NEWS COVERAGE PERIOD FROM DECEMBER 28TH TO JANUARY 3RD2015
SURVEY FOR COAL PLANTS AMID ‘VOICES OF DISCONTENT’
Dawn, December 28th, 2015
MUZAFFARGARH: A survey for installation of two 660MW coal-fired plants in Mahmoodkot areas of Kot Addu tehsil will start from Tuesday (tomorrow).
This was stated by District Coordination Officer Hafiz Shaukat Ali here on Sunday while talking to people from mauzas of Verar Sipra, Rao Bela Sharqi, Gujrat and Budh.
He said Kot Addu Power Company officials would carry out the study. He said UK international teams would conduct environmental tests and “if there are some hazards the project will be shifted to other places.”
Earlier, people and politicians had opposed the project.
The DCO said he had sent all demands of locals, including attractive rates of land, to respective authorities for acquisition.
He said payment would be made to the people prior to the construction of the plant.
Some people seemingly agreed to DCO’s proposals. Locals Malik Shoaib Budh and Malik Niaz said a colony should be built for the landless people.
Sources said in October when survey teams visited the area a number of people attacked them and the district administration registered a case against 150 ‘assailants.’
The DCO said the FIR was sealed on Wednesday. He asked the people to form a committee of locals for making suggestions.
During the course of the announcement of the project, Chinese teams had come to the area for a week but the DCO did not give permission to them to visit the site.
Kapco and CMEC-Pak-Gen are planning plants on the fertile and waterlogged farms of these areas. Besides displacement of hundreds of people, the installation of plants may create serious environmental hazardous for the entire district.
A Kapco official said all basic rights such as job, hospital, school, road and park, would be given to locals. MNA Jamshed Dasti is against the installations of coal plants in the midst of villages. “Kapco and CMEC-Pak-Gen are located in thickly populated areas,” he said.
Rana Mahboob Akhtar, a retired civil servant, has raised some technical points.
He said bagasse and coal-fired plant in Sinawan (120MW), a nuclear plant in Kot Addu (1,000MW), coal unit by Kapco (660MW) and coal plant by CMEC-Pak-Gen (660MW) would make the total proposed capacity at 2,540MW.
“Once existing and under-construction plants are operational, the total generation will be 6,252MW. Concentrating more than 50 per cent of Pakistan’s thermal generation capacity in the radius of 28 kilometres is a strategic blunder,” he said.
Other than power plants, Mid Country Oil Refinery of Parco, and JIMCO oil installations are also located in Mahmoodkot furthering environmental issues, he said.
“On the other hand, DHQ hospital data shows a ‘significant’ rise in cancer, skin diseases, asthma, liver and eye ailments in the area,” Akhtar said.
Agriculturist Malik Khair Muhammad Budh had recently held meeting of locals at Aliabad where people discussed the issue with the DCO.
Later talking to Dawn, union council chairman-elect Akhtar Noon said: “Coal-fired plants are being dismantled all over the world. I will oppose the project.”
ELECTRICITY TARIFF AND SUBSIDY CONCERNS: ‘INDUSTRIES TO BE FACILITATED’ AS OIL PRICES COME DOWN
The Express Tribune, December 30th, 2015
ISLAMABAD: The decision to decrease the power tariff by an average of Rs3 per unit for the industrial sector has come at the cost of domestic users who would be unable to reap benefits of the reduction in global oil prices in the upcoming tariff determination.
The government has preferred the industrial sector, while sacrificing domestic consumers, to keep subsidies within the limit prescribed by the International Monetary Fund (IMF), said officials in the Ministry of Finance and Ministry of Water and Power.
The government has already consumed more than 60% of its annual electricity subsidy budget in the first half of the ongoing fiscal year, they added, raising doubts over its ability to finance the concession.
From July through December, the Finance Ministry released roughly Rs72 billion for power subsidies, which is 61% of the annual budgetary allocation of Rs118 billion. The subsidy payments include Rs18 billion arrears of the previous year, they added.
The government’s decision to provide relief to the industrial sector at the expense of other sectors has highlighted the issue of providing relief to powerful lobbies. Earlier this month, it imposed a Rs40 billion mini-budget and subsequently doled out Rs6.5 billion in sugar export subsidy to the sugar barons.
On Monday, Prime Minister Muhammad Nawaz Sharif announced to cut Rs3 per unit in electricity tariff for industrial users, accepting a five-month old demand of the All Pakistan Textile Mills Association (APTMA). The industry average effective tariff will be around Rs11 per unit – a reduction of 21.4%.
The smart meter domestic electricity users are paying up to Rs15 per unit – 26.6% more than the price industrialists will now pay.
The reduction in industrial tariff is part of the package that the Aptma demanded for enhancing exports which have been constantly declining. The association had claimed that due to increase in electricity tariffs during the last two and a half years it has become uncompetitive against regional peers. The Aptma demanded to cut its tariff by Rs3 per unit, which the government accepted after resisting for five months.
However, the government has not addressed another reason behind the increased cost of doing business – unprecedented indirect taxation. In last two and half years, it has imposed Rs940 billion in new taxes.
The relief in electricity tariffs will be given by passing on the maximum benefit of reduced oil prices in the global market to the industrial sector, said Younus Dagha, Secretary Water and Power while talking to The Express Tribune.
He said the decision did not carry any financial implication on the budget.
“The government would also not pass on the impact of relief to industrial sector to all the other consumers”, said the Secretary. “The industry will be facilitated by being given priority over domestic and agriculture sectors when it comes to passing on the benefits of reduced oil prices.
“The domestic and agriculture sector would continue to receive electricity at subsidised rates.”
He said the National Electricity Power Regulatory Authority (NEPRA) was in process of finalising the tariff determination for all power distribution companies. While determining fresh tariffs, the industrial sector would be entitled to maximum relief on account of reduced oil prices, said the secretary.
However, officials said the government’s decision to give the industrial sector priority would leave virtually nothing for the domestic electricity consumers. Despite more than 60% reduction in furnace oil and other electricity inputs, domestic consumers are still paying higher electricity bills.
In order to meet the IMF’s condition to restrict electricity subsidies to 0.4% of the Gross Domestic Product or roughly Rs118 billion, the government has imposed various electricity surcharges over and above the base tariff rates. This has denied them the benefit of reduced prices to domestic and commercial consumers.
However, despite denying benefits of reduced prices to the domestic consumers, the government has failed to address the issue of circular debt. Evan after clearing Rs480 billion circular debt in June 2013, the total debt has again increased to Rs661 billion including stocks parked in a government holding company.
GAS EXPLORATION: MARI PETROLEUM TO RECEIVE HIGHER PRICE FOR NEW DISCOVERIES
The Express Tribune, December 30th, 2015.
ISLAMABAD: The federal government and provinces have agreed to offer a higher price under the 2012 petroleum policy to hydrocarbon exploration in new fields of Mari Petroleum Company Limited.
“A committee constituted under Clause V of Petroleum Policy 2012 has given approval for the new fields and there is no need to seek green signal from the Economic Coordination Committee (ECC),” a senior government official said while talking to The Express Tribune.
The federal government had constituted the committee comprising deputy chairman of the Planning Commission, finance secretary and secretaries of energy ministries of the four provinces.
The Ministry of Petroleum and Natural Resources, in its summary, had also sought the ECC’s approval for covering new discoveries of Mari Petroleum under the 2012 petroleum policy to enable the company to get an attractive price.
Earlier, Mari had been working under the ‘cost plus return on equity’ formula, but the government scrapped it later in order to increase the wellhead gas price from $0.37 per million British thermal units (mmbtu) to $2.17 over the next five years.
According to a deal with other exploration companies, the government has offered a price of $4.1 per mmbtu for blocks awarded under the 2007 petroleum policy, $4.38 for blocks covered by the 2009 policy and $5.78 for contracts reached under the 2012 policy if crude oil price is $100 per barrel.
These prices are for the exploration blocks that have been shifted from the old to the new policies.
“The same package will now apply to Mari’s new discoveries,” the official said.
So far, the government has received 200 applications from exploration and production companies for an increase in wellhead prices for new discoveries in an effort to step up exploration activity, officials say.
To process the applications in a transparent manner, a model supplemental agreement has been designed in consultation with the finance and law divisions. So far, 94 applications have been processed while the remaining were being examined.
Gas prices will rise following the increase in wellhead prices for exploration companies. There are two ways to absorb the price rise. First, provinces could take a hit on their gas development surcharge collection and second, gas consumers could be forced to pay higher bills, a government official said.
The ECC, while approving the replacement of cost-plus formula with a new crude oil-indexed gas price formula in November 2014, provided Mari Petroleum a level playing field with all other exploration companies.
After the approval, a new gas pricing agreement was struck between the company and the government on July 29, 2015 under which the former was allowed the incentives given to existing leases under various policies including the 2012 petroleum policy.
The incentives given to existing leases under the tight, marginal, low btu, shale gas, the 2012 petroleum policy and any other policies issued from time to time will be equally applicable to production of such gas from the Mari field. Following this, the company exercised the option of shifting to the 2012 policy.
In Mari Petroleum, the government has a 20% stake, Oil and Gas Development Company has 20% shareholding, Fauji Foundation holds 40% shares and the general public has 20% shares.
SAHIWAL COAL-FIRED POWER PLANT: BUILDERS EXPECT POWER GENERATION BEFORE DEADLINE
Published in Dawn, January 2nd, 2016
FAISAL ALI GHUMMAN
LAHORE: Chinese companies building the 1,320MW Sahiwal coal-fired power plant, the first-ever such a project in Pakistan, expect power generation next year which will be the ‘cheapest’ in terms of tariff and environment friendly.
Though the consortium of two Chinese companies which started work on June 9, 2015, is raising basic infrastructure at over a thousand acre land reserved for the plant with an official target of completing it by Dec 25, 2017, officials say the provincial chief executive wants it to be completed much earlier.
Around 3,000 workers, including 1,000 Chinese, are working at the site which is guarded by police personnel.
“We are going to offer 8.1 cents per electricity unit to the Pakistani government under an agreement with the National Electric Power Regulatory Authority and this is the cheapest rate in Pakistan”, says Song Taiji, the Chief Executive Officer of Humeng Shandong Ruyi (Pakistan) Energy (Pvt) Limited.
He told Lahore-based reporters at the site on Friday that the company would produce and sell the electricity for 30 years on a BOT basis before handing over the plant to the Punjab government. He said average life of the plant was 30 years approximately.
Song said the upfront tariff was agreed after Nepra involved international experts and bidding process. He said the plant was being constructed with an estimated cost of $1.8 billion jointly sponsored by two Chinese companies.
He said the coal-fired power generation was much popular in China as more than 80 per cent electricity production came from coal there.
Song said the reason behind importing coal from Indonesia and South Africa was the non-availability of standard coal in Pakistan. “Though Pakistan has huge reserves of indigenous coal but we cannot use them at the moment because of absence of excavation technology and quality material”, he added.
He said the coal would be transported from Port Qasim, Karachi, to the site via rail while canal water with the help of a reservoir would be used in the power generation process. To a question, Song claimed the solar power was costlier than coal’s.
He said the super critical technology would be used in the plant which required high temperature for the perimeter of steam and less coal consumption.
Regarding environmental concerns, he said the height of the Chimney had been set at 180 meters for safe emission.
He said two per cent component of sulphur dioxide in the imported coal would be brought down to zero level to avoid environmental hazards. “We will have proper sulphurization process in the plant for less carbon emission.”
Song further said plants having capacity of more than 300MW fell in the category of super critical technology, adding in Pakistan the coal generation share was even less than one per cent compared to developed countries where share of electricity from coal was about 50 per cent, which meant more environmental pollution.
Song, whose company is the largest in China to generate coal-fired electricity, said he had security concerns before coming to Pakistan last year but now he was comfortable.
“We now feel secure in Punjab and will continue our work without any fear. I rate Pakistan as my second hometown”, Song told a questioner.
Asked why coal-fired technology was being introduced in Punjab when it was becoming redundant in other countries of the world, he said coal-fired power was not an old-fashioned rather it was very advance technology being used by China and other countries.
“This plant is not sub-critical rather super critical which burns less coal and gives less emission as for as environmental protection is concerned.”
Nadeem Aslam Chauhdry, who is energy coordinator for the Punjab government, told reporters that the chief minister had asked the company to complete the plant much earlier than the deadline. “We cannot give you the exact date but we are determined to do the job in less than two and half years.”
He said the federal government had announced upfront tariff for the coal power projects and the company had accepted the tariff of 8.1 cents per unit irrespective of its cost estimates.
He claimed the tariff would not remain exactly 8.1 cents in future as, at the time of agreement, the cost of coal was $ 120 per ton and it was now $60 per ton which implied that the power tariff was the cheapest for this plant as compared to other fossil fuels.
Chauhdry told a questioner that an army brigade was being raised to secure projects linked with the China Pakistan Economic Corridor and this power plant also included in the CPEC.
NEWS COVERAGE PERIOD DECEMBER 21ST TO DECEMBER 27TH, 2015
GAS CRISIS TO CONTINUE NEXT MONTH, SAYS MINISTER
Dawn, December 21st, 2015
LAHORE: Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi says that gas shortage, particularly in Punjab and Khyber Pakhtunkhwa, will persist till next month’s end.
He told Dawn on Sunday that both the Sui Northern Gas Pipelines and Sui Southern Gas Company were unable to meet the demand, especially of domestic consumers.
This year’s gas crisis, he said, was worse than last year’s and “we are almost unable to” bridge the gap between supply and demand. The main problem is in Punjab and Khyber Pakhtunkhwa where there is a shortfall of 200 million cubic feet a day to 250, creating problems for domestic consumers.
The consumers require around 900 million cfd in winter in the two provinces and the shortage has caused mass protests across the country.
The domestic consumers in Sindh and Balochistan are facing low gas pressure, while those in the other two provinces are deprived of supply even in the cooking hours, despite the government having pledged to ensure uninterrupted supply to them after cutting off the industries for the season.
“What can we do in a situation when over 300,000 new domestic connections have been added to the system in Punjab and KP,” Mr Abbasi said.
He claimed that the situation in Sindh and Balochistan was not that bad.
“We are trying hard to bridge the demand-supply gap in Punjab and KP by increasing gas pressure,” the minister said.
Mr Abbasi said the use of compressors by domestic consumers to suck gas was another problem in maintaining the supply. Those receiving gas at the tail end of pipes are facing the problem. That is why a majority of them have installed compressors, creating problems for others.
“We are trying hard to stop them but we cannot detect exactly who is involved in this practice,” Mr Abbasi said.
When asked why was the government facing the problem despite importing liquefied natural gas from Qatar, he said the LNG was only for the industrial sector.
“We have added the LNG to the system after ‘re-gasifying’ it and then supplying it to the industrial sector. We cannot shift it to domestic consumers because that will cost a lot to them,” he said.
He said the LNG cost Rs900 per million British Thermal Units to the government, whereas a domestic consumer paid Rs100 per MMBTU. “How we can bridge this huge gap of Rs800,” he said, adding that the government might introduce a new tariff for the consumers, mainly large ones, if they desired to get uninterrupted supply of imported LNG.
BILL SEEKING OGRA’S RESTRUCTURING TO BE INTRODUCED IN SENATE TODAY
Dawn, December 21st, 2015
ISLAMABAD: The Senate is set to take up a number of important constitutional matters, including a bill seeking restructuring of the Oil and Gas Regulatory Authority (Ogra), when the house meets after a two-day recess on Monday.
Titled “Oil and Gas Regulatory Authority (Amendment) Bill 2015”, submitted by Sassui Palijo of PPP, the bill is on top of the agenda issued for the private members’ day sitting.
Through the bill, which the PPP senator claims is in line with the 18th Constitution Amendment giving more autonomy to provinces, the mover has sought equal representation of the four provinces in Ogra and also sought a role of the Council of Common Interests (CCI) in resolving disputes between the federal government and provinces.
Besides introduction of the bill, the Senate is also likely to have a debate on “the domain and jurisdiction of the CCI and the situation arising out of non-convening of the meeting of the council as is required under Article 154(3) of the constitution”.
The government has been facing criticism from opposition parties inside and outside the parliament for its failure to convene the CCI meeting since March. During the debate, the opposition is likely take the government to task over what it claims violation of the constitution.
Article 154(3) of the constitution states: “The Council (CCI) shall have a permanent secretariat and shall meet at least once in ninety (90) days.”
The upper house is also set to take up a resolution moved by Azam Swati of the PTI asking the government to “establish a regular full-fledged secretariat of the CCI and representation of all provinces in the staff”.
The Ogra bill suggests that the chairman of the authority shall be appointed on a rotation basis from the four federating units on the pattern of the Indus River System Authority (Irsa). The bill has also sought changes in the eligibility criteria for the chairman and members of the authority.
Ogra has been functioning since promulgation of the Ogra Ordinance 2002 (Ordinance XVII of 2002) on March 28, 2002, with the main power to determine prices of some oil and gas products, many of them falling in the provinces’ jurisdictions.
At present, Ogra comprises a chairman and three members, who are known as member gas, member oil and member finance.
The bill seeking amendment to Section 3 of the ordinance suggests that Ogra should comprise “four members one each from the four provinces, to be appointed by the federal government in consultation with the provincial government concerned.”
The mover has suggested insertion of a new sub-section 3A which states: “The chairman of the authority shall be appointed from amongst the members for a period of one year, by rotation in the given order.”
At present, the Ogra chairman is appointed for a four-year term.
According to the bill, the member from Balochistan will become the chairman of the authority first, followed by members from Khyber Pakhtunkhwa, Punjab and Sindh.
CHINA, PAKISTAN INK $820M THAR COAL AGREEMENT
The Express Tribune, December 22nd, 2015.
ISLAMABAD: Pakistan and China on Monday inked a $820-million financing agreement in Beijing, for both the mining and associated power plant project in Thar.
Sindh Engro Coal Mining Company (SECMC) and Engro Powergen Thar Limited (EPTL) signed the local and foreign financing agreements in China.
Negotiations to secure loan financing for the project in Thar Coal Block II have been ongoing since term sheets were signed during Chinese President Xi Jinping’s visit to Pakistan earlier this year.
Under the finance agreements, a syndicate of local banks will provide Rs52 billion for the mining project, being undertaken by SECMC, and Rs22 billion for the associated power plant being established by Engro Powergen Thar Limited.
The syndicate is led by Habib Bank Limited (HBL), United Bank Limited (UBL), Bank Alfalah Limited (BAFL) and Faysal Bank Limited (FBL). The foreign syndicate consists of China Development Bank (CDB), Construction Bank of China (CBC) and Industrial and Commercial Bank of China (ICBC), which are providing loans amounting to $820 million.
Agha Wasif Abbas, Energy Secretary, Khalid Subhani, Engro Corporation President, and Shamsuddin A Shaikh, CEO of SECMC, signed the loan agreement. This project will be implemented under the China-Pakistan Economic Corridor (CPEC).
The drafts of the aforementioned agreements were approved by the Ministry of Finance earlier this year and the government of Pakistan has provided a sovereign guarantee of $700 million to underwrite the loan taken by SECMC. The project’s addition to the CPEC as ‘priority’ paved the way for its financing to be completed.
In addition, sponsor support agreements for both projects were also signed, whereby the sponsors, including the Sindh government, Engro Powergen Limited, Thal Limited, Hub Power Company, Habib Bank Limited and China Machinery Engineering Corporation agreed to inject $490 million into the project to ensure that companies have funds available for the smooth execution of the project. The project is expected to be commissioned by 2018.
In phase 2 of the project, the mine will be expanded to a capacity of 7.6 million tons per year (mtpa) and another 660MW power plant facility will be added. This expansion has also been included into the CPEC.
Earlier this month, the government of Sindh signed an Implementation Agreement with SECMC and a water utilisation agreement with Engro Powergen Thar Limited.
Under the Implementation Agreement with SECMC, the government committed to providing the required infrastructure to facilitate the mining project amounting to $600 million.
POWER GENERATION: NINE COMPANIES, SUGAR MILLS GET LETTERS OF INTENT
The Express Tribune, December 22nd, 2015.
