum Rs45 billion or $290 million. The notional price is worked out on the basis of nearly Rs149 per share price. OGDCL’s share prices continued the declining trend and closed at Rs140.07 a share on Tuesday. It is the third time in the past almost eight years that the federal government was trying to offload stakes of the OGDCL at either the Pakistan Stock Exchange (PSX) or in the global capital markets.
The board also approved to hire the consortium comprising of Credit Suisse, Arif Habib Ltd and Topline Securities for selling 10% stakes in PPL. The second runner consortium was comprised of CLSA & Alfalah Bank.
Due to high scores given by two members of the evaluation committee, the Credit Suisse consortium became successful despite quoting Rs152.5 million higher than its competitor. The consortium will charge a minimum Rs590 million to handle the transaction, including 1.5% of the transaction value as success fee. The notional value of 10% stakes has been estimated at Rs33 billion for transaction purposes. The PPL share price also decreased Rs1.5 to Rs146.87 on Tuesday.
The PC Board approved reserved prices of 27 properties at Rs6.7 billion, which will be sold through open auction.
The board approved to sell the property of Public Motors Limited, which is 65% owned by the federal government and the remaining 35% ownership lies with private owners. Currently there are more than 40 tenants on the premises, however, their lease agreements have expired. The court has authorised the Privatisation Commission to sell the property.
The transaction committee had recommended the PC Board to set the reserve price at Rs5.03 billion for the Republic Motors Property.
The PC Board approved option auction of 17 properties of the Earthquake Reconstruction and Rehabilitation Authority (ERRA) at a reserve price of Rs225.5 million. The properties include open plots, penthouses, apartments and shops, owned by ERRA.
It also approved to sell three properties of the Civil Aviation Authority (CAA) at Rs213 million, which is the minimum reserve price recommended by the financial adviser. Three properties of the Ministry of Water Resources have been approved to be sold at a reference price of Rs275 million. These properties are located at Nicholson Road Lahore, Swat and Mansehra.
The PC Board approved the reserve price of Rs262.5 million for the Trading Corporation of Pakistan’s land situated in Multan.
It approved to sell FBR’s property located at Canal road Faisalabad at Rs640 million reserve price.
Published in The Express Tribune, January 29th, 2020.
https://tribune.com.pk/story/2146092/2-12-firms-pre-qualify-bid-power-plants/
PROPOSAL ON GAS PRICES DEFERRED AGAIN
By ZAHEER ABBASI on January 30, 2020
A meeting of the Economic Coordination Committee (ECC) of the Cabinet has once again deferred the proposal of Ministry of Petroleum for increase in gas prices, apparently owing to further increase in inflation as well as gas and electricity charges due to this measure.
Sources said that matter was not taken up because the revised summary was in the system and Cabinet Division did not receive comments from different ministries; however, the advisor on finance wanted the ECC to take up the matter. Another official on condition of anonymity stated that the government’s effort is to protect the domestic consumers or pass on minimum impact to them and Rs 33 billion impact on account of proposed increase in gas prices would be passed on to them who have been producing electricity from gas. The official said that there is proposed increase of 15 percent for both captive power and CNS stations in gas prices.
A statement issued here said that Adviser to the Prime Minister on Finance Dr Abdul Hafeez Shaikh considered and approved waiving off all port dues/charges amounting to Rs 194,951,059 on 31-1-2020 or till the vessels leave the port accruing against Karkey. The waiver was required as a consequence of the settlement agreement reached between the government of Pakistan and Karkey.
On the summary moved by the Ministry of Industries and Production for payment of outstanding liabilities of Pakistan Steel Mills (PSM) against Sui Southern Gas Company for non-payment of gas bills, the ECC approved the release of Rs 350 million for the partial settlement of the SSGC liability.
Establishment of Trust Fund to implement risk sharing facility under 3rd tranche of US $10 million of credit line of US $140 million obtained from World Bank for Pakistan Mortgage Refinance Company Limited (PMRCL) was also approved.
The purpose of the Trust will be to leverage the Trust Funds by issuing guarantees in favor of the mortgagors to cover possible losses from eligible mortgage loans. The Finance Division also sought approval for the demand of Rs 80 million as technical supplementary grant in the budget of the Finance Division for the financial year 2019-20 for providing assistance to families of the government employees who expired during service and provision of ad hoc relief allowance 2019. The ECC also approved the proposal sent by the Ministry of Finance for the issuance of direction of the federal government to the State Bank of Pakistan under sub-section 6(A) of the section 17 of the SBP Act 1956 to sell its shares in House Building Finance Company Limited (HBFCL). The ECC approved the technical supplementary grant amounting to Rs 100 million to National Information Technology Board (NITB) under the Ministry of IT & Telecommunication for centralized procurement of ICT infrastructure to ensure e-readiness of the federal government for the implementation of the e-governance programme.
Copyright Business Recorder, 2020
https://www.brecorder.com/2020/01/30/566345/proposal-on-gas-prices-deferred-again/
GAS CESS DEFAULTER DUES SOAR TO RS534B
HASNAAT MALIK January 30, 2020
ISLAMABAD. The outstanding dues against defaulters of Gas Infrastructure Development Cess (GIDC) had surged to roughly Rs534 billion until June last year, Ministry of Petroleum and Natural Resources informed the Supreme Court on Wednesday.
During the proceedings, the ministry told the apex court that the principal amount of dues stood at Rs457 billion, while on delayed payments the companies had been required to pay surcharge at the rate of Karachi Interbank Offered Rate plus 4, which translated into another Rs77.7 billion.
The government had promulgated a presidential ordinance last August for an out-of-court settlement of the Rs420 billion GIDC dispute with industries.
The ordinance allowed the general industry, fertiliser sector and CNG sector to pay 50% of their outstanding bills within 90 days in advance and secure 50% discount on future bills provided they withdrew their court cases.
The government said it expected net receipts of Rs150-Rs160 billion under the proposed amnesty provided all the stakeholders availed the offer. However, the government after receiving strong disapproval from various circles withdrew the ordinance within days of its promulgation.
It then approached the apex court through the attorney general requesting for an early hearing of the GIDC case. The ministry, while submitting the report on Wednesday said that till June 30 2019, a total of Rs752 billion was accrued on account of GIDC.