ISLAMABAD: Nine companies and sugar mills have been issued Letters of Intent to generate 271 megawatts of biomass-based electricity in different areas of the country, said Alternate Energy Development Board (AEDB) Chief Executive Officer Amjad Ali Awan.
“In order to tap the potential of electricity generation by sugar mills, the government has already announced the Framework for Power Co-Generation (Bagasse/Biomass),” he said.
Giving details of the biogas projects, he said they included Etihad Power Generation with a capacity of 6MW, Layyah Sugar Mills with a capacity to produce 41MW and Almoiz Industries that would generate 36MW.
Other mills that have been issued the Letters of Intent were Hamza Sugar Mills (15MW), Alliance Sugar Mills (19MW), Safina Sugar Mills (20MW), Shahtaj Sugar Mills (15MW), Chanar Energy (22MW) and RYK Energy (36MW).
“AEDB is following the guidelines on standard security documents (energy purchase agreement/implementation agreement for bagasse-based co-generation projects,” said Awan. He said the National Electric Power Regulatory Authority (Nepra) had announced an upfront tariff of Rs10.7291 per kilowatt hour (levellised) for bagasse-based co-generation projects.
The renewable energy sector has attracted foreign investment worth over $3 billion in the last one year, clearly indicating the investment potential. “Due to the potential, a robust policy framework, lucrative tariff structures and bankable security documents, Pakistan has become a preferred destination for private investors,” Awan remarked.
He said the government was taking steps to harness the renewable energy potential, diversify the energy mix and ensure energy security and sustainable development in the country.
He observed that owing to the promotion and development of renewable energy technology, a record investment had been registered in just one year.
“A detailed assessment of wind, solar and biomass resources was carried out in the country through Esmap’s (World Bank) assistance,” Awan said, adding ground installations for measuring solar irradiation had also been made in several parts of the country.
The Express Tribune, December 23rd, 2015.
Pakistan has one of the most complex systems in place for tariff determination, resource allocation and investing in projects. Therefore, it comes as little surprise that there is an increase in tariff because of revenue shortfalls the gas utility is facing, mainly on account of receivables that would never be recovered.
At a time when the country faces a shortfall of gas and electricity, it would make sense for the government to look at projects that address these concerns.
The import of LNG was one big step in that direction, meant to address concerns for the industrial and CNG sectors that do little besides complain about the gas shortage. Each winter, complaints of industrial units, especially ones in Punjab, become louder. Domestic consumers also continue to protest — albeit in a quieter fashion.
Punjab and Khyber-Pakhtunkhwa (K-P) are again facing the prospect of a tariff hike — if the federal government approves — at the turn of the year. But despite the tariff hike, gas shortage in these two provinces will continue to persist.
While it is the right of every Pakistani to have access to the fuel, it is increasingly worrying that there is little tangible being done to ensure this right. Imported LNG will serve the industrial sector because it makes business sense to accommodate entities willing to pay more. At the same time, gas utilities — that have not published their accounts for years — continue to cite revenue shortfalls to push for the tariff hike. Investing in pipelines and looking to increase the gas supply remains a pipedream
When state-owned entities are accused of non-payment of bills, expecting the government to ensure that ordinary citizens get access to gas becomes a far-fetched idea. Despite the tariff hike that is in the offing, Punjab and K-P will continue to face the winter cold amidst a gas shortage.
The petroleum minister says supplying domestic consumers with gas is an expensive proposition. But can the government really use this as an excuse to do little about the gas shortage being faced by citizens?
ALTERNATIVE ENERGY: AEDB PLANS TO ENHANCE ENERGY MIX BY 2018
The Express Tribune, December 24th, 2015
ISLAMABAD: The Alternative Energy Development Board (AEDB) has embarked upon an ambitious plan to enhance the energy mix up to 20-25% by adding 3000-3500 megawatts of wind-based electricity to the national grid by 2018.
“Out of this, as much as 1,396 megawatt wind-based electricity will be included in the system by 2017 as the AEDB would complete several projects initiated for alternative power generation,” said AEDB Chief Executive Officer (CEO) Amjad A Awan.
He said currently, wind projects with 255.4MW power generation capacity were operational across the country. “Another 28 on-going wind projects of 1396.4MW capacity would be completed by 2017 and would play a major role in overcoming the energy crisis,” he said, adding that nine out of those 28 projects (477MW) had achieved financial close and were under construction.
He further said that strategies had been devised to include 1% energy through the alternative sector. “However, we aim to raise it up to 20-25% by 2018.
“The power tariff for wind power projects has been reduced to 10.4 cents which indicates that this could prove a promising sector for future investments”.
Awan said Pakistan was naturally gifted in alternative energy resources, as identified by mapping assessment of wind, solar and biomass in the country through ESMAP’s (World Bank) assistance. “The AEDB has identified high-potential regions including southern Sindh, Balochistan and Punjab where electricity generation through wind has promising potential.
“Some of the wind potential areas have solar intensity, so in such regions both wind and solar energy could be generated simultaneously and this may also be very attractive for the investors,” he pointed out.
BURDEN ON HONEST POWER CONSUMERS TO CONTINUE: SBP
Dawn, December 25th, 2015
ISLAMABAD: Pakistan’s energy sector has not shown any major improvement in the financial year 2014-15, but the government policies would continue to burden honest consumers for high theft and system losses.
This has been summed up by the State Bank of Pakistan in its assessment of the country’s energy sector. The report has been submitted to parliament this week. On the other hand, Pakistan went beyond many regional countries in passing on relief of declining international oil prices to consumers, it said.
The central bank said that power generation had improved only marginally during the last fiscal year despite the government’s overemphasis on capacity addition at the cost of dilapidated transmission and distribution system.
The low oil prices, on the other hand, had increased investment in renewable energy sources and the country’s exploration and development sector.
“In the power sector, the local price of furnace oil — the key fuel used in power generation — declined by around 30 per cent during FY15. However, despite the resulting fall in the cost of generation, the power supply could improve only marginally (1.6pc) from last year; this was even less than the estimated increase in demand,” the SBP said in its annual report for 2014-15.
It said the load management continued, reflecting the below par performance of the power sector.
Interestingly, even if existing generating units are geared up to operate three-fourth of their capacity, the country simply does not have the infrastructure to distribute this power to end-users. “Unfortunately, the policy focus in energy sector is oriented towards enhancement of generation capacity, instead of the transmission and distribution capacity.”
The central bank noted that the government passed on the benefit of declining generation cost to consumers through frequent downward revisions in the fuel adjustment surcharge.
As a result, the liquidity constraints stemming from circular debt continued to hamper the power generation, despite a considerable fall in the cost of furnace oil.
Specifically, the growing receivables from downstream firms in the energy supply chain affected the furnace oil imports, particularly in the first half of the financial year.
At the same time, private power producers were also reluctant to increase generation because of financial constraints, despite a steep decline in their input cost i.e. furnace oil price.
Meanwhile, the government decided to reduce country’s dependence on furnace oil whose share in power generation fell from 38.5pc in 2014 to 33.2pc in 2015.
Additional drag on power generation came from below normal water availability during the winter, particularly for the period March-April 2015. “Importantly, the hydel power, the cheapest source of power generation, could not get traction due to political complexity.”
However, better gas supplies to the power sector due to substitution of CNG with petrol in the transport sector provided some comfort. Later, hydel generation recovered strongly in May-June 2015 following improvement in river flows.
The steep decline in oil prices also allowed the government to bring down power sector subsidies from Rs309 billion in 2014 to Rs292.3bn in 2015. Furthermore, the lower cost of generation also slowed down the pace of build-up in circular debt — the most binding constraint faced by the power sector.
Interestingly, the government could have gained more in terms of reduced volume of circular debt, had the National Electric Power Regulatory Authority not reduced the fuel adjustment surcharge.
The resulting ease in financial constraints would have even allowed the government to boost power generation and reduce load management.
Focusing on the circular debt, the volume at end-June 2015 was Rs648bn (this included Rs335bn of arrears and Rs313bn of fresh build-up between June 2013 and June 2015).
Taking benefit from lower oil prices, and to address the circular debt issue, the government introduced a new tariff structure that included three different surcharges, tariff rationalisation surcharge of Rs1.54 per kwh, debt servicing surcharge of 43 paisa per unit and Neelum-Jhelum Surcharge of 10 paisa per unit.
LIQUEFIED NATURAL GAS: GOVT SEEKS TO NEGOTIATE GWADAR PIPELINE COST
The Express Tribune, December 25th, 2015.
ISLAMABAD: The government has constituted a price negotiation committee in an attempt to seek a further reduction in the cost estimated by a Chinese company for laying the Gwadar liquefied natural gas (LNG) pipeline and setting up a terminal, an official says.
This project will work as an alternative to the Iran-Pakistan (IP) gas pipeline project and will be executed by the government in cooperation with the Chinese firm on a government-to-government basis.
Under the plan, the LNG pipeline will be laid from Gwadar to Nawabshah and the terminal will be set up at Gwadar port.
The price of steel, which stood at $1,300 per ton when the engineering consultant ILF gave the cost estimate, has come down to $900-$1,000 per ton. The consultant put the total cost of the pipeline and terminal at around $2.5 billion because of the fall in steel and compressor prices.
“However, the Chinese company has offered to develop the project at a cost standing below $2 billion in the financial bid opened by Interstate Gas Systems (ISGS),” a senior government official said, adding a price negotiation committee had been set up to negotiate a further reduction in the cost.
“The bid was much lower than expected,” the official said. Earlier, ISGS had expected the cost of 700 km of LNG pipeline from Gwadar to Nawabshah at $2.5 billion.
He said the pipeline would be connected to the Iranian border at a cost of $200 million after sanctions against Tehran were lifted.
State-owned distribution companies – Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) – will also get a share in pipeline construction as the Chinese company, China Petroleum Pipeline Bureau, is bound to award 30% of work to them.
“This is a significant development that shows Pakistan is serious about kicking off work on the IP pipeline, but its implementation hinges on lifting of global sanctions against Iran,” ISGS Managing Director Mobin Saulat told The Express Tribune. ISGS is working to develop gas import projects.
Initiating the bidding process for the Gwadar pipeline indicated that Pakistan was truly interested in pushing ahead with the IP project.
China Petroleum Pipeline Bureau, selected by the Chinese government to lay the LNG pipeline and set up the terminal, had submitted the technical and financial bid for evaluation.
The company is already working on pipeline projects stretching over 8,000 km in different countries including Myanmar, Bangladesh, Russia and other nations. It has also laid pipelines from Turkmenistan to China.
“This is the first project under the China-Pakistan Economic Corridor for which the technical and financial bids have been opened,” another official said.
The Chinese government would provide a cheap loan covering 85% of the project cost and the Pakistani government would contribute 15% of funds.
The Chinese firm will build the new terminal – a floating storage and re-gasification unit (FSRU) – which will be owned by ISGS. The terminal will have the capacity to handle imports of 600 million cubic feet of LNG per day (mmcfd).
The LNG pipeline, which will be of 42-inch diameter, will be laid on the IP pipeline corridor from Gwadar to Nawabshah.
NEWS COVERAGE PERIOD NOVEMBER 30TH TO DECEMBER 6TH, 2015
PAK-CHINA ‘TECHNOLOGY PARK’ ON ANVIL
The Express Tribune, December 2nd, 2015.
ISLAMABAD: A Pak-China Science, Technology, Commerce and Logistic Park is to be established in Islamabad at a cost of 1.5 billion dollars. Giving details of the project at a news briefing in Islamabad on Tuesday, Minister for Science and Technology Rana Tanveer Hussain said it would be set up as part of China-Pakistan Economic Corridor. It would serve as a platform for technological and commercial linkages between Pakistan and China besides promoting investment and financing, e-commerce and research and development. The minister said Pakistan would provide 500 hectares of land for establishment of the park and all other investment would be made by China. He said three sites have tentatively been identified and a delegation of Xinjiang Production and Construction Corporation is arriving this month for finalization of the site. He said foundation stone of the project is expected to be laid in March next year and it would be completed in ten years in three phases.
RUSSIA TURNS FOCUS TO PAKISTAN’S ENERGY MARKET
The Express Tribune, December 2nd, 2015
ISLAMABAD: In a significant development, Russia has offered to lay a pipeline for gas export to Pakistan, a proposal that stems from fears that Moscow will lose the European Union energy market because of a standoff with the US and Europe over the Ukrainian issue, officials say.
Russia has been a major gas supplier to the EU to meet the bloc’s energy needs. However, trade and energy ties between the two sides have soured since last year in the wake of annexation of Ukrainian region Crimea by Moscow, which has slapped a ban on food imports from the EU.
Last week, another dispute erupted when Turkey shot down a Russian fighter jet over the Syrian border. Turkey has been meeting 50% of its gas requirements through imports from Russia.
Now, the US is expected to jump in and start exporting gas to capture the EU market, which will deal a big blow to Russia.
On its part, Russia, which is the second largest producer of natural gas in the world, is looking for alternatives and diversifying its export markets. It has already signed a multibillion-dollar energy deal with China. Pakistan could also prove to be a huge market as it faces annual gas shortage of over 2 billion cubic feet per day.
“A Russian delegation during a visit to Pakistan last month discussed plans for building a gas pipeline in a meeting of the Pakistan-Russia Inter-governmental Commission,” an official aware of the development said.
They expressed keen interest in laying the pipeline for gas export to Pakistan, which would snake through Turkmenistan and Afghanistan, he said.
Separately, Turkmenistan, Afghanistan, Pakistan and India are working on a transnational gas pipeline, called Tapi, which will also pass through Afghanistan and reach Pakistan and India. According to officials, the Russian pipeline will run parallel to the Tapi pipeline and extend to Gwadar, Balochistan.
Already, Russia has offered liquefied natural gas (LNG) supplies to Pakistan in the next two years to meet its growing energy requirements.
They have signed a government-to-government deal for building a pipeline for transporting LNG from Karachi to Lahore. Moscow will provide $2 billion in financing for the project.
In return, Pakistan will award the pipeline-laying contract to Russian firm RT Global Resources without inviting any bids. The company, a Russian state corporation, will build a 1,100km-long pipeline with a capacity of 12.4 billion cubic metres per annum to connect LNG terminals in Karachi and Lahore.
Under the agreement, Pakistan will provide 15% of equity whereas 85% of funding will come from the Russian company. First phase of the project is expected to be completed by the end of December 2017.
Inter State Gas Systems, which helps develop and implement gas import projects, is working on two pipelines – one from Iran and the other from Turkmenistan. The pipeline from Russia will be the third one if the project is executed.
HEAT AND LIGHT
Dawn, December 2nd, 2015
THREE quarters of a century ago, it wasn’t just political and racialist motives that lay behind the Nazi conquest of Europe. Adolf Hitler also wanted to ensure that Germans would always be well fed, and the fertile fields of Ukraine were viewed as an attractive source of supply. Jews would be wiped out and the remaining locals were welcome to starve.
Climate change wasn’t a hot topic back then, but the quest for food security was capable of driving drastic agendas. Writing in The New York Times a couple of months ago, Yale history professor Timothy Snyder also cited more recent catastrophes that could be construed as a consequence of environmental degradation, notably the Rwandan genocide of 1994, which “followed a decline in agricultural production for several years before. Hutus killed Tutsis not only out of ethnic hatred, but to take their land”.
Others have pointed out that the civil war in Syria was prompted in part by an extended drought that drove a substantial proportion of the rural population towards urban centres and spurred unsustainable levels of unemployment. The Syrian refugee exodus to Europe is seen as a foretaste of worse to come, not least because arable lands in Africa and elsewhere are being purchased by rich countries to meet their own projected consumption needs.
There is, at the same time, evidence that dispossessed, disenchanted and often disenfranchised populations are more susceptible to the lure of religious extremism. This notion wasn’t completely lost on some of the 150 heads of state and government who gathered in Paris this week to kick off two weeks of negotiations aimed at evolving a consensus on measures aimed at restricting global warming to a maximum of two degree Celsius above pre-industrial times, based on the assumption that anything beyond that would be catastrophic for human existence in any number of ways.
It has been estimated that government pledges already in place would lead to a temperature increase of nearly 3ºC — and given that we are talking about pledges rather than concrete action, some scientists fear that the actual outcome by the end of the 21st century could in fact be considerably worse. Meanwhile, some of the island states that have most to lose in the short term from rising sea levels are pushing for a 1.5ºC limit. They are backed by the United Nations, but it is hard to imagine international agreement on this level, given that an increase of 1ºC has already been registered.
A key issue is the extent to which emerging economies, heavily reliant on fossil fuels for expansion, should be expected to chip in towards a reduction in global carbon dioxide emissions. China — which has emerged in recent years as by far the world’s largest polluter — and India contend it would be unfair for them to be held back, given that the developed economies relied on a no-holds-barred approach for decades or even centuries to get where they are today.
There is a certain logic to this argument, but given the overwhelming evidence of the damage that emissions are wreaking on the planet we all share, there is also a compelling need to focus far more sharply on alternatives to oil and coal. In fact, had this occurred on a much larger scale three or four decades ago, the nature of today’s debate would likely have been very different and substantially less alarmist.
One of the many things that hasn’t changed very much over the years is the complaint that switching to solar and wind energy would be too expensive, and that it would anyhow be an inadequate substitute for energy powered by fossil fuels.
Well, yes, innovations are often expensive to start with, and then become steadily less so as the economies of scale kick in. Solar panels are today used in most parts of the world, but there is huge scope for setting up gigantic ones across uncultivable terrain in the subcontinent and especially in the Middle East, as well as across the parched centre of Australia, for instance.
A temporary rise in energy costs would surely be a small price to pay for enhancing the longevity of our fragile common home. Besides, it could be combined with efforts to curb the wasteful use of energy through a plethora of actions on both the micro and macro levels — from encouraging and facilitating the use of public transport instead of individual motorised vehicles, for instance, to a drastic reduction in the manufacture of inessential products.
But wouldn’t that be incompatible with the primacy of the profit motive, on which capitalism thrives? Yes, it very probably would. And it’s equally probable that the 1pc will conspire to thwart the goal of a 2ºC limit. It will be interesting to see what kind of compromise, if any, emerges in Paris. But you can bet your bottom dollar it won’t entail a deviation from the disastrous neoliberal creed.
WAPDA BLAMES LATE APPROVAL OF REVISED PLAN FOR HYDEL PROJECT DELAY
Dawn, December 3rd, 2015
AHMAD FRAZ KHAN
LAHORE: The Water and Power Development Authority has blamed late approval of revised PC-I and squeezed flow of funds as major reasons for delays in execution of the 969MW Neelum-Jhelum Hydel Project.
Wapda took the stance in response to a letter from the prime minister in which he expressed fears that the speed of execution and uncontrolled seepage at tunnels could delay the project by two years and spoil it entirely.
“This project has been unique in the sense that 74 per cent of it has already been completed without the financial close,” said Wapda in its response.
Although the contractor was bound to follow the timeline, timely completion depends largely on flow of funds.
“The problem was brought to the notice of the prime minister when he visited the project. The PM directed the Finance Minister to streamline finances for the project. Under the directions of the Finance Minister, the board of directors of the Neelum-Jhelum Hydropower Company approved the revised PC-I amounting to Rs414 billion. It was submitted to the Ministry of Water and Power on March 30, 2015. The ministry cleared the revised PC-I on May 22, 2015 and sent it to the Planning Commission. After going through the pre-CDWP (central development working party) and CDWP meeting on October 29, Wapda was told that Planning Commission would further re-check the figures and then the revised PC-I would be sent to the Executive Committee of the National Economic Council (Ecnec).” The approval is awaited.
“The main problem is that the contractor cannot follow the strict timeline without the availability of funds. Wapda obtained the term-sheet for Rs100bn loan from a banking consortium but it would only process the loan application when it gets revised PC-I approved by Ecnec. Similarly, for arranging foreign exchange component, the Exim Bank of China is willing to entertain loan amounting to $575 million but it also requires the Ecnec approval of the revised PC-I,” it adds.
A panel of experts recently visited the project and termed progress and quality of work satisfactory, but “timely completion of the project is dependent upon arrangement of necessary funding”.