An amount Rs295 billion was collected and deposited by the gas companies in accordance with the GIDC Act 2015 into the government exchequer leaving an outstanding balance of Rs457 billion.
The report stated that the gas companies were responsible for billing and collection of the cess from gas consumers and its onward payment to the government exchequer. The petroleum ministry cited the protracted litigation against applicability of GIDC and circular debt as reason for non-recovery of GIDC amount by the gas companies.
Due to various lawsuits filed before the superior courts regarding the imposition of GIDC, a total of Rs420 billion had been pending as on June 30, 2019. The amount held under the circular debt is Rs36 billion.
The report stated that the outstanding amount of Rs164 billion was recoverable from the fertiliser sector, while Rs170 billion from the power sector and Rs123 billion from the CNG sector.
It is stated that 92% of the outstanding amount was subject to the settlement of court cases. As for the issue of circular debt, the receivable amount in the shape of cost of gas and GIDC along with applicable interest would be settled once the circular debt issue is resolved.
The report specified that in the recent past, the government had issued Sukkuk bonds worth Rs200 billion to clear a part of the circular debt and was now again considering issuance of another Sukkuk bonds worth Rs250 billion for the purpose.
The strategy to clear the circular debt is being implemented by the Power Division.
PETROL PRICES REMAIN UNCHANGED
By WASIM IQBAL on February 1, 2020
The government has decided to maintain the existing prices of petroleum products for the month of February 2020, said Ministry of Finance here on Friday. The government decided that there would be no change in the prices of petroleum products and the prices of January 2020 would be maintained in February 2020.
The federal government has downward adjusted petroleum levy on high speed diesel (HSD). The Oil and Gas Regulatory Authority (OGRA) calculated petroleum levy on HSD at Rs 18 per liter. However, the General Sale Tax on HSD has been kept at standard rate of 17 percent.
A day earlier on Thursday, the Oil and Gas Regulatory Authority (OGRA) suggested to the government to increase petroleum products’ prices up to 1.9 percent for the month of February 2020. Under monthly review, the regulator suggested a decrease of Rs 6 paisa per liter or 0.1 per cent for petrol.
However, it has recommended an increase of Rs 2.47/litre (1.9 percent) for high speed diesel (HSD). The price of light diesel oil (LDO) which is an industrial fuel might be increased by Rs 1.10 per liter or 1.3 percent. The price of kerosene oil was recommended to be decreased by 66 paisa /liter (or 0.7 percent).
However, after rejection of the proposed changes in petroleum products, the prices will be maintained as; petrol, Rs 116.60 per liter, HSD, Rs127.26/ liter, LDO, Rs 84.51/ liter, and kerosene oil, Rs 99.45/liter.
The government is charging 17 percent general sales tax (GST) on all petroleum products. Apart from it, the government is also collecting Petroleum Levy (PL) on these products. The OGRA has calculated petroleum levy at different ratio. As per government’s directives, the OGRA recommended charging Rs18 per liter petroleum levy on diesel, Rs 15 on petrol, Rs 6 per liter on kerosene oil and Rs 3 per liter on LDO for the month of February.
Copyright Business Recorder, 2020
https://www.brecorder.com/2020/02/01/567045/petrol-prices-remain-unchanged/
OGRA SLASHES LPG PRICE BY RS10 PER KG
OUR CORRESPONDENT February 01. 2020
ISLAMABAD. The oil and Gas Regulatory Authority (Ogra) has announced a reduction of Rs10per kg in the price of domestic cylinder (11..8kg) of locally production liquefied petroleum gas (LPG) and a reduction of Rs454 in the price of commercial cylinder (45.4kg) for February 2020.
According to a notification issued by Ogra, the LPG price has been slashed to Rs1,680. 21 per domestic cylinder from Rs1,791.48 in January, a significant reduction of Rs111for February.
Similarly, the commercial cylinder will be available at Rs6,437 instead of Rs6,891 in January. The regulator notified Rs142 as the per-kg LPG price.
The OPG producer price (propane 40%and butane 60%) has been calculated at Rs82,033.29 per ton for February compared with Rs90,092.65 per ton in January 2020. This price includes excise duty of Rs85 per ton but does not include the petroleum levy. Ogra worked out the producer price for 11.8kg cylinder at Rs967.99.
Marketing and distribution margins have been set at Rs35,000 per ton or Rs413 per cylinder. Apart from these, petroleum levy of Rs4,669 per ton will also be charged, which will translate into Rs55.09 per cylinder.
Prior to the imposition of general sales tax (GST), the consumer price will be Rs121,702.29 per ton compared with Rs129,761.65 per ton in January. The price of 11.8kg cylinder will now stand at Rs1,436.08.
Additionally, 17% GST will be charged, which will translate into Rs20,689.39 per ton or Rs244.13 per cylinder. Final consumer price will be Rs142,391.64 per ton or Rs1,680.21 per cylinder.
Since July 2019, the LPG price has been fluctuating between Rs1,327.76 and Rs1,513.69 per cylinder. LPG Industries Association of Pakistan Chairman Irfan Khokhar welcomed the reduction in LPG prices for domestic and commercial cylinders.
NEWS COVERAGE PERIOD FROM JAN 20 TO JAN 26, 2020
CRITICALITY OF COMPETITIVE ELECTRICITY PRICING
By SHAHID SATTAR on January 23, 2020
The export-oriented sectors of Pakistan have shown marked resilience over the past decades, having weathered the storms of economic uncertainty, severe energy shortages, overvalued currency and delayed refunds. Aided by policy initiatives of the government like providing internationally competitive energy prices, duty-free raw material imports and rationalization of exchange rate, the exporting sector had started to pick up and deliver on enhanced exports, along with fresh investments in manufacturing infrastructure. The government, however, has inexplicably taken a U-turn from the winning formula of regionally competitive energy pricing.
The government’s decision of withdrawing zero-rating was already being lamented for soaking up market liquidity, and there is now an additional and very serious issue to contend with: the reversal of the regionally competitive electricity rates for export-oriented sectors.
On 1.1.2019, an all-inclusive tariff of 7.5cents/kWh was fixed for the exporting sectors, in order to ensure international competitiveness and enhance the export base. This created opportunities for the sector to run more effectively, increase its exports and even consider fresh investment in the technological upgradation and expansion of their production units. However, a recent letter issued by the Ministry of Energy on 13th January 2020 detailed instructions to Discos to charge all add-ons to the7.5 cents, thus increasing the overall electricity price from 7.5 to 13 cents/kWh, a 70% increase. Efforts to facilitate exports and enhance economic growth have been rendered null and void by this illogical government decision. Why change a winning formula?
As per the instructions of the Power Division, the bills issued from January 2019 will now be revised to include all add-ons and surcharges. The retrospective imposition of these charges is incomprehensible, as not only does this decision negate the Cabinet/ECC decision but will also impose a large financial cost on transactions already closed i.e. products made, sold and exported based on the 7.5 cents power cost. Furthermore, given the liquidity crunch caused by withdrawal of zero rating and the inoperative refund system, the market simply does not have the liquidity to pay unjustified retrospective bills.
Another aspect that needs to be considered is that according to the latest Nepra determination, Fuel Cost is Rs 3.47/kWh. The export sector tariff of 7.5 cents/kWh is equal to Rs 11.70/kWh. The difference between 11.7 and 3.47 of Rs 8.23 is sufficient to cover all legitimate fixed costs and distribution costs.
The oft repeated mantra by the Ministry of Energy that they are subsidizing the 7.5 cents tariff is debatable, as the cost of supply calculated below depicts. All charges over and above 7.5 cents/kWh are either in the form of inefficiencies, cost of legacies, idle capacity and/or cross subsidisation.
The legacy contracts in the energy sector and inefficiencies of the system have resulted in outrageous levels of tariffs. Some of these are:
1) 2002 Policy Based IPPs with tariffs that yield over 70% returns in dollar terms whereas the policy restricted returns to 15-16%.
2) Wind Power Tariffs of 14-15 cents/kWh as opposed to tariffs of approximately half this amount at the time when these legacy plants were installed which are currently below 4/5 cents/kWh.
3) Coal Power Generation Tariffs, at 9.5 cents/kWh whereas the going rate at the time was less than 6 cents/kWh. The two Port Qasim and Sahiwal power plants will cost the country in excess of $400 million each year in overpayments as a consequence.
4) Solar Power Tariffs of 18 cents/kWh which are currently under 5 cents/kWh.
5) Distribution Losses beyond NEPRA determined losses.
6) Failure of DISCOS to collect the amounts billed.
7) A highly skewed generation mix with excessive dependence on imported fuels.
Inefficiencies of this manner cannot be exported, and neither can the legacy contract costs. The need to reduce the energy price basket is increasingly urgent, as reduced energy rates have proved invaluable in other countries. This has also been proven in Pakistan’s case where regionally competitive energy tariffs have resulted in a marked increase in quantity exported.
As energy constitutes 35% of the conversion cost of products, a resulting increase of 24% is estimated in the operating cost of textile sector, rendering the country’s products uncompetitive in the international markets. Pakistan’s electricity tariffs will be much higher than regional competitors’, serving as a blow to the Prime Minister’s vision of export-led growth.
Regional electricity prices as highlighted in the table, illustrate that the industrial electricity tariffs of our competitors will be much lower than Pakistan’s making us uncompetitive in the increasing market competition. The objectives of economic growth, a bright future and becoming an export “powerhouse” cannot be achieved until power tariffs are revised to a competitive and stable level.
Source: Chinese Expert Group on Industrial Cooperation of CPEC Findings Report for the First Site Investigation on Textile Industry Diagnosis, and regulator websites.
Keeping in view the government’s vision to facilitate export-oriented sectors in order to expand manufacturing base, generate employment and earn foreign exchange, the textile sector that comprise around 60% of national exports was developing a roadmap to achieve $50 billion of textile exports by 2030 and increase Pakistan’s share in world textile trade form current 1.6% to 3% in next 5 years, with an additional investment of $30 billion in the textile sector in next 10 years.
Efforts are being made to develop a comprehensive textile policy for Pakistan which would ensure that Pakistan’s prime export unlocks its maximum potential. However, these efforts are dependent on the assumption that energy pricing would remain regionally competitive. This is critical to the successful outcome of any policy.
A focus on exports can serve as a sustainable solution to the present economic problems. An increase to $50 billion in textile exports by 2030will also create millions of jobs. The textile growth plan has also been presented to the Prime Minister, and has served as the basis for the textile policy currently under development. These targets are achievable given the viable economic environment, and considered to be useful in creating an array of employment opportunities and foreign investments. Irrational policy measures at this stage will result in a reduction of the already minimal contribution of exports in national GDP growth.
World growth trends show that growing at the same rate as the top 25% of emerging markets will require much higher growth in exports. Considering that exporters face the brunt of the pressure from high energy tariffs, Pakistan is now likely to lag behind its regional competitors, with an inevitable reduction in market share.
The impact of uncompetitive prices is likely to shatter market confidence of industrialists, big or small, hinder trade, decrease the ease of doing business, and put a halt to the recent boom in exports for which the competitive energy pricing was largely instrumental.
The order books of the textile sector currently are at full capacity whilst being based on the electricity costing of 7.5 cents/kWh. As a result, there is an urgent need for technological upgradation, modern equipment and investment in new plants to facilitate the additional orders. These developments were possible, and in fact anticipated, considering the benefits that would accrue for Pakistan’s exports and Balance of Payments. Textile sector modernization and facilitation can be perceived as the key to unprecedented economic growth for Pakistan.
Pakistan is in need of consistent and progressive policy measures, focusing on enhanced productivity that fosters sustainable export volumes. An export-growth led policy is imperative to real economic growth. But as long as these inconsistent policy measures continue to curtail growth, all our efforts are futile. The government should step back from the retrograde steps and holistically develop a plan to deliver on their promise of jobs, poverty eradication, and sustainable economic growth.