In internal correspondence, the chief executive of the NJHP retired Lt-Gen Mohammad Zubair, who has been on notice period for quite some time before quitting the job, had also complained about non-availability of funds.
“As of today, the project is still being financed on day-to-day basis and the government was still far off from achieving financial close of the project even at this critical juncture. After the visit of the Prime Minister on June 19, 2013, a Best Efforts Plan (for accelerated construction) was chalked out and agreed upon by the contractor and the client on July 18, 2013, which had two essentials: clearance of outstanding payments of $150m by August 1, 2014 and advance payment of $68m for purchase of equipment. Wapda sent the plan to the ministry, which returned it to the authority to reassess the plan in view of current progress. The BoD of the project again took up the plan and incentivised accelerated construction. However, the contractor stated the plan was inconsistent with cash flow. The plan could not be materialised because the competent authority never approved the Best Efforts Plan,” it concludes.
PAKISTAN NOW A SAFE PLACE TO INVEST, SAYS MINISTER
Dawn, December 3rd, 2015
WASHINGTON: Minister for Water and Power Khawaja Muhammad Asif told an energy conference in the US on Wednesday that Pakistan was now a safe place to invest.
“Pakistan is a frontline state in the fight against terrorism and it needs economic development to strengthen this fight,” the minister said.
The two-day conference, which began on Tuesday, aimed to encourage US businesses to invest in clean and renewable energy projects in Pakistan.
The acting USAID Chief Larry Sampler, one of the organisers of the conference, told US businesses that Pakistan was an attractive place for investment and promised high returns.
Asif, who also holds the defence portfolio, said that the ongoing military operation against the militants had produced “very positive” results.
“Thanks to the resolve of the government and sacrifices of the armed forces, extremism has radically come down,” he said.
“Foreign officials and businessmen no longer go to Dubai and call Pakistani officials for meetings. They now come to Pakistan,” he said.
The minister, however, acknowledged that the fight against terrorism in Pakistan and Afghanistan has not ended yet, “but we feel comfortable that the terrorists are on the retreat.”
Mr Sampler told US investors that the government of Pakistan was working on plans to balance its interest and the profitability of the private sector.
The government, he said, realised that creating new and reliable sources of economy was extremely important for building investors’ confidence in the country.
Mr Sampler said that USAID was working with the government of Pakistan to improve the transmission and distribution system and had also invested in renewable energy.
Ambassador Jalil Abbas Jilani told the conference that the initiatives taken by the government would help overcome the energy shortage by 2018. These measures would add more than 8,000 MW to the national grid and 20,000 MW in the next 20 years.
The energy minister told the conference that the government would announce new solar tariffs in mid-December.
“We hope the new tariffs will be attractive for investors,” said the minister while reminding prospective US investors that the renewable energy sector offers “immeasurable opportunities”.
“Pakistan would encourage the injection of renewable energy to the extent that is affordable and reliable,” Asif said.
“A country facing a huge energy deficit cannot afford to ignore anything. We have to have energy and affordable, reliable energy now.”
The minister said the country was also encouraging investments in coal-based energy.
A BILLION TREES INSTILLING HOPE FOR A GREEN ECONOMY IN KP
Dawn, December 4th, 2015
With the departure of all the heads of states gathered in Paris for the UN Climate Conference, Le Bourget is more subdued. As negotiators from around 190 countries wait to start haggling over brackets and commas in the text that will form the basis of a new climate agreement, side-events are where all the action is for now. Pakistan’s Khyber Pakhtunkhwa (KP) government presented their “Billion Tree Tsunami” project at the pavilion of the International Union of the Conservation for Nature (IUCN) on Thursday.
Malik Amin Aslam, who is a former Pakistani Minister of State for the Environment and currently Vice President of IUCN, gave a PowerPoint presentation explaining how the “self-financed” project plans to plant 1.5 billion trees in KP in the next few years. Already thousands of nurseries have been set up and around 100 million saplings have been planted across the province. “We have shifted mindsets in KP; people have started regarding trees as an asset”, he told the packed room. “The youth have been involved in the process and we have also launched a campaign against the timber mafia, seizing illegally cut wood and auctioning it off. This project is instilling hope for a green economy.”
The project has shown enough success to be recognised and registered with the Bonn Challenge, which is a global partnership aiming to restore 150 million hectares of the world’s deforested and degraded lands by 2020. Brazil, Costa Rica, Rwanda are some of the countries that are part of the Bonn Challenge and now the KP government has joined as a sub-national entity. “This recognition by the Bonn Challenge shows KP’s Green Growth Initiative is not a mere slogan but is being followed up on the ground through the backing of a political party (PTI),” explained Amin Aslam.
The Inspector General Forests for Pakistan, Syed Mahmood Nasir, was also at the presentation at Le Bourget and in his view this was a good initiative. “There are no politics in tree planting,” he said. “We all have to do our bit to save the forests of Pakistan.” The IG Forests is part of the 25 members strong Pakistani delegation that will attend the negotiations in the remaining 10 days of the conference. According to Malik Amin, “This initiative shows there is still a lot you can do even if the negotiations here don’t succeed”. In his view, only an accord and not a legally binding protocol will come out of the Paris conference. “A common minimum programme” is how Indian expert Joydeep Gupta, director of the Third Pole Network, described the probable outcome.
“There is far too much pressure not to have an accord – but I’m afraid it will be so minimal that it will be useless. Each country’s domestic lobbies won’t let them move forward; you can effectively add up the Intended Nationally Determined Contributions (prepared by over 160 countries now, including Pakistan) and make an accord and go home.
“Rich countries had promised 100 billion dollars a year in help to developing countries; however the Green Climate Fund that was set up to give out the funding only has 7.3 billion right now. The US has not paid up their commitment of 3 billion.“It is finance that will hold up the agreement in Paris – money is the main thing,” he explained. What will definitely come out of the conference, however, will be a big boost to renewable energy. “Expect all the fireworks to start next week, as the new text will come back from the co-chairs,” he added. For now the halls in Le Bourget remain quiet as negotiators await the text.
US TO PROMOTE NEW PRIVATE SECTOR TO INVEST IN CLEAN ENERGY GENERATION’
The News, December 04, 2015
WASHINGTON: The United States intends to promote new private sector to invest in Pakistan’s clean energy generation, transmission and distribution to help the country meet its energy needs, Richard Olson, Special Representative for Afghanistan and Pakistan, has said.
Speaking at the concluding session of the two-day US-Pakistan Clean Energy Business Opportunities Conference, the ambassador said the event was one of the first outcomes of the US-Pakistan Clean Energy Partnership, which Prime Minister Nawaz Sharif and President Obama announced in Washington in October. “The partnership is the next step in our support for Pakistan’s energy sector. We are off to a great start,” he added.
The conference was attended by Minister for Water and Power Khawaja Mohammad Asif and Petroleum Minister Shahid Khaqan Abbasi. The ambassador said that developing Pakistan’s energy sector was one of the top priorities of Prime Minister Muhammad Nawaz Sharif’s government.
Olson said that he was convinced that clean energy solutions, including renewable sources like the wind and solar energy, geothermal, hydro and natural gas, were not only the best hope for resolving Pakistan’s energy crisis but also an assurance that our children could enjoy a cleaner and healthier future.
“Prime Minister Sharif’s attendance this week at the COP21 conference in Paris demonstrates Pakistan’s commitment to doing its part in the global campaign to manage climate change,” he added.
Olson said that clean energy was an integral part of this effort, and Pakistan’s embrace of renewable energy sources could enable it to play a leadership role on global environmental issues.
He said that public investment in energy infrastructure and power generation was essential, adding that the private sector investment in this sector was also crucial. “The more space the private sector has to contribute in the energy sector, the more quickly the energy crisis can be resolved.”
He said the Sapphire Group’s investment in wind power was a great example of public-private partnership in Pakistan’s renewable energy sector. The 50-megawatt Sapphire wind power plant project at Jhimpir was made possible by collaboration between the Pakistan government, private sector investors, OPIC and USAID, and American and multinational companies.
Private corporations from three nations came together and worked swiftly to conceptualise, construct, and complete this renewable power project ahead of schedule, he added.
After 14 months, the power plant was completed, and it began commercial operations on November 23, providing critical electricity to millions of residents of Sindh province. This year, a US company played a critical role in establishing the infrastructure that enabled Pakistan to import liquid natural gas for the first time.
Another US company provided the crucial component for Pakistan’s liquid natural gas-fired power plant deals, a turbine. The focus of the conference was on the tools that are available to help the private sector further unlock Pakistan’s energy potential.
The ambassador said that Prime Minister Sharif’s government had taken many steps over the past two-and-a-half years to improve the investment climate in Pakistan. “Now is the moment to build on the progress that has been made by strengthening the regulatory environment and expanding the space available to the private sector in the energy sector,” he said.
Nothing speaks to the US companies louder than another US company that has had a positive business experience in Pakistan. A number of these success stories are already contributing to Pakistan’s energy sector — more can be cultivated through the US-Pakistan Clean Energy Partnership.
BUSINESS OPPORTUNITIES: PAKISTAN DEVELOPING CLEAN ENERGY, SAYS OLSON
The Express Tribune, December 4th, 2015.
WASHINGTON: Pakistan is committed to developing clean energy solutions and the US will help it in this initiative, US Special Representative for Afghanistan and Pakistan Richard Olson said.
Addressing the US-Pakistan Clean Energy Business Opportunities Conference, he said that infrastructure development needs government funding, but it also requires private sector investment.
Public investment in energy infrastructure and power generation is essential, but private sector investment in this sector is crucial, “We are here to facilitate such investment,” Olson said. The more space the private sector has to contribute in the energy sector, the more quickly the energy crisis can be resolved, he said.
He said as Prime Minister Nawaz Sharif told President Obama in October, developing Pakistan’s energy sector is one of his government’s top priorities. He said Prime Minister Sharif’s attendance this week at the COP21 conference in Paris demonstrates Pakistan’s commitment to doing its part in the global campaign to manage climate change.
A great example of public-private partnership in Pakistan’s renewables sector is the Sapphire Group’s investment in wind power.
The 50 megawatt Sapphire wind power plant project at Jhimpir was made possible by collaboration between the Pakistani government, private sector investors, OPIC and USAID, and American and multinational companies.
FRESH BIDS FOR SIX MANGLA TURBINES RECEIVED; SAVING OF RS4BN EXPECTED
Dawn, December 5th, 2015
LAHORE: Financial bids of three technically responsive bidders were opened at the Wapda House for procurement of six generating units with generation capacity of 135-megawatt each. These units will be installed at Mangla Hydel Power Station as part of Mangla Refurbishment Project.
During the previous bidding process for two units, which was annulled by Wapda, the lowest responsive bid price for one unit was Rs2.377 billion, which has now decreased to Rs1.712bn. At the time of the first tendering, Alstom Hydro France — the lowest responsive bidder — was debarred by the World Bank.
Resultantly, Wapda cancelled the tender and initiated the tendering process afresh. By the time, the sanction imposed on Alstom was lifted and it again participated in the tendering, financial bids of which were opened at the Wapda House the other day.
In addition to Alstom Hydro France, Voith Hydro Germany and Andritz Hydro Austria were bidders in the second tendering. The fresh bidding for procurement of six units is expected to benefit the national exchequer by about Rs4bn as the price of one turbine is lower by Rs665 million.
In the second tendering, Wapda adopted a fast-track approach by inviting tenders for six generating units. In addition to saving of Rs4bn in the cost of the units, Wapda will also be able to complete refurbishment of six units in five years by adopting the fast-track approach.
It is pertinent to mention here that the refurbishment project will increase the generation capacity from 1,000MW to 1,310MW.
The existing Mangla Hydel Power Station has 10 generating units, having generation capacity of 100MW each with a useful life of 30 years extendable up to 35 years. The first unit was commissioned in 1967. Despite completion of their useful life long ago, all units installed at Mangla Hydel Power Station have still been working efficiently and generating electricity in accordance with their installed capacity due to operational skills of Wapda engineers and technical personnel and effective maintenance of these units.
In order to benefit from additional 2.88 million acre feet (MAF) of water and 40 feet additional water head available with completion of Mangla Dam Raising Project in 2009, Wapda planned to refurbish the existing Mangla Hydel Power Station. Besides, the use of latest technology was also one of the factors to make plans for optimising generation capacity of Mangla Hydel Power Station.
Mangla Refurbishment Project will be implemented in various phases, wherein the generating units will be refurbished by closing down one tunnel (two generating units) at a time. First two units will be refurbished by the year 2018, the next two by 2019 and the other two by the year 2020. By the year 2022, all the 10 units will be refurbished to complete Mangla Refurbishment Project.
The approved PC-I cost of the Project is Rs52.224bn. It is worth mentioning that the USAID is providing $150m as grant for the purpose, while rest of the amount will be arranged by Wapda through loans.
Subsequent to the opening of financial bids, member (power) Badrul Munir Murtiza briefed Wapda Chairman Zafar Mahmood on the matter.
UNDETERRED BY CLIMATE SUMMIT, PAKISTAN EMBRACES COAL
The Express Tribune, December 5th, 2015.
KARACHI: Last few weeks have been monumental for Pakistan’s energy landscape. The country has moved closer to unlocking millions of tons of lignite buried in its desert and land has been bought near the port to build facilities to store the fossil fuel and build power plants based on imported coal.
Also, executives have frequently travelled to China and elsewhere to meet lenders and consultants.
For as long as one can remember, Pakistan has used oil and gas to meet two-thirds of its electricity demand. Time and again, the country was left at the mercy of price fluctuations in international markets, especially as its own gas reserves depleted.
In 2013, after Nawaz Sharif’s Pakistan Muslim League (PML-N) came into power largely on the back of a promise to eliminate dilapidating power cuts, it became apparent that coal’s inclusion in country’s energy mix was imperative.
From almost nothing at the moment, Pakistan now aims to add 8,100 megawatts (MW) through coal to its system – as much as 40% of its existing generation capacity.
The obvious reason for using coal is energy economics. Electricity produced using coal is cheaper than both oil and gas. While use of alternatives, like wind, solar and hydel has also been encouraged, coal-based power plants remain most viable for investors and national grid, officials say.
But Pakistan’s belated move comes when developed countries are vigorously moving away from coal. Pressure is also on large consumers like China and India to cut back on its use, as evident from ‘The Climate Summit’ in Paris.
This has not deterred Muhammad Ali Tabba, a director at Lucky Electric, which is building a coal-based 660 MW power plant.
“Pakistan will continue to remain a marginal player even after all the coal plants come up,” he said. “Statistics speak for themselves,” he says.
“Pakistan consumes around 4 million to 4.5 million tons of coal a year. In few years’ time this would increase to 26 million tons and not more. On the other hand, India is burning 500 to 600 million tons of coal and China uses over a billion tons.”
Obsolete coal plants in many developed countries, which have already run their course, are still being used, he said.
Without explicitly mentioning it, Islamabad has laid out such plant specifications and efficiency levels that only low-emission super critical plants would be built.
Out of the ten plants planned, nine depend on imported coal. Half of them are located near Karachi. One project – the Sindh Engro Coal Mining Company’s (SECMC) 660MW project – will be built near the coal mine in Tharparkar district.
These projects have Chinese backing in shape of loans from Chinese banks and equity participation from investors.
SECMC’s CEO Shamsuddin Shaikh said Pakistan’s carbon foot print was already too low to warrant any concern. “Our country does not have any other option. We have to go with coal.”
About the push for alternates, he said thermal power still accounted for most of the global base load, which basically meant reliable supply of electricity.
“Wind, solar and even hydro power plants depend on seasons and conditions. They cannot be relied upon for uninterrupted supply.”
Industry officials say that five projects including Lucky’s 660MW, K-Electric’s 700MW, Hubco’s 1320MW, SECMC’s 660MW and another 1,320MW project of Sinohydro Resources and Al-Mirqab Capital are in advance stages of implementation.
“I have serious doubts if the other projects will materialise,” said an official, referring to the three coal-based power plants planned in Punjab.
These will use imported coal, which will be shipped to Port Qasim and transported upcountry via Pakistan Railways.
Activity is picking up near Karachi as K-Electric and Lucky have bought land at Port Qasim in recent weeks. Lucky intends to have financial close by April 2016 and SECMC’s funding will be secured by this year’s end.
Despite repeated attempts the Private Power and Infrastructure Board (PPIB) Managing Shah Jahan Mirza was not available for comments.
While all the coal-based power projects have been made part of multi-billion dollar China Pakistan Economic Corridor (CPEC) initiative, one project has been left on its own – K-Electric’s $1 billion 700MW power project in Karachi.
“Apparently, the reason behind this is that K-Electric is a private company,” said a company official. “Our view is that we are doing the same thing of helping ease the power crisis. So there shouldn’t be any discrimination.”
All other coal power plants are linked with National Transmission and Dispatch Company (NTDC) system, which transmits electricity to every part of the country except for Karachi. “Isn’t that unfair? We are the only project for country’s largest city and government has not included us in its initiative.”
Being part of the CPEC helps give more credence to a project along with certain fiscal incentives.
NEWS COVERAGE PERIOD NOVEMBER 23RD TO NOVEMBER 29TH, 2015
GAS PROJECTS STUCK IN POLICY CONFLICT
Dawn, Business & Finance weekly, November 23rd, 2015
HEFTY payloads of hydrocarbon resources have shifted from their 50-year-old base in Balochistan to Sindh over the last two decades and are now moving into the security-affected areas of Khyber Pakhtunkhwa and the adjoining tribal region.
In recent years, a majority of major oil and gas finds have been reported in this new field. But their development and commercialisation has been hampered, in part, by the security situation. However, the chief reason is the conflicting policies and the politics of Imran Khan’s PTI-led government in KP and the PML-N government in the centre.
While the federal government blames the PTI’s ‘dharna politics’ for a ‘massive setback to the national economy,’ professionals in KP are perturbed that the continuing acrimonious relationship between the centre and the province will have far-reaching consequences for the nation.
Dawn Business and Finance spoke to Mr Raziuddin, CEO of the Khyber Pakhtunkhwa Oil and Gas Company Limited (KPOGCL) — a firm set up as required under the 18th constitution amendment — for an overview of the ground situation.
“The two governments [federal and provincial] are totally disconnected. They should move away from the ‘container legacy’ in the interest of development of hydropower and oil and gas resources to benefit the whole nation and eradicate the menace of terrorism and extremism in KP and Fata through job creation and industrialization,” he says.
In his assessment, three critical articles of the constitution — 154, 158 and 172(3) — related to centre-provincial relationships and responsibilities are being violated, trespassed or ignored.
“International energy majors like Kuwait’s Kufpec, Russia’s Rosgeo and others are entering KP and Fata but unfortunately the federal and provincial governments are not on the same page. Their acrimony is an irony for the country and the future generations,” says the CEO.
Raziuddin led the country’s largest exploration firm OGDCL and also Attock Refinery as managing director in the past and headed the energy group that formulated the energy-related section of the Planning Commission’s Vision 2025 and 11th five-year plan documents.
He says he recently gave a briefing at the Military Corps Headquarter in Peshawar on the situation, opportunities and the political infightings and the need for bringing the two political governments on the same page to deal with the challenges facing the economy, particularly natural resources.
“We want to fast-track and expedite oil and gas development in KP, but the federal ministries are cold-shouldering these efforts.”
Raziuddin claims the province is currently producing about 385m cubic feet of gas per day (MMCFD) and plans are in place to increase this to 2bn cubic feet per day by 2025 — half of the current national production of 4BCFD. “But it will be ironic if we are unable to ensure its consumption through increased industrialisation.”
The KP government had moved a summary to the Economic Coordination Committee (ECC) of the Cabinet in June 2014, seeking allocations for new gas finds of about 160MMCFD around Kohat and Karak for the setting up of an 800MW power plant near Khushal Garh.
But the federal government decided in November 2014 that the Private Power and Infrastructure Board (PPIB) — a federal agency — should set up the plant instead of the provincial government.