(The views expressed in this article are not necessarily those of the newspaper)
Copyright Business Recorder, 2020
https://www.brecorder.com/2020/01/23/564098/criticality-of-competitive-electricity-pricing/
NEWS COVERAGE PERIOD FROM JAN 06 TO JAN 12, 2020
PTI GOVT COMPLETES ONLY ONE POWER PROJECT IN SIX YEARS, KP ASSEMBLY TOLD
Bureau Report Updated January 07, 2020
PESHAWAR: Of the 10 power projects, the PTI government in Khyber Pakhtunkhwa has completed only one in the last six years during which 11 energy and power secretaries were changed, the provincial assembly was told on Monday.
During the question hour, the government informed the house that those projects would cost around Rs82 billion with the hydel and solar ones generating 307.8 megawatts and 876 kilowatts respectively.
The official reply said only one project of the solarisation of the CM’s Secretariat had been completed at the cost of Rs109 million producing 376KW electricity, while work on the solarisation of the Peshawar civil secretariat meant to generate 500KW electricity was in final stage.
Replying to the question of Jamiat Ulema-i-Islam-Fazl MPA Naeema Kishwar Khan, information minister Shaukat Ali Yousafzai said work on five other hydel power generation projects would be completed very soon.
MMA objects to frequent transfer of secys, CM aide says transfers, postings have nothing to do with governance
He, however, didn’t set any specific time-frame for the completion of those projects.
The lawmakers were informed that as many as 11 administrative secretariat of the energy and power department had been changed from March 2013 to Sept 2019. Interestingly, according to the official reply, six secretaries were posted and transferred in 2018-19.
Muttahida Majlis-i-Amal member Inayatullah Khan said the frequent posting and transfer of administrative secretaries badly affected performance of the department. He said none of the secretaries had completed his tenure.
Special assistant to the chief minister on local government Kamran Bangash said transfer and posting of secretaries and other officials was the government’s prerogative and it had nothing to do with governance.
He termed posting and transfer of officers a routine matter.
The treasury and opposition members exchanged arguments over decline in the province’s literacy rate.
MMA member Inayatullah Khan through his question drew the lawmakers’ attention towards declining literacy rate in the province.
He said the National Evaluation Report showed that the Net Enrollment Ratio (NER) was 69 per cent in KP in 2012-13 which reduced to 68 per cent in 2017-18.
The opposition lawmaker claimed that NER had witnessed a further decline in 2018-19. He said the official statistics showed that KP was now lagged behind Balochistan in literacy rate.
The lawmaker said the decline in NER was a serious matter as the government had been spending billions of rupees on education every year.
Minister Shaukat Ali Yousafzai said NER had dropped after former Fata’s merger with the province.
He said around 1.8 million children would be enrolled next year.
Speaker Mushtaq Ghani kept the question pending for a detailed discussion.
The assembly was informed that the Frontier Constabulary had occupied government girls high school in Suleimankhel and government girls primary school Darwazgai in Peshawar.
The official reply said that deputy commissioner Peshawar had requested Commandant FC for early vacation of the schools. The government introduced the Khyber Pakhtunkhwa Civil Administration (public, Service Delivery and Good Governance) Bill, 2020 in the assembly.
The bill is aimed at establishing and building an effective system of civil administration for good governance and improved service delivery and its enforcement mechanism in the province.
The bill says that soon after the commencement of this act, each deputy commissioner shall set up a Complaint Management Cell in the district, to enquire, coordinate and oversee the resolution of public complaints relating to service delivery.
Section 10(1) of the proposed act says that every head of public agency shall keep the DC informed on matters of public importance, related to that public agency and submit a periodic report on the working of his office to the DC at such time and in such form and manner as directed by the department.
The officer of district administration, in addition to other existing monitoring mechanism, may inspect and review the quality, standard and efficiency of public facilities in a district, and render advice to concerned public agency to take such measures as may be necessary for improving the quality, standard and efficiency of that public safety.
Published in Dawn, January 7th, 2020
DELAY IN PAK-IRAN GAS PIPELINE COMPLETION CHALLENGED IN PHC
Bureau Report pdated January 07, 2020
PESHAWAR: A lawyer on Monday moved Peshawar High Court to seek directive for the federal government to complete Pak-Iran gas pipelines project at the earliest to address the issue of natural gas loadshedding in the country.
Advocate Saifullah Muhib Kakakhel filed a petition also requesting the court to declare as illegal the creation of different slabs by the government on units’ consumption by natural gas consumers for purpose of monthly billing.
The petitioner requested the court that the rate of natural gas should be unified for each unit of natural gas consumed and there should not be any slabs in it.
Few days ago, the petitioner had filed a petition against continuous loadshedding of natural gas in Khyber Pakhtunkhwa specially Peshawar, requesting to declare its non-supply to the province as illegal and unconstitutional.
Lawyer also requests PHC to declare different slabs of gas consumption illegal
The petitioner stated KP was producing natural gas more than its requirement and under Article 158 of the Constitution the needs of the province had to be met first before supplying it to other provinces.
The respondents in the petition are: Ministry of Energy and Power Division through its secretary, KP government through its chief secretary and Sui Northern Gas Pipelines (SNGPL) through its chief executive.
In the present petition, the petitioner stated that Pakistan had entered into agreement with Government of Iran in 1995 for provision of natural gas facility to Pakistan and on part of Iran the work on pipeline till Pakistan’s border had already been completed.
He said that Iran had also offered Pakistan $500 million to help with construction of the pipelines, but due to the US pressure Pakistan could not complete the pipeline within the stipulated time. He states that Pakistan has violated the terms and condition of the agreement and may face heavy penalties in near future.
The petitioner states that the ruling PTI chairman had promised before the general elections that he would not come under any foreign pressure and would go to any extent for making Pakistan prosperous but now he appears to be helpless in this regard.
He states that recently the prime minister also did not attend an important summit in Malaysia due to pressure of Saudi Arabia, which brought bad name to the country.
He contends that there is dire need of gas and oil in the country that can be imported easily from Iran but the government has not been availing that option.
About the mechanism of monthly gas billing on basis of different slabs of consumption, the petitioner states that the criterion devised by the government is not recognised throughout the world.
The petitioner states that the government has created slabs in which a domestic consumer is paying different rates of unit and if he exceeds the limit of units in one slab which he consumed, the government charges him at higher rate.