The KP government protested strongly but then gave in on the condition that the plant would be located in KP to feed special industrial zones in Hattar, Gadoon, Risalpur, Nowshera, Hayatabad and Sheikh Maltoon-Mardan.
“Today is the first anniversary of the ECC decision but the federal government is yet to issue tenders for the power plant. This is a provincial as well as a national loss from an economic and industrialisation point of view,” says Raziuddin. “We believe this is violation of Article 158 of the constitution. The federal government should at least set up the plant itself if it doesn’t want the province to do it.”
Article 158 promises the province having gas well-heads to have precedence on the natural resource over other parts of the country.
Inserted through the 18th amendment, Article 172(3) requires that minerals, oil and natural gas within a province or adjacent territorial waters be owned jointly and equally by that province and the federal government, without changing past commitments and obligations. The centre is not honouring this article.
The KPOGCL CEO says all existing operators are working in the hydrocarbon pay zones of 4,000 metres or less, but the urgent need is to go beyond 6,000 and even 12,000 metres deep where large deposits can be developed.
Here, the federal and provincial governments don’t have to compete but synergise their resources and efforts. But he deplores that applications for Lucky block, Bannu West, Mardankhel, Latambarwali, Karak North, Kulatchi and Peshawar East are being held up by the federal government.
The Mardankhel field, discovered in March with 4,000 barrels of oil per day and 65MMCFD of gas, has not been allowed to be developed. This field alone is causing a daily loss of Rs3.3m to KP in the form of missed royalties, which stand at 12pc. The loss to the federal government and the economy is much bigger.
Similarly, the Karak North, Kulatchi and the Baratai blocks are awaiting tender evaluation since January 19.
The provincial government had developed small hydropower projects in Mardan North, Ranolia and Jabori of 2.6MW, 17MW and 56MW respectively and paid the cost of the transmission line to federal agencies like the National Transmission and Despatch Company and the Peshawar Electric Supply Company. But they are delaying the transmission line for no reason.
He says all these issues are concerns of the Council of Common. But its sphere has been encroached upon by the ECC.
DISMANTLING OF MARI GAS WELLHEAD PRICE AGREEMENT
Dawn, Business & Finance weekly, November 23rd, 2015
THE year 2014-15 marked a big ‘milestone’ for one of the largest gas production companies in the country, Mari Petroleum.
Lt. Gen. Nadeem Ahmed, Mari Petroleum’s (MPCL) CEO, says the year has been of significance as it marked the end of the restrictive Mari gas wellhead price agreement (GPA). The formula has been revised from the cost-plus wellhead model to one that is linked to international crude oil prices. The company has a 16.2pc share in the country’s total gas reserves.
“The cost-plus operating arrangement under the GPA may have provided a protective umbrella to MPCL but it had also taken away the corporate incentive of operating on a commercial basis like other exploration and production (E&P) companies.
“Under the old agreement, MPCL’s exploration losses were underwritten by the government. Now with industrial exposure, the company will face the risk of failure but will also have greater rewards for success.”
The company owns the production lease and is the operator of the country’s second-largest natural gas reservoir, Mari gas field in Sindh. The gas produced by the company is supplied to fertiliser manufacturers, power generation companies and gas distribution companies. Mari operates 11 E&P assets and maintains partnership with national and international companies in six non-operated blocks.
For Mari’s shareholders, the revised formula retains the cap on dividend distribution (a minimum of 30pc) for the next 10 years.
“Whereas an improved pricing mechanism was well received, the cap on dividends has roped in the excitement for the Mari stock,” said Foundation Securities energy analyst Nauman Khan.
Hasan Raza at Alfalah Securities sees this as slightly positive. “[The company’s] cash balances will surge, which will beef up its bottom line”. He adds that the company has successfully drilled two development wells while drilling on a third development well is in progress.
The company’s management admits that efforts are being made to mitigate and manage the risks that are inherent in the E&P business, particularly the one that relates to the dismantling of the GPA.
“The successful transition from operating on a cost-plus basis to operating on market-oriented terms will remain a huge challenge,” the company says in one of its reports. As a result of the dismantling of the GPA, its revenues have now been directly linked with international crude prices, it adds.
“A decline in crude prices will cause a decline in the company’s revenue and consequentially a reduction in profitability.”
“Under the previous pricing arrangement, the company was guaranteed a fixed return on its equity based on its gas production. Its profit and loss account was prepared using a bottom up approach in which all expenses, such as interest cost and exploratory expenses etc, were added back to compute net revenues,” explains an energy expert.
“As a result, its realised gas prices remained artificially depressed. And while it charged higher rates from its customers — fertiliser plants, Wapda and generation companies — the differential in the realised prices and the prices charged from customers was pocketed by the government in the form of various taxes and surcharges, like the GIDC, GDS and the GST,” he claims.
The Fauji Foundation has a majority shareholding in MPCL at 40pc, giving it management control. It is followed by the Oil and Gas Development Company with a 20pc stake and the government with 18.2pc of equity in the company. The government had divested half of its 40pc original stake in the company to the general public in 1994. The public currently holds 21.6pc shares of MPCL.
The company has a small equity base of Rs1.1bn. The Mari stock was trading at around Rs482 a share last Friday. The company’s market capitalisation amounted to Rs52bn on June 30, while its total assets were valued at Rs66bn.
A couple of months ago, Mari’s shareholders approved a resolution calling for distribution of Rs9.7bn in specie dividend against the company’s un-distributable profit and loss balance at June 30, 2014, in the form of non-voting, non-cumulative, redeemable preference shares.
Another major development during 2014 was the approval of a five-year extension in Mari’s lease. “This means that the company will have the development and production rights in the lease area till 2019,” said one analyst.
The extension will enable Mari to enhance recovery and produce more natural gas from the area, and its CEO adds that the lease can be further extended by 10 years under the prevailing statutory regime.
AGP REPORT ON NANDIPUR GIVES THE LIE TO CRITICS
The News, November 23, 2015
ISLAMAaBAD: A special report prepared by the Auditor General of Pakistan (AGP) on the Nandipur power plant project trashes the oft-repeated assertion that put its cost at about Rs85bn, Rs35bn more than the actual expenses of Rs50bn.
A number of political leaders including some who are generally considered well-versed with financial matters for having worked in mega corporate entities had been claiming that the project would cost Rs85bn. The government had got the Nandipur project audited by the AGP in a bid to assuage hue and cry created by certain quarters.
However, the AGP report says that as on August 31 this year, an amount of Rs49.911bn was spent on the project as against the revised approved estimate, Rs58.416bn. Thus, a sum of Rs7.5bn was saved meaning that the project was completed in less than the money okayed by the competent economic forum of the government.
Interestingly, a whopping amount of Rs31.858bn was spent on the project far above the then sanctioned funds even before the Nawaz Sharif government came in place in June 2013.
The report said that the original approved (PC-1) amount was Rs22.334bn. It becomes clear that the spending of Rs31.858bn by the time the current government assumed office had already overshot by Rs9.5bn, with the project being still in limbo, nowhere near completion. This phenomenal public money was used by the previous government.
To kick-start the work on an almost dead project, the Nawaz Sharif government approved its revised cost of Rs58.416bn on July 4, 2013, just a few days after taking charge. It deserved severe battering if it had not completed the project within this money or had shown incompetence and negligence. However, it received thrashing for closing the project at the top speed while saving a lot of money from the approved funds.
The AGP report said that there was a steep escalation of about Rs36bn in the cost, which was attributed mainly to the inordinate delay in the completion of the project due to holding of legal opinion by the Federal Law Ministry. The escalation was legally covered since the revised PC-1 was duly recommended and approved by the competent forum.
Plant and equipment, whose original cost was around Rs13bn, was estimated to be purchased at around Rs33bn. Added to this huge escalation under one item, there was an increase of Rs1.6bn each for civil works and structures, and administration and authority overheads.
The report said that around Rs1bn was allocated to demurrage and container detention charges in the revised PC-1. Still the major irritants in the whole cost escalation scenario were Rs11bn increase in the Interest During Construction (IDC) and over Rs8bn in foreign currency exchange rate impact.
However, the report said that the demurrage and detention charges were not part of the revised PC-1. These were separately allowed as one-time dispensation to clear the project equipment, which was long detained at the port due to non-availability of foreign credit facilities.
The major contributors to the escalation included currency fluctuation, Rs8.443bn; inflation Rs5.273bn; expansion in project scope Rs1.98bn; administration, consultancy and inland transportation Rs1.647bn; increase in IDC as a result of raise in project cost and delay in completion time; and remobilisation, extension of time cost, repair and replacement of damaged equipment, insurance cost etc., Rs6.538bn.
These details, the report said, show that increase in IDC accounted for 50pc of cost escalation. The other major factor in cost escalation was additional payment of $67m to the contractor for resumption of work on the project.
It said that the increase in IDC in the overall cost escalation was most striking. It was noticed that there was a provision of Rs3.613bn for IDC in the original PC-1 but the same was increased to Rs14.641bn up to August 31 this year. This abnormal rise of Rs11.028bn could be avoided had there been no idle time during execution of the project since major portion of the amount i.e. Rs5.93bn is attributable to the idle period of financial years 2010-11 and first half of 2012.13.
According to the report, for resumption of work, the Engineering Procurement Construction (EPC) contractor was paid an additional cost of $19m on account of Establish, Operate and Transfer (EOT) claims, $8m against remobilization and provisioning of $40m for the inspection/testing/repair/replacement of defective parts after joint inspection by the contractor, engineer and employer of the project. Accordingly, $67m was paid to the contractor on account of additional EPC cost in the shape of remobilisation, compensation on account of EOT and for inspection, repacking, testing and repair of plant.
To give a further lie to the figure of Rs85b as the cost of the Nandipur plant, cooked up by the agenda-driven elements, the report listed details of each and every penny spent on the project with the total spending coming to Rs49.9bn.
An amount of Rs60.914bn went to site preparation and surface engineering; Rs28.835bn to gas turbines and 1 steam turbine, unit transformers, substation equipment, gas conversion kit, chemical analysis and calibration equipment, control equipment etc.; Rs536.124mn to initial spare parts; Rs2.256.765bn to main civil works and structures; Rs752m to power dispersal arrangement; Rs206.81m residential buildings; Rs107 .282m to non-residential buildings; Rs2.9m to information and communication network; Rs19.433m to transportation and communication; Rs22.236m to security and surveillance; Rs3.212m to environment; Rs35.051m to inauguration and media campaign; Rs575.41m to erection and commissioning charges; Rs241.628m to engineering and consultancy; Rs17.462m to contingencies; Rs370.438m to clearing, forwarding, handling and inland transportation; Rs47.892m to insurance during construction; Rs713m to demurrage and container detention charges and Rs14.641bn to IDC @ 12pc on LCC.
The report also said the managing director of the project was appointed against the non-existent post. Some of the biggest issues of the Nandipur project, which are still unresolved like lesser capacity Furnace Oil Treatment Plant (FOTP) clearly reflects adversely on the management. Moreover, undue haste was shown in inauguration of the plant and it was put into operation on HSD instead of furnace oil from May 2014 to October 2014, which resulted in abnormally higher per unit cost ranging from Rs30.64 to Rs71.87.
‘WORK ON MANSEHRA GAS PIPELINE PROJECT TO START SOON’
The News, November 23, 2015
MANSEHRA: Federal Minister for Religious Affairs and Interfaith Harmony Sardar Mohammad Yousaf said on Sunday that the government had approved Rs700 million for laying natural gas pipeline from Abbottabad to Mansehra and work on the project would be started in near future.
“PM Nawaz Sharif has been taking personal interest in developing remote areas of Mansehra and approved Rs700 million for pipeline, through which natural gas would be supplied to Balakot and Oghi tehsils,” he said while inaugurating gas supply to Ogra and adjoining areas.
District Nazim Sardar Said Ghulam, MPA Sardar Zahoor and Tehsil Nazim Khuram Khan Swati also spoke on the occasion. Sardar Yousuf said the 12-inch diameter gas pipeline would be laid from Abbottabad to Mansehra to supply gas to Pakhal, Oghi, Balakot and Shinkiari.
He said the prime minister would inaugurate second phase of motorway from Havelian to Chatarplain in early December.“The motorway would bring a revolution in lives of people of Hazara and they could travel to Islamabad in only 2/3 of the time being spent now,” he said.MPA Sardar Zahoor, District Nazim Sardar Said Ghulam and Tehsil Nazim Khuram Khan also addressed the ceremony.
FIXING THE ENERGY CRISIS
The News, November 23, 2015
Energy is the most important source of national power. Without adequate sources of energy, no country can achieve economic prosperity and military potency. Unfortunately, Pakistan is plagued by energy shortages resulting in socio-economic and political issues. The initiatives of the incumbent government aimed at resolving disruptive energy crisis seem to take much time given the existence of problems entrenched in the country’s energy sector.
According to various studies, our energy need is expected to grow at an ACGR of 4.37 percent to 6.09 percent in the coming 15 years. On November 28 2014, Minister of State for Petroleum and Natural Resources Jam Kamal Khan claimed that there would be a 50 percent increase in primary energy demand between 2014 and 2030.
The installed capacity at present – based on February 2015 figures – is 22,571MW. For the period 2015-2018, the government has planned to add 10,400MW to the system by LNG, coal fire, wind, solar and hydro projects. The projected production would take up to 32,971MW installed capacity by the end of year 2018. If the policy continues unchanged and unhindered, loadshedding could end by 2018.
As per the country’s 2014-15 figures, our total energy mix goes something like this: thermal 65 percent, hydropower 31.5 percent, nuclear 3 percent, coal 6.5 percent and wind and solar at 0.5 percent. In this mix, thermal sources are contributing 68 percent and renewable sources 32 percent. Public-sector contribution is 58.5 percent while the private sector’s share is 41.5 percent. The new energy mix would get 52 percent from renewable sources and 48 per cent from thermal by the 2018. According to some estimates, the country will install about 53,000MW by the year 2022. However, all that requires policy continuation and strict checks and balances.
There are some challenges that could slow down all initiatives aimed at sorting out our energy crisis. Our bad governance emanating from the leadership crisis is the main reason behind the mounting problems affecting the energy sector.
The country’s elected representatives are hardly familiar with feasible energy projects. Such incompetence is a blessing in disguise for them because it helps them embark upon rather costly energy projects, thus amassing considerable commissions: the Turkish power plant and the Nandipur Thermal Power Project are two cases in point.
Moreover, the country’s reliance on expensive oil rather than renewable sources is further exacerbating the crisis. Despite being a cash-strapped country, Pakistan spent $6.69 billion on imports of petroleum products and crude oil during July-Nov 2014-15 – which accounted for about a quarter of the country’s total trade bill. This import bill is expected to considerably increase in 2015-16. These oil expenses are increasing electricity prices as well as a burden on our dwindling foreign exchange reserves.
Furthermore, due to outdated and inefficient transmission lines and theft, around 20 percent power goes in vain. According to Former Pepco MD Tahir Basharat Cheema, system losses stand at 20 percent of total power generation and distribution. Out of this, five percent is theft from the system, five percent is due to an outdated system and the remaining 10 percent is owing to technical losses.
On account of the energy crisis, the country faces a plethora of socio-economic and political issues. A large number of both small and large enterprises are shifting towards other South Asian countries due to long power outages. Resultantly, exports and foreign exchange reserves of the country are fast dwindling. Moreover, a large number of skilled labourers are also becoming jobless and moving abroad.
Power outages are causing joblessness, widespread poverty, social unrest, frustration, frequent disruptive strikes, crime and other psychological problems. The situation caused by lingering loadshedding is rather alarming and needs prompt and prudent measures by the government to produce or manage adequate energy for both domestic and commercial users.
To resolve this energy shortage, the government should diversify its approaches by relying on both renewable and non renewable sources. First, the leadership of the PML-N along with the provincial setups should make the power ministry competent, responsive and accountable, and lay down stringent checks and balances on it in order to stop corruption.
Second, all incomplete hydropower projects should be completed in time and more small dams should be constructed throughout the country. The construction of the 969MW Neelum-Jhelum Hydro Power Project, 1,410MW Tarbela Extension 4 Hydropower Project, 1,320MW Tarbela Extension 5 Hydropower Project, 720MW Karot Hydropower Project should be expedited as they are in their implementation phase now.
In addition, the 4,500MW Diamer Basha Dam, 4,320MW Dasu Dam and 1,100MW Kohalo Hydropower Project are in the completion phase. The government should also continue its policies without delay in order to complete these hydropower projects in the stipulated time.
Third, though nuclear energy is fraught with hazards, it still cannot be ignored due to the increasing energy needs. The country’s installed nuclear power plants – Kanupp (137MW), CHAS-NUPP-1(300MW), CHAS-NUPP-11 (300MW) are already adding a total of 737MW to the national grid. Work on CHAS-NUPP-3 and CHAS-NUPP-4 – each with the capacity of 340MW – should be completed in 2016 and 2017, respectively. Moreover, Kanupp-2 and Kanupp-3 with the capacity of 1,100MW each should not be delayed due to change in government and resultant political vendettas.
Fourth, Pakistan can produce 4,500MW electricity from the gas received via the Iran-Pakistan (IP) gas pipeline. The country should complete its portion of 785 kilometres of the pipeline with Chinese and Russian financial and technical assistance; the ground is clear after the Iran and P5+1 nuclear deal. Moreover, the federal government should persuade Turkmenistan and Afghanistan into expediting the work of the Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipeline. The pipeline will provide Pakistan with 1.32 bcfd (billion cubic feet/day) gas.
The China-Pakistan Economic Corridor is expected to add 10,400MW to the national grid by 2018. The project should not be delayed due to security, administrative and geopolitical hurdles. Moreover, the LNG agreement worth $21 billion signed with Qatar in February 2015 aimed at supplying 500 million cubic feet a day (mcfd) LNG to Pakistan should be free from corruption and administrative issues.
Fifth, despite possessing 175 billion tones of ignite coal in Thar, the country still lags behind in terms of generating electricity from this source. Coal contributes around 40 percent to the world’s power generation. Therefore, work on the 6,600MW Gadani Power Project and the Thar coal project – which can produce 4,000MW – should start. However, extensive care should be taken because coal is not eco-friendly.
Electricity can also be produced by solar and wind sources. The wind power plants in Ghoru and Jhimpir in Sindh are already producing 200MW electricity. The wind corridor in Sindh can potentially help produce 43,000 MW power. The Punjab government has planned to produce 1,000MW from the photovoltaic solar field in Bahawalpur in which 100MW power generation became operational in May 2015. However, the cost of wind and solar energy is around Rs20 and Rs15.5 per unit respectively; they are thus relatively expensive.
The country is also rich in shale gas possessing some 51 trillion cubic feet of shale according to the US Energy Information and Administration (EIA). Shale gas needs advanced technology and considerable financial resources, so it can be used in the future when its exploration is inexpensive and the country acquires the technology.
The government should not be indifferent to the prospect of diversifying the energy resources of the country. This is the primary means available to sort out the enduring socio-economic issues that have been haunting the nation.
The writer is an independentresearcher, blogger, columnist based in Karachi.
PAKISTAN HAS 100,000MW PRODUCTION POTENTIAL
The Express Tribune, November 23rd, 2015.
Imtiaz Ali Qazilbash
ISLAMABAD: As is well known, hydroelectric power is the cheapest, cleanest and indigenous form of energy. Pakistan has 65,000 megawatts of identified projects and 100,000MW potential.
The Water and Power Development Authority (Wapda) was established for the development of water and power resources. I was among a small group of engineers that formed the nucleus of Wapda under the great visionary and genius Ghulam Faruque in 1958.
In January 1959, we moved to Lahore. From 1958 to 1976 – a period of 18 years – Wapda was respected as a world-class organisation for being competent, efficient, completing large projects on time and within budgets. There was no corruption.
We completed the Warsak (240MW), Mangla (800MW) and Tarbela (over 3,000MW) projects in addition to a number of small hydel and several large thermal power stations.
An interconnected grid system at 132 kilovolts, 220kv and 500kv was installed from Warsak to Karachi with a state-of-the-art telecommunications and control system.