He contends that in normal business when a consumer purchases something in bulk, he buys it at lesser rate than the one, who purchases a single item. Contrary to that normal practice, he says, the government has fixed excessive rates for consumers, who consume more natural gas.
Published in Dawn, January 7th, 2020
https://www.dawn.com/news/1526739/delay-in-pak-iran-gas-pipeline-completion-challenged-in-phc
GAS SHORTFALL SET TO ALMOST DOUBLE NEXT YEAR
Khaleeq Kiani Updated January 09, 2020
ISLAMABAD: Amid an ongoing controversy over gas shortages, the federal government on Wednesday said the shortfall would almost double next year unless infrastructure constraints were phased out through cooperation of the stakeholders concerned, particularly Sindh.
At a meeting of the Cabinet Committee on Energy (CCoE) presided over by Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh, the ministry of energy reported that gas shortfall was increasing due to about 7 per cent decline in domestic gas production and 5pc growth in consumption when compared with last year, effectively creating a 12pc gap between the demand and supply.
This was despite the ongoing subdued economic growth rate. “Due to lack of gas exploration during the last 10 years, production of gas had declined by 7pc while demand had risen by 5pc annually which had resulted in a heavy gas shortfall which stood at nearly 270mmcfd (million cubic feet per day) in December 2019,” an official statement said. This shortfall was estimated to reach 477mmcfd in 2020-21.
To address the shortfall, the government has decided to build additional terminals and five new private terminals had been awarded in November 2019, while the process for a dedicated pipeline of more than 1,200mmcfd required to carry imported liquefied natural gas (LNG) from these terminals to the northern parts of the country would also begin soon.
Cabinet panel informed that due to lack of exploration during the past 10 years, gas production has declined by 7pc while demand has risen by 5pc
Sources said Dr Abdul Hafeez Shaikh asked the petroleum and power divisions to come up with a detailed plan to overcome the shortage of energy and improve gas supplies throughout the year. He also asked questions about the price differential between the gas and electricity and desired fresh ideas as to how to balance the surplus in electricity and deficit in natural gas.
One of the major reasons for this upsurge is the consumption of gas in winter season, almost double than the summer, by the domestic sector which prefers to use heavily-subsidised gas as compared to other energy sources, the meeting was told.
The meeting was explained that average electricity and gas price currently stood at about 60:40 and greater number of consumers was relying on gas for heating and cooking in winters when compared to electricity. Even in gas, about 36pc gas consumers were being provided gas at Rs121 per unit against an average price of Rs780 per unit for domestic gas and almost Rs1,600 per unit for imported LNG.
The committee was given a detailed briefing on the current situation of demand and supply of gas/Re-gasified LNG, natural gas allocation and management, average gas supplies, winter load management, indigenous gas production, supplies and consumption in different regions and LNG requirement by the Sui Northern Gas Pipelines Ltd (SNGPL)/ Sui Southern Gas Company (SSGC).
The meeting was also informed that residential consumers of Karachi were anticipated to suffer the most next year due to gas shortage as the consumption had increased by almost 20pc this year.
The CCoE was further told that work to add 70mmcfd to the SSGC system and take LNG supplies for the SNGPL up to 1,300mmcfd had already started but its implementation was hampered by grant of Right of Ways from the Sindh government which had granted only one so far and two more were still awaited since last summer. With these measures, nearly 70mmcfd gas is likely to be added to the SSGC by the end of this month.
The committee noted that there was a need to work on contingency plans for 2020-21 to overcome the gas shortage and improve its supplies by using energy produced through gas and electricity as a whole.
The meeting also asked the ministry of energy to brief it in the next meeting on the current situation in the power sector so that the issues and problems in both the gas and power sectors could be properly analysed.
Published in Dawn, January 9th, 2020
https://www.dawn.com/news/1527150/gas-shortfall-set-to-almost-double-next-year
SINDH GOVT WILL NEVER PURCHASE IMPORTED GAS, MURAD TELLS PA
Hasan Mansoor Updated January 09, 2020
KARACHI: Chief Minister Syed Murad Ali Shah on Wednesday told the Sindh Assembly that his government would never purchase imported gas and demanded that the constitutional right of the people on natural gas being produced in their province should not be violated.
“I had made Sindh’s stance in clear terms in the CCI [Council of Common Interests] meeting and my plea had been accepted by the prime minister,” said the chief minister while furnishing a policy statement during the Sindh Assembly’s session presided over by Speaker Agha Siraj Durrani.
He was referring to a recent statement given to the media by Federal Energy Minister Omar Ayub Khan and Special Assistant to PM on Petroleum Nadeem Baber in which they claimed that the Sindh government had agreed on the weightage average cost of gas (WACOG).
Terming the statement totally baseless, Mr Shah said: “I had taken up this matter in the CCI meeting and had requested the participants to accept the constitutional right of the people of Sindh on the gas being produced from our province. The prime minister had accepted my plea under Article 158 of the Constitution.”
In the absence of all opposition parties, the house passes a bill empowering the CM to make appointment of ombudsman
He added the CCI meeting was held on Dec 23 and on Dec 25, he wrote a letter to the prime minister and apprised him of the issue vis-à-vis implementation of Article 158.
He said that the prime minister replied to him to wait for the minutes of the CCI meeting and then if he [the CM] had any objection, the PM would remove them accordingly.
“The minutes of the CCI meeting should have been issued within a week but they are still being awaited,” the CM said.
The chief minister said Sindh was producing 25,000 to 26,000 million cubic feet per day (mmcfd) gas but in return it was hardly receiving 800 to 900 mmcfd.
Mr Shah said the local gas price was Rs820/unit while the price of LNG was Rs1,690 per unit.
He said that the federal government was not giving Sindh its own gas and forcing the provincial government to purchase expensive imported gas.
“Why should we opt for the imported gas when we are producing 70 per cent of its nationwide production,” he asked. “Our stance is very clear ie give our people their constitutional right on the natural gas.”
Referring to the media talk of Mr Khan and Mr Babar, the two federal cabinet members, the chief minister condemned their statement that Sindh was ready to purchase LNG and said: “We will never accept LNG on average price, [we] want our natural gas being produced from Sindh instead.”
Earlier, opposition parties staged a walkout when the chair disallowed their demand for a detailed discussion before the passage of the Establishment of the Office of the Ombudsman for the Province of Sindh (Amendment) Bill, 2020.
A number of lawmakers from either side of the aisle engaged in exchange of heated arguments and at times their colleagues had to intervene to stop a quarrel from getting worse.
The opposition members wanted to speak in detail since they considered the amendment bill was of greater importance that transferred the governor’s power to appoint the provincial ombudsman to the chief minister.
Parliamentary Affairs Minister Mukesh Kumar Chawla, however, started a clause-by-clause reading of the bill despite loud protests by the opposition that later led to their walkout.
It was for the first time that all opposition parties jointly walked out of the house, as two members of the Tehreek-i-Labbaik Pakistan and the sole member of the Muttahida Majlis-i-Amal joined major opposition parties — the Pakistan Tehreek-i-Insaf, Muttahida Qaumi Movement-Pakistan and Grand Democratic Alliance — in the protest.
The bill empowers the Sindh chief minister to appoint the ombudsman by saying the office of the governor was constitutional and therefore his/her functions should remain constitutional.
It referred to cases decided by the apex court in 2011 and 2012 in which the court observed “exercising the executive authority by the governor is in violation of the express constitutional intent and mandate”.
“The role of ombudsman for the Province of Sindh Act, 1991, is a statutory one created by the Act of the Provincial Assembly,” said the bill. “To make the role of provincial ombudsman more effective, it will be expedient to empower the chief minister and to make provision for the purpose.”
The bill concluded the provisions of the existing law did not provide qualifications for appointment as ombudsman.
“Therefore, in order to provide qualifications as well as term of appointment of ombudsman, it is expedient to amend the law,” it concluded in the statement of objects and reasons.
The bill was passed unanimously in the absence of opposition lawmakers.
The Shaheed Allah Buksh Soomro University of Art, Design and Heritage Jamshoro Bill, 2020 was referred to the standing committee concerned to consider and submit its report to the house in two weeks.
The house also passed the Provincial Motor Vehicles (Amendment) Bill, 2020 with a majority vote.
The new law changes certain provisions of the Provincial Motor Vehicles Ordinance, 1965 in which term “certificate of registration” has been defined.
“As now the provincial government intends to issue the Security Featured Motor Vehicle Registration (MVR) Smart Card, the existing definition of certificate of registration needs to be modified and to include therein the Security Featured MVR Smart Card,” according to reasons elaborated by the law.
The house deferred a resolution moved by PPP’s Qasim Soomro in which the provincial government was asked to correct the spelling of 5,000-year-old city of Moenjodaro to Muhenjodaro.
Published in Dawn, January 9th, 2020
https://www.dawn.com/news/1527093/sindh-govt-will-never-purchase-imported-gas-murad-tells-pa
GOVERNMENT OKAYS FORMULA FOR EQUAL DISTRIBUTION OF LPG ALLOCATION
By RECORDER REPORT on January 9, 2020
The federal government has approved the equal distribution formula of LPG allocation in a bid to provide relief in commercial and domestic LPG cylinder prices.
Under the new arrangements, all LPG marketing companies will receive equal volume of LPG gas from public and private sector LPG producing companies at approved base price of the Oil and Gas Regulatory Authority (OGRA).
Pakistan Petroleum Limited (PPL) has been observing the new guidelines given by the federal government; however, the Oil and Gas Development Company (OGDCL) has yet to implement the new guideline.
Chairman LPG Industries Association of Pakistan, Irfan Khokhar, while addressing a press conference on Wednesday, maintained that Special Assistance to Prime Minister Nadeem Babar and Federal Minister of Energy Omer Ayub in a meeting gave assurance of equal distribution of LPG volume to all LPG marketing companies to provide level playing field to all businesspersons associated this particular industry.
He said that association will ensure availability of LPG to consumer at OGRA approved base price on monthly basis. Irfan Khokhar was of the view that with elimination of LPG industry cartel, more than 200 LPG gas marketing companies will be able to provide cheaper and affordable fuel to consumer, particularly in the freezing winter.
The initiative going to be taken by the federal government will help control the gas prices, particularly for the consumers of mountainous ranges who use this gas as fuel.
The government has assured LPG Industries Association of Pakistan to end signature bonus in award of LPG supply to provide level playing field to the all industry. Finally, the cartel of LPG industry bucketing unjustified revenues going to end as the federal government approved the equal distribution of LPG allocation which will ultimately provide relief in LPG gas price to public, he explained.
He said that Pakistan Tehreek-e-Insaf finally decided to ensure equal distribution formula to provide level playing field to all LPG marketing companies.
Following the financial and business model of PPL, he said the federal government seems heartened to provide level playing field to LPG businesspersons.
Irfan Khokhar along with Vice Chairman of LPG Industries Association Pakistan Shawanaz Saeed and Vice President FPCCI Qaisar Khan held the press conference at FPCCI.
Copyright Business Recorder, 2020
NEWS COVERAGE PERIOD FROM DEC 30 JAN 05,2020
PETROL PRICE LIKELY TO RISE RS2.61 PER LITRE
By Zafar Bhutta Published: December 31, 2019
ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) has recommended in a summary sent to the government that prices of petroleum products should be increased by up to 3.2% for January 2020.
It recommended the highest increase of Rs3.10 per litre or 3.2% in the price of kerosene oil – a fuel used for cooking purposes – followed by a hike of Rs2.61 per litre or 2.3% in the price of petrol, which is a transportation fuel that has an impact on the common man.
According to an official, Ogra has sent the summary to the Ministry of Energy (Petroleum Division), which will forward it to the finance ministry for approval. The government will take decision on the summary on Tuesday.
The regulator suggested an increase of Rs2.25 per litre or 1.8% in the price of high-speed diesel, which is mainly used in transport and agriculture sectors. Any revision in the diesel price has a direct impact on the life of common man as it results in a rise in inflation.
Ogra also proposed an increase of Rs2.08 per litre or 2.5% in the price of light diesel oil (LDO) for the month of January.
If the government accepts recommendations of the regulator, the petrol price will go up from the existing Rs113.99 to Rs116.6 per litre and diesel price will rise from the current Rs125.01 to Rs127.26 per litre.