Without adequate electricity, there could be no economic development and hydroelectric power alone was the preeminent source. In 1975 in the Pakistan Administrative Staff College, Lahore, we arranged a high-level conference on “The Role of Hydroelectric Resources in the Development of Pakistan”, chaired by then Water and Power Minister Yusaf Khattak and attended by the chairman and members of Wapda, federal secretaries as well as 200 water and power engineers.
My paper, which was adopted among conference recommendations, proposed the initiation of work on two major dams/projects on the Indus, after a study on the sites by a reputable consulting firm.
In December 1976, at the annual convention of the Pakistan Engineering Congress, in the multi-sectoral National Development Programme, announced by Prime Minister Zulfikar Ali Bhutto, the stress on hydroelectric power programme of the 1975 conference was included.
In Ziaul Haq’s long night of darkness, the development stopped. Nevertheless, the study on nine sites on the Indus was carried out from 1981-84 by the reputable Canadian Montreal Engineering company. It ranked Bhasha as the best site technically and economically, followed by Dasu, Thakot, Pattan and five other sites. It also prepared a comprehensive feasibility study of the Bhasha dam project.
The tragedy started when Wapda came under the chairmanship of three corrupt individuals from 1976 for 15 years (one of them still hiding abroad). They not only went for thermal power projects with quick kickbacks, but also retarded its core competency in hydel projects.
Corruption and incompetence crept into the organisation. The ‘only Kalabagh’ lobby was another insidious factor.
As a member of the Planning Commission’s Working Group on Energy, I advocated hydroelectric power projects throughout 1990-91. In 1991 at the national seminar on the 8th Plan, I presented a list of 42 major projects. It led to the development of Wapda’s hydel programme – Vision 2021 in 2001.
This programme has been further expanded by Wapda, Private Power and Infrastructure Board and others and at present there are 87 major projects, not only for electricity production but also for storage of 42 million acre feet of water.
These include 15 very large projects including Bhasha (4,500MW), Dasu (4,320MW), Bunji (7,100MW), Kalabagh (3,600MW), Pattan (2,800MW), Thakot (2,800MW) and others. Then there are a whole range of projects in the 500MW range and lower. It is incorrect to say hydel projects are controversial. Only Kalabagh is.
Climate change can only be ignored at our peril. Dams have to be built for storage and flood mitigation and to save agriculture. Recent warning from the Indus River System Authority must not be ignored.
We have to be wary of building more thermal power stations, particularly coal which the US, Germany and even China are giving up. The cost factor is crucial. Hydroelectricity should be Rs2 to 3 per kilowatt hour (presently Rs1.25) compared to coal at Rs12.5, furnace oil above Rs16, wind Rs14 and solar Rs22.
If Pakistan is to develop economically and raise living standards, 50,000MW should be added in the next 15 years. That is where the construction of Bhasha, Dasu and Bunji (16,000MW) on a fast track is imperative together with Munda and Akhori.
Basha must not be delayed any further. What is essential is to arrange the $4 billion needed for civil works including the diversion tunnels and main dam, possibly from the $50 billion financing consortium proposed by China’s Three Gorges company with the IFC for Pakistan’s hydroelectric projects. Each year’s delay in Bhasha is costing the economy over $3 billion.
The writer is the former chairman of Planning Commission’s Working Group on Hydropower and Alternative ENERGY.
RUSSIAN INVESTORS INTERESTED IN PAKISTAN’S ENERGY, AUTO SECTORS
The Express Tribune, November 24th, 2015.
ISLAMABAD: A delegation of Russian businessmen, led by Ildar Mingaleev, Deputy Minister Ministry of Industry and Trade of the Republic of Tatarstan, visited the Islamabad Chamber of Commerce and Industry (ICCI), expressing their interest in investing in Pakistan’s energy and automobile sectors.
“The delegation has held negotiations with Pakistan Petroleum Limited (PPL) and Oil and Gas Development Company (OGDC) to explore the possibility of joint ventures in the oil and gas exploration field,” said Mingaleev.
“Russia’s largest energy company Gazprom is interested in supplying LNG to Pakistan while RT Global Resources, part of the Russian state corporation Rostec, will construct a 1,100km North-South gas pipeline in Pakistan by 2020 to link LNG terminals from Karachi to Lahore.”
Russian investors are also interested in investing and entering into joint ventures for the manufacturing of heavy-duty trucks, passenger cars and other specialised vehicles, shipbuilding and manufacturing of gas turbines and compressors.
“Russia has established free economic zones with tangible tax benefits to foreign investors,” he said and suggested “Pakistani investors should set up textile units in Russia to capture the huge regional market.”
The Trade Development Authority of Pakistan is planning to take a business delegation to Russia and ICCI members will also be part of the delegation that will look for business opportunities.
Speaking on the occasion, ICCI President Atif Ikram Sheikh said Russia was an important country with which Pakistan wanted to develop close relations.
“Cooperation with Russia is the key to achieving Pakistan’s goal of better trade with Central Asia,” Sheikh said, adding “Pakistan wants to strengthen trade, economic, scientific and technical cooperation with Russia for mutual benefits.”
He highlighted energy deficit as a major issue facing Pakistan due to which the industry suffered and asked Russia to help in overcoming the problem by exploring investment and joint venture avenues in the sector.
“Pakistani products including textiles, surgical instruments, leather products, fruits and vegetables and others have great potential in Russia,” he emphasised, proposing frequent exchange of trade delegations that could ex
An official of the Ministry of Commerce said delegations of businessmen and government officials would visit Russia, Belarus and other Central Asian countries to step up business interaction in the respective markets.
At the same time, he said, Pakistan would continue facilitating and offering incentives to local investors.
GOVT HOPEFUL OF EARLY RESUMPTION OF WORK ON TWO HYDROELECTRIC PROJECTS
Dawn, November 25th, 2015
PESHAWAR: The Khyber Pakhtunkhwa government is hopeful of the early resumption of work on transmission lines of two hydropower projects, which has delayed for over five months after both projects were completed earlier in June 2015.
The relevant officials told Dawn that the 17 megawatts Ranolia Khwar project in Kohistan district and 2.5 megawatts Machai Canal Mardan project were both completed in June but had yet to be connected to national grid despite the severe energy crisis faced by the country.
An official at the KP energy and power department said they had also paid the ‘deposit work’ money to the National Transmission and Dispatch Company (NDTC) and Peshawar Electric Supply Company (Pesco) for laying transmission lines.
“The NDTC has been tasked with laying transmission lines of Ranolia power project in Kohistan, while the Pesco will work on Machai,” he said.
The official said the NDTC was not able to resume work on lying transmission lines of the Ranolia power project due to stay orders three local residents obtained from the courts seeking diversion of proposed transmission lines, saying it would damage their homes.
He said few days ago, Peshawar High Court (PHC) vacated one of the stay orders and two other were being heard by courts in Kohistan.
“Some days ago, Kohistan’s local Jirga led by PK-61 MPA Abdul Haq Khan met the chief minister and assured him that both local residents would withdraw their cases,” he said.
Khattak assured the delegation that the people affected by projects would be compensated for their losses.
The official hoped that NDTC would start work on 220kv line soon after these cases are withdrawn.
On the other hand, the Pesco has also not begun work on lying down transmission line of the Machai Canal power project due to one or other reason so far despite it has been paid Rs53 million.
The official said that last month, the Pesco also assured that it would soon start work on lying transmission lines to connect the project with national grid.
A Pakhtunkhwa Energy Development Organisation (PEDO) official requesting anonymity told Dawn that a local court in Kohistan would decide status of a case on Wednesday (today) and it was likely to be quashed.
He said they were they were hopeful the local court would also follow PHC decision, which has vacated the stay sought by a local. “Otherwise, the Jirga has promised vacation of stay orders and chief minister has assured it of adequate compensation,” he said.
He said the PEDO has paid about Rs100 million as cash deposit for lying a kilometer and half of transmission line to connect it with the national grid. Currently the power plant was being tested.
Another PEDO official said Rs53 million had been paid as deposit work for over 12 kilometers long transmission line of Machai Canal power project.
The official said Pesco had earlier in October pledged to PEDO that it would start work on this transmission line soon.
Machai project cost is said to be around Rs663 million.
Officials said the delay in starting work on transmission lines was a loss for the both the province as well as federal government as cheap electricity generated from both projects would save money used on thermal projects.
They said the energy from these projects would serve to save precious foreign exchange of the country, used on importing oil to run thermal power projects.
RS4.8 BILLION SOLAR LIGHTS SCAM UNEARTHED IN SINDH RURAL DEPT
The News, November 25, 2015
MIRPURKHAS: An enquiry is likely to be initiated into Rs4.8 billion solar street lights project, hit by mass irregularities and serious technical issues in the very initial phase of project.
Sources revealed that the samples of imported solar lights have been sent to Mehran university of Engineering and Technology, Jamshoro for technical assessment. The report is likely to be completed by end of this week.
Sources said, although this huge funded project has to be completed in 2017, however, the costly imported solar street lights developed technical issues just after few weeks of installation. Most of such light have failed to work at all. Besides, some powerful govt officers turned this project to their own interest and managed to get installed these solar street lights at their official residences and offices.
This project was initiated and implemented by Rural Development Department (RDD) Sindh with main focus on rural areas of Sindh. When contacted, Abdul Sattar Qureshi, DG RDD Sindh told The News that two monitoring committees have been formed to check the installation of solar lights.
WAPDA TO RAISE RS244BN FOR TWO HYDEL PROJECTS
Dawn, November 26th, 2015
ISLAMABAD: The government allowed the Water and Power Development Authority (Wapda) on Wednesday to raise Rs244 billion from domestic commercial banks for timely completing two major hydropower projects of Rs900bn — Dasu and Neelum-Jhelum.
The decision was taken at a meeting of the Economic Coordination Committee (ECC) of the cabinet, presided over by Finance Minister Ishaq Dar.
The meeting postponed till Friday approval of a proposed $16bn gas sale and purchase agreement with Qatar for import of liquefied natural gas (LNG) till 2030.
Wapda Chairman Zafar Mahmood told Dawn that the 969MW Neelum-Jhelum hydropower project was being constructed without its financial close. “Today’s decision is a milestone for the project, which has now been put on the right track.”
He said a consortium of banks led by the National Bank of Pakistan was ready to extend Rs100bn for the project. The ECC decided to issue sovereign guarantees subject to approval of its revised cost by the Executive Committee of the National Economic Council (Ecnec).
The funding will be available to Wapda after formal approval of the project’s revised cost of Rs413bn by Ecnec next week.
Mr Mahmood said the project’s cost estimates were last approved by the Planning Commission three years ago, but without including major components like interest during construction and taxes and duties. The two items were, nevertheless, payable upfront to the banks and tax authorities and hence required to be made part of the final cost estimates.
He said the Central Development Working Party (CDWP) had cleared the revised cost estimates at Rs413bn by including three per cent contingency expenditure, instead of Wapda’s estimates of Rs414bn, including contingency cost of 5pc.
The Ecnec approval of Rs413bn will also enable China Exim Bank to extend a loan of $576 million. With the availability of these two loans (Rs100bn by local banks and $576m by China Exim Bank), the project’s financial close, which has been hanging in the balance for many years, will now be achieved.
On the basis of these funds, a timeline for project completion would be finalised with the contractors immediately, Mr Mahmood said, adding that the delay of one high-flow season deprived the nation of around $250m in lost opportunity cost.
He said there was no reason for delaying the project any further because financing had been lined up. It was a major problem in the past, he recalled.
Informed sources said the Rs100bn loan would be available to the Neelum-Jhelum project for 10 years, including a grace period of two years involving an interest rate of about Karachi Interbank Offered Rate (Kibor) plus 1.75pc. In case of timely payment (eight years), the interest rate would come down to Kibor plus 1.10pc, the sources said.
DASU DAM: About the 4,320MW Dasu hydropower project, the Wapda chairman said it was the first time that the authority had been able to arrange part financing of such a major project on the basis of its balance sheet. He said Wapda would raise Rs144bn for the project whose first phase’s (2,160MW) final cost had been estimated at around Rs486bn.
Mr Mahmood said sovereign guarantees would be available for Rs88bn loans from commercial banks while Rs56bn would be backed by Wapda’s own balance sheet. The World Bank would be providing around Rs184bn which on average were very soft and long-term loans of 25-30 years. This will include International Development Assistance (IDA) of Rs57.3bn, a commercial financing in foreign exchange worth Rs46bn, an export credit of Rs54bn and additional IDA/IBRD (International Bank for Reconstruction and Development) terms of Rs27bn.
The total cost of the Dasu project (first phase) has been estimated at Rs486bn, including interest during construction cost of Rs106bn.
The sources said the banking consortium would extend Rs88bn loan for 15 years, including a grace period of five years. This is expected to entail an interest rate of Kibor plus 1.40pc as it will be backed by the government’s sovereign guarantee. The banks are still demanding Kibor plus 2pc interest rate on the remaining Rs56bn which will be backed by Wapda’s own balance sheet.
COTTON SALE: The ECC, at the request of the commerce ministry, allowed the Trading Corporation of Pakistan (TCP) to sell its balance lint cotton stock on a retail daily basis at a minimum of Karachi Cotton Association’s spot rate for the day through commission agents to be hired by TCP through open tender.
The committee approved a payment of Rs1.4m to transportation company Mercedes Cargo Services on account of supply of wheat to Afghanistan in compliance with a court order.
It also approved release of funds to the Pakistan Steel Mills for payment of two months’ salaries to its employees.
The ECC allowed the petroleum ministry to set up two subsidiaries – LNG Import Limited and LNG Handling Company – for import of LNG and construction of second LNG terminal for which the government’s bid process fell into troubles. A committee has been set up to review legal requirements for the purpose.
FROM CENTRAL TO SOUTH ASIA: ENERGY MINISTERS STRIKE TRANSMISSION LINE ACCORD
The Express Tribune, November 26th, 2015.
ISLAMABAD: Energy ministers of South and Central Asia have signed a final agreement for laying transmission lines for the supply of 1,300 megawatts of electricity from Kyrgyzstan and Tajikistan to Afghanistan and Pakistan.
“The accord was inked in Turkey on Tuesday and Water and Power Minister Khawaja Muhammad Asif represented Pakistan at the event,” said the spokesman of the Ministry of Water and Power. “Work on the transmission lines is expected to start in May 2016,” he said.
According to an estimate given by the National Electric Power Regulatory Authority (Nepra), the project will cost $953 million.
Pakistan will import electricity from Tajikistan under the Central Asia-South Asia (Casa) 1,000 project and supplies will begin in 2017. It will be able to import an additional 300MW if Afghanistan does not consume its share of electricity because of low demand.
The transmission lines will pass through war-torn Afghanistan, which has assured project stakeholders of protection of the infrastructure. It will take 1.25 cents per kilowatt hour as transit fee.
During the recent visit of Tajikistan President Emomali Rahmon to Pakistan, both sides had announced that the project would be completed before 2018.
The Kyrgyz Republic, Tajikistan, Pakistan and Afghanistan have put an important framework – the Inter-governmental Council – in place for making the Casa-1,000 project a reality. In addition to the commitment from the four countries, the World Bank has consented to finance the project.
The four countries have established the Inter-governmental Council in an effort to foster cooperation on the Casa-1,000 project. The council is tasked with discussing and deciding the strategic issues pertaining to the project and ensuring that necessary steps are taken to execute the plan.
In a significant development, Tajikistan is planning to offer 1,000MW to Pakistan, in addition to the Casa project, in a bid to put its surplus energy to use and help Islamabad ease the energy crisis.
Pakistan is studying the possibility of making more electricity imports for which transmission lines will be laid from Tajikistan to Chitral in the northern areas. A commission was formed during the Tajik president’s trip to Pakistan to work out modalities of the project.
Under this programme, the transmission lines will pass through a small border area of Afghanistan and reach Chitral, which is 15km from Tajikistan’s border.
Among other sectors of the economy, the energy sector of Tajikistan has been showing sustainable growth for the last 15 years.
During this period, hydroelectric power generation has been stable. In addition to big power plants, Tajikistan has 20 medium and 40 small hydroelectric power stations in remote mountainous areas.
Apart from electricity supply, Pakistan and Tajikistan have also agreed to build road projects that will connect the South and Central Asian regions.
In order to develop regional links, Prime Minister Nawaz Sharif and Tajik President Rahmon have given approval to the Gwadar-Peshawar-Kabul-Kunduz-Dushanbe, Khunjerab-Kalasu-Murghab and Chitral-Eshkhahim-Dushanbe routes.
The prime minister said regional connectivity with Tajikistan and China-Pakistan Economic Corridor (CPEC) projects would transform economic outlook for the entire region. “The CPEC and connectivity projects with Tajikistan will prove to be the game changer for the whole region,” he said.
NEELUM-JHELUM POWER PROJECT DELAYS IRK PM
Dawn, November 27th, 2015
AHMAD FRAZ KHAN
LAHORE: Taking exception to some fundamental delays in the execution of the 969MW Neelum-Jhelum hydropower project which, according to him, could cause the loss of the entire project, Prime Minister Nawaz Sharif has asked the Water and Power Development Authority (Wapda) and the project’s (NJHP) management to either get their act together or be ready to face the consequences.
In a letter (1(51)/DS(EA-II)/2015) issued by the PM Office, the prime minister has asked them to come up with an explanation in three days about eight crucial observations which are afflicting the project.
The letter said: “There are significant delays in tunnel excavation as excavation is slow and water seepage issue has become so severe that it can result in loss of the entire project.”
Tunnel breakthrough, expected to be achieved by January 2016, is now delayed till at least May 2016. Additional 22 months would be required for laying rails, installation of steel liners and plug adits. Hence, the expected date of completion of Jhelum crossing is between Nov 2017 and March 2018. Civil works at the weir site are also lagging significantly behind the schedule. Handing over of Unit-I, scheduled for May 2016, is now delayed at least by 14 months.
“The contract enforcement by the NJHP consultant is extremely weak, which is a major factor for slipping of all targets by the contractor. Any further slackness in the project supervision and contract enforcement will further push project completion date till early 2019. The consultant is continuously ignoring ground realities regarding completion of milestones and has allowed the contractor to pursue contract on ‘best effort basis’, instead of pursuing timelines. The option of suspending payments for enhancing performance security is not being exercised by the consultant to the detriment of the project.”
The prime minister’s warning followed observations by the Islamic Development Bank (IDB), one of the financiers of the project, that the “contractor is taking full advantage of unfortunate accident owing to which one of the tunnel boring machines was damaged and remained stagnant for the past six months”.
Besides, it said, delivery of IDB-financed equipment, which was originally planned for 2013-14, had repeatedly been postponed, without any written justification. Moreover, the contractor took a leisurely 18 months to issue enhanced performance guarantees, which should have been provided within 30 days of signing of variation order.
“In view of the above, the consultant should immediately issue a written notification to the contractor to submit an updated revised schedule showing modifications necessary to ensure synchronisation of first unit by May 31, 2016 – legally binding delivery as per variation order signed by the contractor and the NJHP consultant in August 2012.
“Alternately, the contractor will have to counter request for an extension of time, officially documenting the new legally binding completion date,” the IDB observed.
The PM Office letter said: “The prime minister has taken very serious view of the matter and desired that a comprehensive report on the above mentioned observations should be forwarded to his office within three days. Moreover, the project management and Wapda must ensure that revised timelines of the project are met at all cost for which responsibility rests squarely with them.”
NANDIPUR UNDER SUPERVISION OF US COMPANY
The News, November 27, 2015
GUJRANWALA: The supervision of operations of Nandipur Power Project were given to a US company on Thursday. According to reports, General Electric and its subcontractor Albario Engineering Private Ltd have taken charge of the project. At least 144 foreigners have reached the site to manage the operations.
Sources said 425MW electricity would be generated through the plant. It should be mentioned here that Nandipur project’s managing director (MD) was sacked a few weeks earlier for slackness and poor performance.
The government had entered in talks with foreign companies following the MD’s removal from the post. Meanwhile, project director, Shahid Suhail, was also removed for work shirking.