The price of LDO, which is mainly used in industries, will jump to Rs84.51 per litre from Rs82.43 whereas kerosene oil price will rise from the current Rs96.35 to Rs99.45 per litre.
Kerosene is used for cooking purposes, especially in remote areas where liquefied petroleum gas (LPG) and pipeline gas are not available.
The government is currently charging 17% general sales tax (GST) on all petroleum products. Apart from that, petroleum levy is being collected on these products from the consumers.
The government is charging a petroleum levy of Rs18 per litre on diesel, Rs15 per litre on petrol, Rs6 per litre on kerosene and Rs3 per litre on LDO.
In the tenure of previous Pakistan Muslim League-Nawaz (PML-N) government, the petroleum levy was charged in the range of Rs3 to Rs10 a litre but GST was higher than the current rate.
Since GST collection is transferred to provinces, keeping in view its high revenue requirement, the federal government has reduced the GST rate while increasing the petroleum levy to collect and transfer more revenue to the national exchequer.
In the current government’s tenure of around one and a half year, the prices have touched high levels due to depreciation of the rupee against the US dollar.
Pakistan is a net importer of petroleum products and almost 85% of the need is imported, therefore, the depreciation of the rupee against the dollar has played a key role in pushing up oil prices, resulting in higher inflation.
Prices of petroleum products had dropped in December when the government slashed them by up to 3.4%.
Now, the regulator has recommended an increase in prices of all petroleum products for January 2020 and the finance ministry may insist on passing the full impact on to consumers in order to avoid revenue loss. However, final decision will be taken in consultation with Prime Minister Imran Khan.
https://tribune.com.pk/story/2127535/2-petrol-price-likely-rise-rs2-61-per-litre/
NEPRA INCREASES K-ELECTRIC’S TARIFF BY RS4.8 PER UNIT
By Our Correspondent Published: January 1, 2020
ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has allowed K-Electric a hefty increase of around Rs4.8 per unit in power tariff on account of quarterly tariff adjustment as consumers and the government will be paying extra Rs106 billion.
In a statement issued on Tuesday, Nepra said the authority, based on the information, data and record provided by K-Electric, approved the quarterly adjustment claims of the power utility for the period Jul-Sept 2016 to Jan-Mar 2019. With the tariff revision, K-Electric will receive Rs106 billion from the consumers and the government, in the form of subsidy, for a total 11 quarterly adjustments.
The revised tariff was worked out at Rs17.69 per kilowatt-hour (kWh) and its impact would be felt in electricity bills for coming months. “The electricity price has been increased from Rs12.81 to Rs17.69 per unit, an increase of around Rs4.8 per unit,” a Nepra official said.
A major reason for the higher power tariff was the consumption of re-gasified liquefied natural gas (RLNG) by K-Electric in power production, which left an additional impact of Rs24 billion.
Other reason was the increase in gas prices from the reference price of Rs400 per million British thermal units (mmbtu) to Rs629 per unit.
Moreover, expensive furnace oil was also a factor as its rate went up from the reference price of Rs27,000 to around Rs70,000 per ton. Increase in operation and maintenance costs as well as capacity cost of independent power producers (IPPs) owing to indexation and exchange rate variation also led to the hike in electricity rates.
It is important to highlight that the government maintains a uniform tariff across the country, thus, the increase for consumers, if any, would be to the extent of maintaining uniformity across the country, and most of the increase would be settled at the government level, Nepra said in the statement.
Nepra dismissed as incorrect the notion that K-Electric consumers would pay an additional Rs4.87 per unit. “Tariff is uniform in entire Pakistan including for K-Electric consumers; Nepra gives different tariffs for distribution companies but the government makes them uniform across the country including for K-Electric consumers,” it clarified.
To make the tariff uniform, according to Nepra, the government gives subsidies to different categories of domestic, commercial, industrial and agricultural consumers. “Subsidies are provided across the country to all consumers including K-Electric consumers.”
Nepra pointed out that it took decision on a reconsideration request in the matter of K-Electric’s multi-year tariff (MYT) for seven years covering the period 2016-17 to 2022-23 on July 5, 2018. It approved average sale price of Rs12.8172 per kWh.
However, K-Electric challenged the decision in the Sindh High Court, which granted a stay order regarding notification for the determined tariff. Later, K-Electric withdrew its petition and the federal government notified the MYT on May 22, 2019.
According to the mechanism provided in the MYT determination, Nepra will review and revise the approved tariff on monthly, quarterly and annual basis in accordance with the prescribed adjustment mechanism. The impact of monthly variation in K-Electric’s fuel cost component as well as power purchase price to the extent of targeted transmission and distribution losses has to be adjusted on a quarterly basis.
In addition to that, the monthly variation in the variable operation and maintenance and fixed costs of the power producer, as allowed by the authority, is required to be adjusted on a quarterly basis. The hearing was held on August 21, 2019 in Karachi and Nepra Tower, Islamabad through video link.
Commenting on the development, a K-Electric spokesperson dismissed the claim that the tariff increase would be borne by the consumers.
He clarified that the government “maintains a uniform tariff across the whole country, thus, the increase for the consumers, if any, would be to the extent of maintaining uniformity across the country and would be notified by the Ministry of Energy”.
The spokesperson added that the tariff adjustments were mainly on account of increased furnace oil prices, gas prices and swapping of local gas with RLNG by Sui Southern Gas Company and were in line with the approved tariff adjustment process.
Published in The Express Tribune, January 1st, 2020.
https://tribune.com.pk/story/2128207/2-nepra-increases-k-electrics-tariff-rs4-8-per-unit/
LNG SUPPLIES INCREASE
The Newspaper’s Staff Reporter Updated January 03, 2020
ISLAMABAD: Despite system constraints, the Liquefied Natural Gas (LNG) supplies into the system increased by almost 14 per cent during calendar 2019 over the preceding year and reduced gas shortfall by 20-25pc.
The two LNG terminals operating in the country reported to have pumped more than 393.6 billion cubic feet (BCF) of gas into the national gas distribution network in 2019 compared to 345.6 BCF of 2018, showing an increase of 14pc, a Petroleum Division official said.
He said the lower economic growth rate coupled with higher prices restricted the key consumer groups from taking full advantage of the available terminal capacity. In 2019 the country imported 7.57 million tonnes of LNG through these terminals which handled 123 LNG cargo ships from Qatar, Australia and other European countries.
In 2019, the country’s total gas demand stood at approximately 4,800 million cubic feet per day (mmcfd), in which more than 20pc of gas was supplied through Regasified Liquefied Natural Gas (RLNG) by the two terminals of Engro Elengy and Pakistan GasPort Consortium (PGPC).
The LNG cargoes have also witnessed an increase of 14pc in 2019 compared to 108 cargoes in 2018.
At present, several parts of Pakistan are facing low gas pressure or zero supply situation with a drop in the temperatures across the country. Different sectors of economy such as power plants, CNG stations, fertiliser plants and textile mills are facing huge production losses due to the gas shortage and the country could lose valuable foreign exchange as export orders may not be completed.
The current gas crisis could have been averted if more LNG cargoes had been imported in a timely manner as annual LNG import capacity of both the terminals was approximately 9.4 million tonnes. All LNG imported was regasified and pumped into the SSGC and SNGPL gas network to meet needs of power and industrial sector which offtakes 62pc and 25pc of regasified LNG, respectively.
The official said the authorities were first unprepared to prevail upon the power sector to utilise their committed demand during summers leading to oversupply crisis in the gas network and then failed to estimate rising gas demand in the country and line up additional imports. In both cases, the gas network and its consumers suffered.
Currently, natural gas contributes around 43pc to the country’s energy mix. However, it has been facing gas shortage since 2015 as its indigenous production has not been able to keep pace with the growing demand. For meeting this shortage, the country has been importing LNG which is converted into natural gas by the two LNG terminals.
Talking about the recent domestic prices for different fuels in 2019, the official explained that the average price stood at $11.1/mmBtu for RLNG, $12.6/mmBtu for furnace oil, $19.8/mmBtu for Liquid Petroleum Gas, $20.2/mmBtu for High Speed Diesel, and $20.4//mmBtu for mogas (petrol).
LNG has proved to be a cheaper solution and saved the country more than $3-4 billion in last four years. However, the situation may be changing now as furnace oil (FO) prices are showing declining trend as refineries in the international market were phasing out furnace oil production.
The FO prices are already dropped by almost 25pc in the recent months. The government needs to plan in advance and facilitate obsolete local refineries to upgrade.
He said the successful operations of these two terminals and the development of LNG import infrastructure had paved the way for more LNG terminals in the country. Pakistan needs at least three or four more LNG terminals to address its ongoing energy shortage.
Published in Dawn, January 3rd, 2020
https://www.dawn.com/news/1526002/lng-supplies-increase
THARIS TO START GETTING ROYALTY ON COAL RESERVES IN JUNE, SAYS CM
Hanif Samoon January 05, 2020
MITHI: Sindh Chief Minister Syed Murad Ali Shah has announced that Tharis would start getting their due royalty on coal reserves from June this year.
He made the announcement while addressing the ceremony held in Marvi Cricket Ground here on Saturday to inaugurate the day-long ‘Thar Cultural Festival 2020’, which has been organised jointly by the provincial government and other stakeholders including the Engro Energy Limited (EEL), Sindh Engro Coal Mining Company (SECMC), Thar Foundation (TF) and Shanghai Electric Company (SEC) with support of the Pakistan Rangers Sindh. The theme of the event is ‘Salam Pakistan’.
The CM said that the Sindh government was fully committed to provide basic amenities to all those who were being displaced from the project area of Thar coalfields near Islamkot. “Tharis will start getting their due royalty on the huge reserves of ‘black gold’ from June this year,” he said.
He pointed out that the SEC and SECMC were going to produce around 4,000 megawatts within the stipulated time. He expressed his satisfaction over progress of the work saying that the work on both mining and installation of power plants was going on in full swing.
Thar’s people told not to sell away lands, rather get model villages built by govt
Mr Shah said that people of the entire Islamkot taluka would be provided up to 200 units of electricity free of cost since the Sindh government had undertaken payment of their bills as the Pakistan Peoples Party (PPP) chairman Bilawal Bhutto-Zardari had announced while inaugurating two power plants in March last year.
He noted that the mining firms and power generation companies working here had already achieved their financial close by arranging the required funds for coal extraction and power production.
He advised Tharis living in the Thar coalfields’ areas not to sell away their lands coming under mining. “Rather, they should ask Sindh government to get model villages like Senhari Dars built on their lands,” he said.
Appreciating Tharis’ culture and peace-loving attitude, CM Shah said: “Thar is not only rich in minerals, but is also matchless in its culture, natural beauty, hospitality and interfaith harmony … Muslims and Hindus living in this desert region maintain exemplary harmony for centuries,” he said.
Heralding prosperity in the area in the years to come, the chief minister said that the mining companies here were providing jobs to over 70 per cent population of Thar and the jobs included those of officers’ grade.
He also said that acceding to Tharis’ demand, the Sindh government had already set up an NED University campus here where not only local students but people from other remote areas of the province were getting technical education. Even students from Gilgit and Baltistan were seeking admission in this campus, he added.
The campus, he disclosed, would be shifted from Mithi to a 350-acre site along the Islamkot-Mithi road. Before completing its tenure, this government would establish a grand university at the site, he said.
CM Shah also praised Sindh Rangers director general Omer Ahmed Bukhari for making great efforts and extending his full cooperation in organising the festival, which he described as a “grand cultural event in Mithi”.
He announced that Sindh Minister for Culture and Tourism Syed Sardar Shah was going to organise another such cultural festival in Nagarparkar next month.
Thousands of people thronged the Marvi cricket ground on Saturday morning to attend the festival where dozens of stalls showcasing Thari and Sindhi culture were set up.
Several organisations and individuals had arranged folk dance and music programmes to entertain visitors. Schoolchildren took special interest in camel dance, horse race, tent pegging, dog show, military and Sindh Rangers band, malakhra bouts, martial arts show and other such features.
The chief minister later distributed cash awards, shields and certificates among winners of the competitions.
Published in Dawn, January 5th, 2020