The decision was taken even before the inquiry of alleged malpractices and corruption was called. The decision was taken on the advice of the Board of Directors of the Genco-III, Ministry of Water and Power.The ministry had appointed Shahzada Akbar as the new Project Director.
ENHANCING OPTIONS: CM APPROVES RS12.6B SUKKUR BARRAGE REHABILITATION PROJECT
The Express Tribune, November 28th, 2015
KARACHI: Chief Minister Qaim Ali Shah has approved a Rs12.6-billion Sukkur barrage rehabilitation project, under which flood passage capacity will be increased by 150,000 cusecs and the entire barrage system will be monitored from the control room.
He took this decision while presiding over a meeting at CM House on Friday. The meeting was attended by finance and irrigation minister Murad Ali Shah, chief secretary Muhammad Siddique Memon, additional chief secretary (development) Aijaz Ali Khan, irrigation secretary Zaheer Hyder Shah, water experts Idrees Rajput, Bashir Dahar and Ali Gohar Shah, and British consultant Ian Heijne and his team members.
The consultant, Heijne, said that the barrage structure will be made safe and sound, and flood flow capacity will be enhanced from 1.15 million cusecs to 1.3 million cusecs.
He gave three options for the rehabilitation of Sukkur Barrage. The first option, costing Rs12.6 billion, is to retain the existing river training works, under which flood capacity will improve from 1.15 million cusecs to 1.3 million cusecs, he said, adding that it will improve management to reduce sediment entry into the canals.
For the second option, Heijne suggested that river training works be modified to increase river width. It will increase the flood capacity from 1.15 million cusecs to 1.5 million cusecs with improved flow concentration. It will cost Rs25.2 billion.
The third option that the consultant gave was to increase the number of river spans, and enlarge settling and opening of all the 10 closed gates. It will also increase the flood capacity to 1.5 million cusecs. This will cost Rs26.3 billion.
Irrigation secretary Hyder Shah suggested that the three options given by the consultant after going through a four-year study have different impacts. “But what we need is to discuss all the three options threadbare,” he said.
Water expert Rajput suggested that the structure of the barrage was strong enough. Therefore, he said, option one is better than the other options and recommended the chair to approve it.
Water expert Dahar said that, in the first option, it is the standard operating procedure of the barrage management that effective flushing and closure of head-works during large flows will be made.
The irrigation minister also endorsed option one. “We do not need to increase the flood capacity to 1.5 million cusecs because the flood capacity of Guddu Barrage is 1.2 million cusecs.
The irrigation secretary explained that option one includes different works, such as dredging and excavation for silt disposal, civil works for repair and rehabilitation of barrage and canal head regulators, change of gates and mechanical works, modernising of monitoring and control instrumentation, and construction of new building for monitoring and control, laboratory, workshop and others buildings.
Chief secretary Memon was of the view that almost all the issues and problems are covered under option one. If the pond level of the barrage is increased, it will improve discharge in the canals of the left bank, he said.
The chief minister said that Sukkur Barrage was the lifeline of our agro-economy. “Most of our population depends on it,” he said. “Therefore, its rehabilitation is overdue.” He approved the first option.
NANDIPUR NOT CLOSED, GENERATING OVER 100MW: MINISTER
Dawn, November 29th, 2015
LAHORE: The Nandipur Power Project is presently generating over 100 megawatts of electricity and propaganda about its closure is baseless and unfounded, Minister of State for Water and Power Abid Sher Ali said on Saturday.
Addressing a press conference at Wapda House, he claimed that generation by hydroelectric projects had risen from 2,200MW to 4,369MW, allowing the power sector managers to turn off thermal units and save some money.
He predicted that the Nandipur Power Project would soon start generating more than 180MW and would ultimately achieve the potential of generating 525MW.
The minister promised that the second audit report on the project would be made public and said: “There has not been a single incident of corruption and malpractice in any power project as the PML-N government has kept things transparent.”
He said that industrial units had been exempted from loadshedding and load management had been limited to six hours a day in urban areas and eight hours in rural areas, excepting those areas where line losses and power theft were rampant.
He said the government had achieved its generation target of 16,900MW this year, which would be increased in 2016.
Grid stations have also been installed at a cost of Rs30 billion this year and work on some other grid stations is under way.
The minister claimed that circular debt stood at around Rs250bn because of subsidies and power theft of billions of rupees.
“Some influential landlords have defaulted on bills of Rs4bn and the distribution companies have disconnected supplies to their tube-wells in different parts of the country. The Quetta Electric Supply Company’s dues on tube-wells are over Rs130bn. The ministry has sought Rangers’ help to recover the dues,” he said.
APP adds: Mr Ali said that power plants based on Re-gasified Liquefied Natural Gas (RLNG) would be operational by June 2017 and 400km transmission lines would be laid for them by December 2016.
He said the government had saved Rs110bn in three RLNG projects of cumulative capacity of 3,650MW being installed in Bhikkhi (Sheikhupura), Balloki (Kasur) and Haveli Bahadur Shah (Jhang).
In reply to a question, he said the government had saved Rs220bn by introducing ‘merit audit’ in the power sector and improving the recovery rate of the distribution companies.
The minister said that PC-I of Rs58bn for the Nandipur project had been prepared by the previous governments, adding that vested interests and massive corruption had turned the project into junk despite the spending of Rs33bn before the PML-N assumed power in 2013.
Had the PML government decided to abandon the project, the nation would have to pay $160 million fine to the companies concerned, he said. Therefore, the government took a wise decision and made the power plant operational within the fiscal limit of Rs50bn.
Mr Ali said that generation of inexpensive electricity, particularly from hydel sources, was the priority of the government. “We are generating electricity as per demand of the distribution companies. We prefer hydel and other inexpensive sources and operate furnace oil- or diesel-based plants only when needed,” he said.
Dawn, November 29th, 2015
CLIMATE and topography bequeath Central Asia with rich hydropower potential. After heavy winter snowfall come the strong sun and warm summers. This brings melting water, 40 cubic kilometres each year, down from glaciers in the Tian Shan Mountains and snowfields in the highlands and steppe land.
As it comes down Kyrgyzstan’s 40,000 rivers and streams, the water drops thousands of metres in altitude. Further south, Tajikistan’s mountains and rivers provide it an estimated 4pc of the world’s hydropower resources. There is surplus electricity in the summer months and now a plan — known as CASA 1000 — is to export 1300MW to Pakistan and Afghanistan
Both countries have reached an agreement under which Afghanistan will receive a fee of 1.25 cents per kWh from Pakistan in exchange for letting 1000MW transit through its territory. The power purchase price is reported to be five cents. This does not appear to be a bad deal for Pakistan.
The shortage of electricity in this country is an impediment to greater industrialisation. A plan to establish a series of industrial estates along the path of the China-Pakistan Economic Corridor had to be shelved this year for want of electricity. Power generation is not the only constraint. A ramshackle transmission and distribution system is equally to blame. Consider for example Sindh’s wind corridor where against 4000MW of immediate wind power potential the grid is unable to evacuate anything close to that from Jhimpir where the wind estates are located. Most of the potential is being squandered.
After reaching Kabul from Tajikistan, the planned CASA 1000 transmission line will enter Pakistan at Torkham before reaching Peshawar. What arrangements are being planned to then transmit this 1000MW to other parts of the country? How can we be sure that we will then not encounter another Sindh wind corridor type situation?
At the same time, I ought to point out a couple of potential risks. Kyrgyzstan and Tajikistan also have decrepit, Soviet-era grids that struggle to keep the lights on. If, like us they also plan to upgrade their grid in the coming years and there is a surge in domestic demand, could we expect a curtailment in electricity available for export? Second, many of the Soviet-era dams are in need of rehabilitation, while new ones are also planned. To what extent is the project predicated on the investments that are going to be made here and what are the risks if these do not materialise? Lastly, there is the risk is of escalating insurgency in Afghanistan.
Nonetheless, energy arbitrage is only one aspect of this project. Its bigger component is improving regional connectivity and economic integration between Kyrgyzstan, Tajikistan, Afghanistan and Pakistan. Such projects create interdependencies and give the countries a stake in each other’s stability and security.
The planned Tapi gas pipeline is another such project. That takes a different route as it enters Afghanistan from Turkmenistan, north of Herat and then takes a circuitous course along the Afghanistan ring road to arrive at Kandahar before crossing over to Quetta.
The Iran Pakistan gas pipeline is yet another. The same region is traversed by a North-South highway that links the Iranian port of Chabahar with the Afghanistan ring road. This too is an access to Central Asia. The Afghanistan segment of this road is Indian-built and a cause of much (and needless) chagrin in Pakistani defence quarters.
To be clear, it was Pakistan’s intransigence — and not too bright a move on the chessboard — of not allowing India overland transit to Iran and Afghanistan, which led to Chabahar’s development. Were it not for that there would today be a strong commercial lobby in India pressing for harmonious relations with Pakistan.
Beyond energy re¬¬so¬¬u¬r¬¬ces Afghanistan holds substantial de¬¬posits of high quality iron ore and coking coal in its Bamiyan province and in which, a few years ago, a consortium of Indian companies had obtained over $10 billion in mining concessions.
Through these columns, let me float the idea for this ore and coal to be brought by means of a straight 600km rail line that can be laid from Bamiyan running through Miramshah in North Waziristan and down to Kalabagh. A giant steel mill could be established here, possibly with Russian assistance that would supply steel products to industries in northern Pakistan and the states of western India.
Crowning all these initiatives, of what could become a mesh of electricity transmission lines, gas pipelines, mines, roads, railways and ports, is the China Pakistan Economic Corridor.
Energy, steel, ports, transit corridors and human capital are the primary resources on which nations are built. We have all the building blocks in sight. The only thing needed is a vision that transcends zero-sum thinking.
NEWS COVERAGE PERIOD NOVEMBER 17TH TO NOVEMBER 22ND, 2015
SOLAR ENERGY- INFINITE SOURCE OF POWER GENERATION
The Express Tribune, November 16th, 2015.
ISLAMABAD: Energy sustainability through the solar resource seems to be the only option. The amount of energy the sun radiates in a day is more than the energy used by the world population in a year.
Every hour millions of kilowatts of solar energy hit the earth’s surface, which, if consumed, can altogether change the life of common man. Owing to this characteristic, solar energy is considered an infinite source of renewable energy.
Scientists believe the sun alone will be sufficient to meet energy needs of the world, if all non-renewable resources are exhausted.
Pakistan is deficient in energy, though it has enormous coal, wind, solar and water resources. Its overall power generation capacity stands at 23,538 megawatts with a shortfall of nearly 4,000 and 9,000 megawatts in winter and peak summer seasons, respectively.
According to estimates, electricity demand will rise to 40,000MW by 2020. In such a scenario, the country will trail growing demand despite a number of ongoing projects including hydroelectric power schemes, which are likely to be completed by 2018.
In the backdrop of growing population and depleting resources, experts suggest solar energy is the permanent resource that is available for use in direct (solar radiation) and indirect (wind, biomass, hydro, ocean, etc) forms.
Solar energy can be easily converted into electricity with the help of photovoltaic technology, which can be classified as active and passive. Photovoltaic panels and solar thermal collectors that harness solar energy are examples of active solar technology. Passive technology involves constructing rooms to improve air circulation and orienting space to use sunlight.
It is a proven and easy-to-use mechanism, which is being used globally for telecommunication towers, highway billboards, off-grid cottages, resorts in desert areas, water pumping for community needs and irrigation, park lighting, exterior home lighting, etc.
A brief look at Pakistan’s resources highlights that the situation is not that dismal. Only coal reserves of about 175 billion tons in Thar can generate 100,000MW for the next 200 years. Water resources, if exploited, can generate up to 60,000MW. Had dams been built along the Indus cascade, these alone would have generated 40,000MW.
In the case of solar energy, annual radiation in most areas is about 2,000 kilowatt hours/m2, which is the highest in the world. It is generally a consensus among experts that solar power generation is the most sustainable, as there is no chance of resource exhaustion.
Estimates suggest if only 10% of the Thar desert, spread over an area of 300,000 square kilometres, is utilised to generate solar energy, the production capacity could be as high as 300,000MW. Though a 100MW solar project is being executed in Bahawalpur and other such projects are in the pipeline, the pace of development is very slow.
The delay should be investigated as some quarters blame the oil mafia for creating the hurdles.
The solar photovoltaic technology is a stable and state-of-the-art system and is also cheaper compared to power generation through oil or coal. Such power projects are popular in the world and many countries including the US and China are promoting the technology.
At present, Pakistan mainly consumes oil and gas-based electricity, but the progress of photovoltaic technology provides an opportunity to revamp the national energy structure.
Contrary to the uncertainties surrounding the supply of fossil fuels, solar energy is a resource that is permanently available virtually everywhere. The fuel price over the lifetime of the solar power plant is almost zero.
In power generation through conventional resources, fuel price volatility is a significant risk factor, with oil prices fluctuating between $50 and $100 per barrel in the last around one and a half years.
Solar energy does not require expensive raw material like oil and coal and its labour needs are significantly lower. The raw material does not need to be constantly extracted, refined and transported to the power plant.
The life expectancy of solar projects varies widely, but many panels produced today carry a 25 to 30-year warranty with life expectancy of up to 40 years.
Now is the time to switch the national focus to renewable energy resources. Otherwise, the money being paid by the consumers as well as subsidies on electricity bills will pile on the burden on the entire system.
DASU INFRASTRUCTURE CONTRACT SIGNED
Dawn, November 18th, 2015
LAHORE: The Water and Power Development Authority (Wapda) signed a Rs4.8 billion contract with the China Railway First Group (CRFG) on Tuesday for construction of a project colony and allied infrastructure for the Dasu Hydropower Project.
The project’s General Manager Haji Muhammad Farooq Ahmed and CRFG GM Xian Zhengjum signed the agreement at Wapda House.
The contract includes construction of project offices, houses, hostels, a rest-house, a hospital, a community centre, parks and a playground in about two years.
Wapda Chairman Zafar Mahmood said on the occasion that the fourth contract had been awarded through a transparent system for bid evaluation. He urged the contractor to complete the work within the stipulated time.
The Wapda chief said the expressions of interest (EoI) submitted by various construction firms of international repute for civil works of the dam and powerhouse were being processed and the work would commence as soon as the required process was completed.
The firms awarded the three contracts earlier have mobilised resources at the sites for laying a 132kV transmission line from Duber Khwar Hydel Power Station to the Dasu project site, relocation of a portion of the Karakoram Highway and construction of the right bank access road.
The government is implementing the project in two stages. The World Bank is financing the stage-I with an IDA credit of $588.4 million and a PCG of $460m.
The 2,160MW stage is scheduled to be completed in five years and will contribute more than 12bn units of affordable and environment-friendly electricity to the national grid every year. The project is likely to help provide relief to consumers by reducing the tariff in addition to creating opportunities for socio-economic development in the remote area of Khyber Pakhtunkhwa.
OFFICIAL FIND FAULTS IN THE PARLIAMENT SOLAR ENERGY PROJECT
Dawn, November 18th, 2015
ISLAMABAD: A Chinese contractor is executing a project to make the Parliament House self-sufficient in energy, but the quality of work has worried some officials.
“I doubt this kind of work will serve the intended purpose of producing 1.1MW of electricity on a long-term basis,” a senior official of the National Assembly Secretariat said, about the Solar Power Generation System (SPGS) being installed there since April.
Not only has the contractor, appointed by the Chinese government, refused to provide daily progress reports to the secretariat, it has also not submitted drawings of the SPGS project, initiated with a Rs500 million Chinese grant, the official told Dawn.
Acting Speaker Murtaza Javed Abbasi noted flaws in the work when he visited the project in the last week of October after suspicions that low quality material was being used in construction.
Even after mechanical tests carried out by the University of Engineering and Heavy Mechanical Complex at Taxila found weak threads’ strength, the secretariat discovered that the contractor continued to use the same weak anchor bolts. Neither did the contractor periodically test the strength of concrete cubes for the beams meant to support solar panels.
Secretariat officials were alarmed that beam-column joints had been filled with concrete. They also observed empty spaces between the photovoltaic plates, which, the contractor was informed, will cause leakages.
“Under our agreement, the contractor cannot proceed with the work until the highlighted flaws are rectified – it has carried on with impunity,” the official said.
Despite several requests, the contractor has not provided the secretariat details of the interconnectivity of the SPGS with the national grid, when the project is set to be complete by December 6. Those details are mandatory for securing a license from the National Electric Power Regulatory Authority and the National Transmission and Dispatch Company, according to the official.
However, memos fired by the secretariat to ‘all concerned quarters’ – including the speaker, deputy speaker and the Economic Affairs Division of the federal government – about ‘the substandard work’ seem to have been in vain.
All that the Secretary National Assembly, Mohammad Riaz, could do in the situation was hope.
“I hope the contractor will remove the flaws pointed out by our engineer,” he told Dawn. “We all wish that the Chinese-aided project is completed and runs successfully.”
Some of his colleagues are not as hopeful.
“We are unable to understand the laxity shown by the Economic Affairs Division. After all, it is the responsibility of the Government of Pakistan to ensure that money is spent honestly and efficiently,” they say.
PAKISTAN SEEKS INDIAN CONSENT FOR NEUTRAL EXPERT
The News, November 18, 2015
ISLAMABAD: To initiate a legal battle at the international forum over the faulty designs of the 330-MW Kishanganga Hydropower Project being built on the Ganga River in Held Kashmir and the 850-MW Ratle Hydropower Project being erected on the Chenab River, Pakistan has formally asked India to give its consent for the appointment of a neutral expert to initiate arbitration.
Pakistan’s Foreign Office has written to India, seeking its consent for the appointment of the neutral expert over the designs of the two projects as both countries at the level of the Permanent Commission of Indus Waters (PCIW) have failed to resolve the issue.
Mirza Asif Beg, commissioner of the Pakistan Commission of Indus Water, confirmed the development, saying that in case the Indian side did not give any response, Pakistan would move the World Bank for the appointment of the neutral expert. “We have exhausted all provisions enshrined in the Treaty to resolve the dispute as Pakistan is of the opinion that the said designs are not in line with the provisions of the Treaty and will cause water loss to the low riparian country. Pakistan has already hired US law firms for fighting the case. The NESPAK and the Pakistan Commission of Indus Water will provide technical input during the legal battle.”
Pakistan’s Foreign Office last week sent a statement of points of difference to India according to which India has been asked to jointly appoint the neutral expert.
Pakistan has earlier taken India to the International Court of Justice on the 450-MW Baglihar Hydropower Project wherein India got success and then took New Delhi to The Hague for the interpretation of the Kishanganga Hydropower Project.
The Hague court, in its final order, had not only asked India to increase the environmental water flow downstream from the dam to 9 cubic meters per second (Cumecs) – an increase of 112% – but also rejected the Indian government plea to reconsider or re-interpret the Permanent Court of Arbitration order of Feb 2013 that the 330-MW Kishanganga Hydro Electric Power Project (KHEP) under construction and all other subsequent projects could not draw down the water level in the projects below the dead storage level.
India is currently carrying on both the projects along with mega storages of water on the Pakistani rivers with the designs which are completely breaching the provisions of the Indus Water Treaty. Pakistan had raised three objections to the Kishanganga project’s design. Pakistan also wants India to raise intake by up to 4 metres and raise spillways up to 9 metres.
On the issue of Ratle plant, Islamabad raised four objections. Pakistan wants India to maintain free board at 1 metre whereas India wants to keep it at 2 metres. In addition, India wants to keep the pondage of 24 million cubic metres, but Pakistan wants the pondage of 8 million cubic metres. Pakistan also wants that the intake of the project should be raised by up to 8.8 metres and it spillways should be raised by up to 20 metres.
India is constructing the Ratle Hydropower Project on the Chenab River and if it manages to construct the project with its existing objectionable design, the water flow of the Chenab River at Head Marala will reduce by 40 per cent that will be detrimental to irrigation in central Punjab of Pakistan.
Beg said India has awarded the project contract to a private company that will run the project on a BOT (build, operate and transfer) basis for 35 years and then hand it over to India.
This dam will be three-time larger than the Baglihar dam. India has already craved out the plan to generate 32,000 MWs of electricity on the Pakistani rivers and will have the capacity to regulate the water flows destined to Pakistan. So far India has built the Dalhasti Hydropower Project of 330-MW, Baglihar of 450-MW and now has started the Ratle project.
On the Neelum River that joins the Jhelum River in Pakistan; India has already completed the Uri-1 and Uri-II Hydropower Projects.
NANDIPUR PROJECT COST TURNED OUT TO BE RS58 BN NOT RS84 BN: KH ASIF
The News, November 19, 2015
ISLAMABAD: Federal Minister of Water and Power Khawaja Asif has said that the audit report by the Auditor General of Pakistan (AGP) has endorsed the government’s claim that the Nandipur power project will be completed within the amount of Rs58.4 billion, not Rs84 billion. So far, around Rs51 billion have been spent on this project.
Addressing a press conference along with Minister for Information and Broadcasting Pervaiz Rashid, Kh Asif said the AGP’s report had been completed; however, it will be sent to the prime minister and once he had seen it, it would be made public and the ministry will give reply to the audit.
It is worth mentioning that the AGP had given a clean chit to the federal government on the 425-megawatt Nandipur Power Project, saying there was no misappropriation in its financial affairs or cost overrun. However, it raised questions on the appointment of the managing director, under-capacity furnace oil treatment plant (FOTP) and the project’s award to a blacklisted foreign company.
The minister parried the question whether the public will trust the report which was prepared by the Auditor General Rana Assad Amin.
To address the concerns that were voiced in the media and parliament, the government had initiated two separate audits, one by the AGP and the second by M/s Ferguson. M/s Ferguson audit is under way.
Asif said that the AGP report points a finger at not awarding the project’s operation and management (O&M) contract to a company after competitive bidding, as it was liable to be awarded after July 2015. He said that after competitive international bidding, its O&M contract will be awarded in the next two or three months.
Although, the furnace oil treatment plant (FOTP) of the project is under-capacity and two more skids will be added to the already installed four skids, yet the project is operational since July 24, 2015, and is generating 445MWs of electricity. The contractor, who has to install two additional units to make up for the deficiency, has been made to undertake the rectification. However, for the time being, all the four units are being utilised to match the requirements.
He added that the government was planning to transfer it on gas which will reduce its generation tariff by around two Cents. Asif said, “It will require 100 million cubic feet of gas per day and its allocation has been made already and once it is converted to gas, its generation capacity will rise to 500 megawatts. The report has also recommended augmentation of the FOTP capacity and gas conversion of the project which are already being undertaken by the new management.”
He said that the project was awarded to a Chinese company Dongfang when it had not been blacklisted. It was blacklisted in a railway project months after the energy project was given to it. The report has indicated that the project was given to a blacklisted company. However, the report itself has indicated that M/s Dongfang was blacklisted on 21-6-2013 with reference to a project in Pakistan Railways while the Nandipur project was awarded to the said firm in January 2008.
The report has said that the appointment of MD Nandipur was illegal as there was no approved position of MD. “The company’s BoD has the authority to create such posts. As far as the experience of the appointed MD is concerned, we believe at that point more of managerial experience was required to put the project back on track.”
Regarding the financial implication of the delay in the project completion, the minister said that due to around two-year delay and incompetence of the previous Pakistan People’s Party’s government, not only the project cost increased due to inflation, exchange rate and interest during construction (IDC) but its financial implications on the economy were around Rs226 billion during these two years.
Khawaja Asif further claimed that according to the report, the project was supposed to be completed in 2011 but due to some legal hurdles it remained unfinished. “We restarted it in 2013 on the same PC-I blueprints since 60-65% of the project had been completed. Till then the exchange rate, charges and interests had piled up. It had been propagated that the project’s cost had reached Rs84 billion from Rs21 billion. According to this report, Rs51 billion have been spent out of Rs58 billion, which is the new cost for the project. It is also proved by Nepra and the official audit that allegations of going over the budget were exaggerated.”
APP adds: Replying to a question, Khawaja Asif said that Net Hydel Profit would be paid to Khyber Pakhtunkhwa soon as Prime Minster Nawaz Sharif had directed to resolve the issue.
To a question, he said the government was in contact with the workers of the Water and Power Development Authority (Wapda) who were on strike to resolve the issue amicably.
IMPLEMENTATION OF ENERGY POLICY 2013 MAY OVERCOME ENERGY CRISIS
The News, November 19, 2015
KARACHI: The government may overcome energy crisis by early 2018 if energy policy 2013 is implemented in letter and spirit, energy specialists said on Wednesday.
Most of the government’s measures lack far-sighted and all-round approach, which is critical for good governance and institutional growth and performance, they said, speaking at a seminar titled ‘Government’s Performance in Power Sector: A Mid-Term Review’.
The Institute of Policy Studies organised the seminar.
Ex-secretary Ashfaq Mahmood at Water and Power Ministry critically evaluated the government’s performance in comparison with its strategic framework in 2013 policy.
“While the government’s primary target was the elimination of load shedding, its policies were also inclusive of other important areas, such as power generation, distribution, theft control, revenue collection, transparency, accountability and customer care,” Mahmood said.
“While the government was somewhat successful in reducing load shedding, it cannot find a sustainable resolve unless it pays heed to other mentioned areas as well.”
He said the present government aimed at improving the performance of power generation companies to achieve the target of eliminating load-shedding by 2017.
A report, issued by the National Electric Power Regulatory Authority (Nepra), claimed that the efficiencies of generation plants in public sector declined 11 percent to 36 percent of their design efficiencies and their distribution losses were in the range of 9.47 percent to 33.40 percent of the electricity received. “None of the discos (distribution companies) met the target set by Nepra in 2013-14 while in case of Fesco, Gepco, Lesco and Iesco (Faisalabad, Gujranwala, Lahore and Islamabad) the losses even showed increase over the previous year in sharp contrast to Nepra’s requirement to reduce losses,” Mahmood said. He also lamented that the target of coal conversion is also not making much headway, whereas the solar park has started making some contribution but is expensive.
Mahmood lauded the new power generation policy 2015 and termed it as a step in the right direction.
Member (Energy) Syed Akhtar Ali defended the approach of the Planning Commission and claimed that the present government’s efforts were unprecedented and things were gradually improving.
Additional secretary Abu Bakar Madni at Sindh energy department claimed a paradigm shift in Sindh government’s policies to attract investment in the sector and to exploit the immense potential in the province through public-private partnership.
Dawn, November 20th, 2015
WHAT happens when a government shoves aside common sense and prudence, and makes an infrastructure project a matter of hubris?
The answer can be found in the auditor general of Pakistan’s findings on the Nandipur power project. From the very outset, once the PML-N had made clear that Nandipur would be the project on which it would demonstrate its power-sector credentials and prove it could do what the PPP utterly failed to do, it was apparent that the power project was going to be a high-risk affair.
Already a lightning rod under the PPP, Nandipur had become a symbol of government incompetence, profligacy and worse.
Despite that baggage, or perhaps because of it, PML-N policymakers decided to throw caution to the wind and make outsize promises that were going to be very hard to keep. It was like tempting fate — and the gods were unlikely to be kind.
In the end, as the AGP report has suggested, the PML-N administration has proved to be like many dispensations before it — unwilling to make reasonable pledges and unable to deliver timely and cost-efficient results.
In a way, it is almost beside the point that no gross corruption has apparently been unearthed by the AGP.
Nandipur, in part because of the elevated status the government gave it, but also because of the political opposition’s gleeful and exaggerated allegations, has at the midway point of this government become a symbol.
Electricity was the issue on which this government had staked its reputation and ability to deliver quickly and efficiently.
Two and a half years on, aside from a heavy emphasis on power generation — perhaps tellingly similar to the PPP’s approach — there has been very little by way of power-sector reforms or overhaul of the transmission and distribution systems.
Were it not for the oil prices bonanza, it is more than likely that the PML-N would be presiding over a similarly collapsing system as under the PPP.
If there is a positive to be found in the Nandipur fiasco, it is that the PML-N, at least at the prime ministerial level, remains willing to acknowledge and confront mistakes and failures. But are lessons really being learned?
If it weren’t for the allegations of corruption and the PML-N’s anxiousness to prove those allegations untrue, would there have been an audit into Nandipur? That appears to be unlikely. Which means that future bungling of projects is just as likely as before.
WIND PROJECTS OF 3,500MW TO BE SET UP BY 2018
The News, November 20, 2015
ISLAMABAD: The Alternate Energy Development Board (AEDB) has embarked on an ambitious plan to enhance the energy mix up to 20 to 25 percent by adding 3,000 to 3,500 megawatts wind-based electricity to the national grid system by 2018.
Out of this as many as 1,396 megawatt wind electricity will include in the system by 2017 as the AEDB would complete several projects initiated for alternate power generation, Chief Executive Officer (CEO) Amjad A Awan said in an interview with APP.
Awan said currently the wind projects having 255.4 megawatts power generation capacity are operational across the country, including FFC Energy (49.5 MW), Jhimpir Zorlu Enerji Pakistan (56.4 MW), Jhimpir Three Gorges First Wind Farm Pakistan (49.5 MW), Jhimpir Foundation Wind Energy-II (50 MW) Gharo and Foundation Wind Energy I (50 MW) Gharo.
Awan said 28 ongoing wind projects of 1,396.4 MW capacity would be completed by 2017, which would play a major role in overcoming the energy crisis on which the government is focusing.
He said out of these nine projects (477 MW) have achieved financial close and are under construction.
These projects include Sapphire Wind Power Company (50 MW), Yunus Energy (50 MW), Metro Power Company (50 MW), Jhimpir Tapal Wind Energy (30 MW), Jhimpir Gul Wind Energy (50 MW), Jhimpir United Energy Pakistan (99 MW), Jhimpir Hydro China Dawood Power (50 MW) Gharo, Master Wind Energy (50 MW), Jhimpir and Tenaga Generasi (50 MW) Gharo. Fourteen wind power projects with a cumulative capacity of 664 MW are at different stages of project development and are expected to be completed by 2017/18.
He said there has been strategies that favour that one percent of energy should come through alternate sector; however we aim to rise it up to 20 to 25 percent by 2018.
He said power tariff for wind power projects has been reduced to 10.4 cents, which indicates that this could prove a promising sector for future investments.
He was of the view that Pakistan was having huge wind power generation potential and if exploited properly it could become a very lucrative and feasible source of alternate energy.
Pakistan naturally is gifted in alternate energy resources and this has been identified by mapping assessment of wind solar and biomass in the country through ESMAP’s (World Bank) assistance.
He said although the wind potential has been evaluated at a huge scale; however as far as our studies and surveys are concerned “we have specifically identified the wind corridors having power generation potential of 30,000 megawatts.”
He said the AEDB has identified the high potential regions, including in Southern Sindh Balochistan and Punjab where electricity generation through wind has a promising potential.
Awan said some of the wind potential areas have also solar intensity so in such regions both wind and solar energy could be generated simultaneously and this may also be very attractive for the investors.
He said there has been good responses from the investors to invest in this particular field of energy generation and observed that when the investors are given confidence over the sustainability of the projects they willingly come to invest.
The CEO said historically Pakistan has been leading energy sector in the region as it has been pioneering to produce through various sources, including coal, gas, bio gas, wind and solar.
“We were the first to set up regulatory authority and initiated power generation through independent power producers,” he said.
SINDH, SECMC SIGN ACCORDS FOR THAR COAL PROJECT
The News, November 20, 2015
KARACHI: Government of Sindh signed implementation agreement with Sindh Engro Coal Mining Company (SECMC) on Thursday for ensuring infrastructure development for the Thar Coal Project.
A water utilisation agreement has also been signed with Engro Powergen Thar Limited (EPTL), an important security document for financial close and water allocation for its power plants in Block II, Tharparkar
“Another important milestone has been achieved for both mining and associated power plant activities in Thar Coal Block II,” a statement said.
Under the implementation agreement with Sindh Engro Coal Mining Company, the government will commit to provide all required infrastructure to facilitate the mining project amounting $600 million.
The joint venture agreement under which SECMC was formed, provides the government of Sindh with majority shareholding in the company ie 51 percent and responsibility for the provision of key infrastructure such as road networks, airport facilities, water supply scheme, effluent disposal scheme as well as all required security for expatriate employees who are expected to arrive in the area early next year.
The signing of this agreement represents the provincial governments’ continuous support in expediting the timely execution of the Thar Coal project. It also furthers its resolve to encourage economic prosperity in the country by facilitating the requirements of investors for the financial close of SECMC’s mining project.
The associated power plant being established by Engro Powergen Thar Limited (EPTL) is also nearing financial close with the signing of the water utilisation agreement with the government of Sindh.
Under this tripartite agreement, the Thar Power Company, a subsidiary of SECMC, will be responsible to operate and maintain the infrastructure facilitation, while the Sindh Irrigation Department and Energy Department will ensure the allocation of 17.5 cusecs of treated water for the functioning of EPTL’s power project in Block 2.
Under the agreement, concerned provincial departments will be responsible to construct water supply infrastructure from the LBOD to Nabisar whereas EPTL will be responsible to establish the same after Vajihar.
The News, November 21, 2015
Amanat Ali Chaudhry
With the laying of the foundation stone of the 1,223MW Baloki power plant near Kasur on November 10, work has begun on three gas-fired power projects of 3,600MW cumulative capacity.
The construction of the 1,180MW Bhikki power plant, one of the three power plants, is being funded by the Punjab government whereas the 1,200MW Haveli Bahadur Shah (Jhang) and 1,223MW Baloki power plants will be financed by the federal government. These projects are set to be completed by 2017 and will add a total of 3,600MW to the national grid on completion.
The addition of this quantum of electricity from gas-fuelled projects will go a long way in alleviating power outages in the country. One of the chief highlights of these projects is that they are being built near the load centres.
On being voted into power, the present government was confronted with three key policy areas – elimination of terrorism; end of the energy crisis; and the revival of the national economy through deep-rooted, structural reforms.
The energy crisis, whose severity cannot emphasised enough, did not happen all of a sudden. It was years of criminal neglect that led us here. The hours-long power outages not only literally darkened our households but also took a heavy toll on our economy.
Our energy problem is much more complex than we understand. The problem is not just confined to the widening gap between demand and supply. While generation of electricity remains a dominant challenge, it is cheap and affordable energy that we need the most to run the economy.
Energy governance, revamping of the transmission and distribution network and circular debt are other key challenges the government is dealing with. The present high tariff of electricity is due to costly sources of power generation. Unless we broaden our energy mix and shift its focus from expensive sources to cheap sources of power generation, we cannot resolve our energy crisis on a more enduring and sustainable basis.
Following the 18th Amendment whereby provinces were allowed to launch their own power projects, the government of Punjab has initiated a number of projects to overcome the severe energy shortages. The government is tapping all available resources in the province such as coal, solar, and wind to generate cheap, clean and environment-friendly electricity. There is no preference for any fuel as harnessing all available resources for electricity generation is a strategic imperative to bridge the demand-supply deficit.
From mooting of the idea of setting up gas-fired power plants to the groundbreaking of these projects, the process took five months to complete. There are a number of defining characteristics of these projects.
The first relates to savings. In all these projects, the government has ensured a phenomenal saving of Rs110 billion, something unheard of in a country where corruption in energy projects was the name of the game in the past. These phenomenal savings are tangible. All three projects are being built at half the price at which similar gas projects have generally been installed to date. The Guddu Power Plant was constructed at the cost of $836 per kilowatt. The per kilowatt cost of the Uch Power Plant was $987. In the same way, the cost of various IPPs ranged from $800 to $930 per kilowatt. Compared to these, the cost of $466 per kilowatt will be incurred on the construction of the Bhikki power plant.
It is not just the reduced and the minimum cost factor that makes these power plants landmark projects. Importantly, they will be installed by using the most efficient and state of the art technology compared to the already installed LNG-powered plants. The world renowned American corporation, General Electric, has won the contract for supply of machinery and equipment for the plants.
The second is the efficiency factor of these plants. A brief comparison is instructive here. The Guddu Power Plant is considered the best in terms of efficiency – at 54.48 percent. Comparatively speaking, the efficiency of these power plants will be 61 percent, which is seven percent more than that of Guddu. For Nepra, a plant is considered to have achieved acceptable efficiency benchmark if its efficiency level is 57 percent. In case of all three gas-fired plants, efficiency will be 61 percent, representing an increase of more than four percent compared to the acceptable level of efficiency.
It is relevant to mention that the entire process of selection of contractors including preparation of detailed engineering design and tender documents, and pre-qualification was concluded in just five months under the supervision of world-renowned consultants and in accordance with the best practices of transparency.
Globally respected firms such as General Electric, Mitsubishi and Simmons participated in the bidding process, which testifies to the fact that Pakistan is becoming a preferred destination for international investors. The renewed and extraordinary interest the international firms are taking in Pakistan owes, among other factors, to the seriousness of the government’s development agenda, track record and credibility.
These gas-powered projects have established new benchmarks: first, the cost of plants is almost half of the cost of plants installed to date. That brings a new culture of realistic cost for power projects and provides fair returns to investors without being burdensome for the consumers. Second, the bidding process was completed in a meticulous manner according to the laid-down timelines. This is unprecedented in the power sector.
Third, the physical infrastructure and security documents now in place would facilitate construction of plants near load centres. Four, after the 18th Amendment the government of Punjab has developed the capacity to undertake large-sized power plants in the province.
The vision underlining the power projects in Punjab is characterised by transparency, efficiency, compliance with requisite standards and quality controls and accountability.
The twin factors of cost-overruns and delay in completion of projects have been a recurring phenomenon in our development history. The government should make sure that it completes energy projects within the stipulated costs and timelines.
With energy sector development being the focus of the CPEC, the day is not far when Pakistan will achieve self-sufficiency in the field of energy, which is a vital component of our national security paradigm. For its part, the present government is committed to eliminating power shortage from the country and making it energy secure in line with its vision of a ‘Roshan Pakistan’.
LIGHT IN THE DARKNESS
The Express Tribune, November 21st, 2015.
The US-Pakistan Clean Energy Partnership, which was recently announced, should be recognised for the estimated impact that it will make on 30 million people by adding at least 3,000MW to the electricity grid. Pakistan is in an energy crisis — one that adversely impacts its economy and costs businesses up to 34 per cent of their annual revenue, according to the World Bank’s Doing Business 2016 report. Anything that can be done to address this state of affairs should be celebrated.
But do you know who aren’t celebrating this partnership? The estimated 70 million people of Pakistan who aren’t connected to the electricity grid, and aren’t likely to receive its benefits in their lifetime. In fact, without electricity to power a phone, radio or TV, it’s likely that they’ve not even heard of the partnership.
The Pakistan government has sadly been silent on its plan to bring this large proportion of the population into the 20th (let alone the 21st) century. Instead, it’s focused on big-ticket power plants, both dirty and renewable, that sit well with the voting public. This is an extremely short-term view. Every day, this population spends money on inferior alternatives, limiting its economic contribution. According to the IFC Pakistan Off-grid Lighting Consumer Perceptions report, the off-grid population spends $1.2 billion every year on poor alternatives, such as kerosene and battery-powered torches. But these alternatives aren’t adequate. A child can’t study by the light of a kerosene lamp, nor can a businessman keep his shop open after sunset.
Across the Atlantic Ocean, we see a different story. Hundreds of thousands of households in East Africa, in the short span of a few years, have gained access to modern energy through pre-paid solar systems from private sector companies, such as M-KOPA, Off-Grid: Electric and BBOXX. Mobisol, a German company operating in Rwanda and Tanzania, announced that it has sold solar systems to over 30,000 households in 2.5 years, amounting to over 3MW in solar generation capacity. Having demonstrated feasibility, African governments are now supporting such companies in their endeavours, such as the Tanzanian government pledging in 2015 to light one million off-grid homes by 2017. In Bangladesh, the government and development institutions have implemented the IDCOL programme to unlock consumer financing. In 2.5 years, the programme has gone on to facilitate electricity access for over 3.6 million people.
In Pakistan, the story is bleak in comparison. The social business that I co-founded, EcoEnergyFinance, is one of a handful of players that reach deep into off-grid locations to sell and service solar energy solutions. We have found that a lack of affordability, availability and service infrastructure prevent people from accessing such solutions, and this is reflected as well in the IFC report. The government can address this in the following ways. Firstly, by providing financial mechanisms that will unlock consumer financing of solar energy solutions by the private sector. Secondly, by ensuring that all solar panels and accessories imported into Pakistan are of high quality and certified by a programme like Lighting Global. And lastly by providing flexible funding to promote innovative and entrepreneurial solutions to the off-grid challenge.
The private sector is ready to step in and meet the growing needs of the 70 million people that are off-grid. With the support of the government, our progress can be accelerated, leading to a more prosperous Pakistan.
NEELUM-JHELUM HYDROPOWER PROJECT DELAYED FOR 7-8 MONTHS
The News, November 22, 2015
ISLAMABAD: In another shocking development, the 969MW Neelum-Jhelum Hydropower Project, whose cost has swelled to whopping Rs414 billion, has been delayed by another seven to eight months in the wake of government’s failure in achieving the financial closure.
In the case, financial closure of the project, which has been completed by 74.5 per cent, is achieved today, then all the turbines of project will go on test run by end of next year, one of the top men in Wapda told The News. The earlier timeline for the project completion was Nov 2016 which has now been extended to July-August 2017. But even if the required amount of almost $1.576 billion is ensured now, the project will be on test run by end of next calendar year. However, the delay can be reduced to seven to eight months by working round the clock.
China’s EXIM bank has linked the release of $576 million to Pakistan to the approval of revised PC-1 of the project with a cost of Rs414 billion by Ecnec (Executive Committee of National Economic Council) as the CDWP (Central Development Working Party) has already recommended the project with the new cost.
Likewise, a local banks’ consortium headed by National Bank of Pakistan (NBP) has also argued that it will provide the Rs100 billion (around $1 billion) loan the moment Ecnec approves the project.
However, the Nawaz government that wants the project to be completed by 2016-end has failed to achieve the financial closure.
However, Wapda Chairman Zafar Mehmood, when contacted, in a cautious response said the project was facing financial constraints. “If the financial closure gets achieved today then the project will be functional some time by the end of 2017.” However, he remained tight lipped when asked as to when the financial closure will be achieved.
Younas Dagha – secretary water and power – didn’t respond when he was sent an SMS containing the question: Is there any development that the Neelum-Jhelum Hydropower Project has delayed by 7-8 months because of the government’s failure in achieving financial closure? The correspondent made several calls on his cell phone, but it remained unattended. However, the top official said: “We are spending more money out of the budgeted amount that was to be spent by Wapda’s own resources and keeping the project afloat so that the contractor could not make its mind to leave the project.”
The PC-1 has been revised thrice and the project is 74.5 per cent complete in the absence of financial closure. So in this way, this project is one of its own kind.
“So far a huge amount of Rs180 billion has been spent on the project out of which Rs 39 billion is being generated through Neelum-Jhelum Surcharge imposed on electricity bills.”
In 2002, the official says, the project cost was Rs84 billion, but its design had to be modified after the 2005 earthquake,, keeping in view the fault lines passing through the site, while the scale of the project also expanded.
Furthermore, the cost escalated to Rs274 billion due to the rising value of dollar. Now, it is the third time that the project cost has be revised upward to Rs414 billion mainly because of the inclusion of duties, taxes and IDC (interests during cost) till completion of the project and the cost of the consultant.
The 86 per cent increase in the cost is because of the IDC and 7 per cent in the wake of consultancy fee. So far, 74.5 per cent construction work has been completed on the site. “We have constructed the tunnel beneath the bed of River Jhelum, which will be connected to the tunnel coming from the dam site by end of January 2016.”
Moreover, transformers and mechanical equipment has been installed in powerhouse, while power pylons are being installed in the switch yard from where electricity will be transmitted to the Gujranwala grid station.
The tunnel excavation has been completed by 86 per cent as 59-km tunnel has been constructed. At the dam site, 72 per cent construction work has been completed, including the construction of spillway up to level of 1019 meters, wherein one hydraulic gate has been installed and the second one will also be in place in next two months.
The tunnel boarding machines (TBMs) have the target to excavate the 22.5-km tunnel out of which 13.5-km has been done. The official said the project was earlier delayed by six months because of the rock burst at the site owing to which three workers died and nine were injured.
CHINESE INVESTORS EYE JOINT VENTURES IN POWER PROJECTS
Dawn, October 6th , 2015
LAHORE: Chinese investors have shown keen interest in joint ventures with their Pakistani counterparts in the fields of solar and coal power generation.
A two-member Chinese delegation while visiting Lahore Chamber of Commerce and Industry (LCCI) on Monday said that private sector of both the countries needs to come forward to further strengthen the bilateral relations.
On the occasion, LCCI President Sheikh Muhammad Arshad anticipated that the bilateral trade between the two countries would touch $15 billion within the next few years.
He said: “Although Pakistan’s exports to China are gradually increasing, the trade has always been in favour of China.”
The two countries had a combined market of more than 1.5bn people but the trade volume needs to be pushed up, he added.
GAS SUPPLY TO BE DIVERTED FROM ENGRO TO GUDDU PLANT
The Express Tribune, November 6th, 2015.
ISLAMABAD: Petroleum and Natural Resources Minister ShahidKhaqanAbbasi has said that gas supply will be diverted from Engro Fertilizers to the Guddu power plant in December this year in a bid to increase electricity production from the plant.
“The fertiliser manufacturer, however, will be provided gas from other sources to meet its needs,” said the minister while talking to The Express Tribune.
Earlier, in a meeting chaired by Prime Minister Nawaz Sharif on October 14, the Ministry of Water and Power and the Ministry of Petroleum and Natural Resources got engaged in an argument over diverting gas supply from Engro Fertilizers to the Guddu power plant.
Water and Power Secretary YounusDagha suggested that 60 million cubic feet of gas (mmcfd) should be withdrawn from Engro Fertilizers and it should be provided to the Guddu plant after December 2015 as envisaged in an agreement.
However, the petroleum minister responded that Engro had formally purchased the gas and it could not be used for other purposes.
Earlier, 60 mmcfd was diverted from the Guddu plant to Engro Fertilizers and the period was extended to December 2015 because of delay in start of operations at the new Guddu plant. In response to the continuous gas supply for one year, Engro offered to install two gas-booster compressors at the power plant with maintenance services.
In the meeting, the petroleum minister briefed the participants about expected gas supply to the Guddu plant in the summer of next year.
At present, 250 mmcfd of gas is being supplied to the plant for producing 747 megawatts of electricity, which will be enhanced by 700MW through additional supply of 100 mmcfd from a new pipeline from the Mari gas field, which will start running in January.
According to the minister, an additional 30 mmcfd will be available depending on repair and maintenance of the existing Sui pipeline. However, the repair work will take six months.
The meeting was told that funding for laying the new pipeline and the repair of Sui pipeline was a major obstacle.
The water and power secretary argued that the Guddu plant needed 215 mmcfd of gas for boosting power generation by 600-700MW by April 2016 and any gas shortage would lead to a decrease in electricity production in the summer of 2016.
Saying that demand for electricity would rise during summer next year, the prime minister gave directives that the required gas should be provided from Sui to the Guddu plant by the end of March 2016.
He also ordered that all legal avenues should be tapped to expedite the repair work. A mass awareness campaign should be undertaken for energy conservation, he said.
A representative of the Ministry of Petroleum aired concern over the financing gap that could hamper repair work on the Sui pipeline. “The completion of repairs could be possible in six months, therefore, it will be difficult to meet the deadline of March 2016,” he said.
The water and power secretary suggested that his division could arrange funds from its resources to meet the repair expenses within the set timeframe.
The meeting participants decided that the Ministry of Petroleum would ensure the supply of required gas volume of 215 mmcfd to the Guddu power plant by March next year.
It would complete construction of the pipeline from Mari field to the Guddu plant by the end of January next year and would also come up with estimates for the repair of pipeline from Sui to the power plant.
The petroleum ministry will provide the expenses estimates to the water and power ministry for arranging necessary funds.
QAIM SEEKS WB FUNDING FOR COAL-FIRED POWER PROJECTS
Dawn, October 6th, 2015
KARACHI: Sindh Chief Minister Syed Qaim Ali Shah has asked the World Bank to assist his government in low-cost power generation.
“We have one of the largest coal reserves in the world which is enough to meet our energy requirements for centuries. What we want you to help us in generating environmental-friendly coal-fired energy in the province,” he said while talking to World Bank Country Director Illango Patchamuthu, who called on him at CM House on Monday.
The CM recalled that the World Bank was financing coal-fired power generation in South Africa. “Keeping in view the instance and our dire need the World Bank must consider our request.”
He said that the World Bank could also help the Sindh government in acquiring new technology to generate environment friendly and cheap coal-fired energy.
He also said that the agriculture sector had a substantial role in reducing nutrition gap. “But it is stagnant on different counts, including retardation of soil fertility, old-fashioned cultivation practices and lack of cropping zoning and diversification.”
Mr Shah also urged the WB official in Pakistan to help Sindh to explore the avenues of overseas employment opportunities for its skilled youth. “Under the Benazir Youth Development Programme we are imparting training to our youths in 70 different trades. If a chunk of our skilled youth is provided with overseas employment opportunities it would be a great help to reduce our burden and shape up their career,” he said.
Mr Patchamuthu informed the CM that the World Bank had stopped funding coal-fired power generation projects primarily for environmental concerns, but he would take up the issue with the WB management to help Sindh in low-cost power generation.
Earlier, Finance Minister Syed Murad Ali Shah said that the WB was providing support in different projects of the agriculture sector, including the Rs112.360 million Sindh agriculture growth project.
He said that a Rs30 billion Sindh irrigated agriculture productivity enhancement project would be launched shortly.
CM FOR ELIMINATING BOTTLENECKS IN THAR COAL PROJECTS
Dawn, October 12th, 2015
KARACHI: Sindh Chief Minister Syed Qaim Ali Shah has directed the Thar Coal and Energy Board to remove all bottlenecks from the power projects launched in Thar.
“We have to produce power from Thar coal. It was the dream of Shaheed Benazir Bhutto and I am committed to make it true,” said the chief minister while presiding over 19th meeting of the board at the CM House.
He said that his government was committed to steer the province out of energy crisis and asked Senior Minister for Finance Syed Murad Ali Shah to invite Dr Samar Mubarak Mand to brief the board on technical aspects of his project.
He said that he wanted to ensure that all people uprooted because of the power projects were settled in their new houses before the power plant had been commissioned.
Earlier, giving a presentation to the chief minister on the progress so far made on the project, Thar Coal Managing Director Aijaz Ahmed said that anMoU had been signed with Shanghai Electric Power for supply of coal. Block-1 in Thar coal field had been allotted to Sino-Sindh Global Mining where it would also install four power plants, each one of 330 MW for $1.1 billion.
He said that Block-II had been given to Sindh Engro Coal Mining Company (SECMC). The Block-V where DrMand had launched underground coal gasification project and power plant 38 bore holes had been drilled and test burn had been conducted, he said.
He said that Block-VI had been given to UK-based Oracle Coal-fields and Block IV to Harbin Electric Company, China. Similarly Block-III A& B had been allotted to Asia Power Group Ltd, he said.
NANDIPUR PROJECT’S BOSS SENT PACKING
The Express Tribune, October 15th, 2015.
By Abdul Manan / Zafar Bhutta
ISLAMABAD: As calls for a probe into the fledgling Nandipur power project rose to a crescendo, the government has sacked the project’s managing director and asked the water and power ministry to take over the project and make it operational within a fortnight.
MD Captain (retd) Muhammad Mehmood was dismissed by Prime Minister Nawaz Sharif during a high-level meeting of the Cabinet Committee on Energy at his office on Wednesday. Muzaffargarh Power Plant’s Chief Engineer Muhammad Tariq has been given the additional charge of the 425 megawatt project.
The prime minister directed the power ministry to get the Gujranwala based plant functional within 15 days. The water and power secretary, who attended Wednesday’s meeting, could not be reached for confirmation despite repeated attempts.
Troubles for Captain (retd) Mehmood, a Grade-19 officer, had been brewing since long. Under his watch the plant had stopped working soon after it was inaugurated in May 2014. He had also run into trouble with the company’s board of directors and the water and power ministry.
Among the reasons being cited for his dismissal is his refusal to sign an agreement with Chinese firm Dong Fang to operate the plant for six months, and for trying to bypass the board of directors to award the operation and maintenance contract to a Malaysian firm on higher rates and for an extended period.
“He refused to sign any document relating to the agreement with Engineering, Procurement and Construction’s (EPC) contractor Dong Fang, which upset the water and power ministry” said a senior official of the ministry familiar with the matter.
Interestingly, Capt (retd) Mehmood had been awarded Tamgha-e-Imtiaz for his ‘untiring work’ for the company. The award had been conferred on the recommendations of Punjab Chief Minister Shahbaz Sharif.
During Wednesday’s meeting, the prime minister was briefed on various power projects in the country, especially those earmarked under the China-Pakistan Economic Corridor. He directed enhanced inter-ministerial coordination for early completion of the projects. “Transparency and adherence to relevant laws and rules must be given topmost priority in all these projects.”
“China is a great friend and has tremendously justified our time-tested friendship by heavily investing in Pakistan, especially in energy related projects, which would certainly resolve the important issue of energy deficiency in the country,” said Nawaz.
During the meeting, the premier was told that of the Rs57 billion allocated for the Nandipur power project, Rs49.5 billion has been released so far.
Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi briefed the prime minister on the provision of liquefied natural gas (LNG) to the power sector. The premier directed the ministry to undertake an awareness drive about the project and its costs by holding workshops and seminars.
NANDIPUR STARTS PRODUCING 470MW
The News International, October 27, 2015
ISLAMABAD: Nandipur Power Plant went on producing 470 MW on Monday and was finally adjusted to 430 MW which is being injected to national grid.
It made dead plant equipment, stuck on Port Qasim for four years, successfully electricity producing plant, sources working at site confirmed to The News and concerned officials in Islamabad also verified the same.
Currently, the plant is operating by using furnace oil as fuel and after installation of gas convertor plant in next five months, the combined cycle plant will be producing much cheaper electricity for around Rs10 per unit.
Nepra has approved a tariff of Rs11.3 per unit for production of electricity from furnace oil for the Nandipur plant. It is pertinent to mention here that tariff demanded from Nepra by KP government for hydro power plants is Rs12 per unit of electricity.
Nandipur power project was conceived and approval for the cost for purchasing machinery was given during Musharraf regime. EPC (Engineering, Procurement, Construction) contractor M/s Dongfong was hired during PPP regime. Plant machinery continued catching rust and remained stuck at Port Qasim for four long years because of incompetence and vested interests of officials and their political masters.
The plant was installed and successfully test run in August this year but was shut down subsequently because an agreement reached with a Malaysian firm for Operation & Maintenance (O & M) of plant was cancelled as it was demanding very high rates. A project which remained dead for around a decade was successfully installed and tested but was made a ‘big scandal’ because of few weeks delay in its operations.
Priority fuel for the plant was natural gas right from the day this plant was conceived but it was decided to make it a dual fuel plant as bankers were not ready to finance a single fuel plant fearing losing their money in case of unavailability of a single fuel like gas.
It was observed during inspection of the plant earlier this year that Furnace Oil Treatment Plant (FOTP) was of low capacity (60%) as compared to the required measurement. This was a fact and was highlighted as one of the big points of the ‘scandal’ without explaining functioning of FOTP, possibility of its up-gradation to the desired level and as to who was responsible for installation of low capacity plant which remained for years at Port Qasim. FOTP is needed only when plant is operating on furnace oil. Most importantly current situation of FOTP is not being highlighted.
It has been established that it was responsibility of the EPC to install required capacity FOTP and made the plant fully functional. Those who made an important energy project a mega scam are unaware that EPC contractor not only admitted this fact but has already started working on up-gradation of FOTP plant and this enhancement process will be completed in next three to four months without spending of a single penny from the Pakistan government exchequer.
The government of Pakistan has $35 million bank guarantees of EPC contractor it submitted for Chicho Ki Malian project which was scrapped and government can cash these guarantees if FOTP not functioned at the desired level. FOTP is a small part of a big power unit and its function is to purify furnace oil from sulfur contents. Interestingly, the plant is operating and will operate on full capacity with FOTP working on 60% capacity as plant has storage of around 28,000 metric tonn of purified furnace oil which will continue fulfilling 40% deficiency till the time FOTP is up-graded to the required level. The machinery purchased by previous governments is an old model.
Officials say that as there are other plants operating on different fuels which can generate relatively cheaper electricity so Nandipur plant can also be shut down for seven to eight hours per day when power requirements at the national level are low and in this duration FOTP will continue purifying furnace oil.
The second LNG terminal is not competed yet as it is expected to be completed early next year following which RLNG will be included in the system and will be available for Nandipur resulting in production of much cheaper electricity.
Board of GENCO-III which owns Nandipur plant has recently requested Nepra to increase the already decided per unit price of electricity being produced on furnace oil from Nandipur as there are some costs which were not considered by the authority while penning down April 2015 judgement through which per unit rate was decided.
If Nepra does not allow increase in the price, it will add to the circular debt but once the plant is converted on gas this effect will also be minimised. Nepra will decide per unit cost of electricity produced from Nandipur by using gas after gas convertor plant will be installed. Old model machinery will produce costlier electricity as compare to latest models of gas turbines but scrapping of machinery bought by previous government for hundreds of millions of dollars was not an option. Experts having understanding of whole process and are aware of history of the project term successful operation of Nandipur Power Plant as a big success which will add considerable electricity in the national grid which will also become much cheaper when will be converted on gas.
‘SOLAR PARK PRODUCING 12PC MORE POWER THAN TARGET’
Dawn, November 5th, 2015
FAISAL ALI GHUMMAN
LAHORE: The Quaid-i-Azam Solar Park, Bahawalpur, the first ever DC installation in Pakistan, is currently producing up to 12pc more power than the energy production requirements set by the National Electric Power Regulatory Authority (Nepra).
The first phase of the plant was completed in March last when it started producing 100 megawatt.
“The plant is giving an average yield of 169 gigawatt hour against the annual target of 153GW hour to meet 153 million units production requirement,” says Najam Ahmed Shah, the chief executive officer of the Quaid-i-Azam Solar Power (pvt) Limited.
Speaking to Lahore-based reporters at the site for the QASP on Tuesday, Shah said extra profits coming from the first phase of 100MW plant would be shared with the distribution companies and people under Nepra rules.
Responding to a question about controversies over the project, he said 1,000MW solar park only required capital expenditure in the form of financial loans as its production didn’t require any fuel while its maintenance cost was negligible. “The solar energy can be the cheapest mode of power in Pakistan if commercial loans are available on easy terms.”
Shah told a questioner that the solar panels spread across 500 acre produced maximum energy when sun rays were maximum and produced less power in high temperatures. He said the comparison of solar radiation and temperature in Pakistan with Germany suggested that panels in Pakistan would produce 33pc more power than Germany.
Dr Rana Abdul Jabbar Khan, focal person for QASP, told reporters that in first phase 100MW power had already been connected with the power distribution system while 300MW power plants were at final stage and expected to produce solar power by the end of December.
He said the remaining 600MW power plants would be set up in third phase starting in January 2016.
Dr Khan said the QASP would be able to get claim for carbon credit as the Clean Development Mechanism Additionality (CDMA) had also conducted analysis through on-site survey for our claim. He said the carbon claim was only linked with solar power generation as 70pc thermal generation in Pakistan was emitting high levels of carbon dioxide in atmosphere.
About solar power tariff controversy, Dr Khan said the present tariff was 14.15 cents which was expected to drop to single digit next year keeping in view the increasing trend of solar installations and production globally.
Earlier, briefing the journalists on capacity factor and energy production comparison, the CEO said the average efficiency of 100MW plant over the years was 80pc with average 20pc plant losses. He said the DC plant would suffer 20pc losses because of conversion into AC.
The monthly revenue (including tax) reached its peak of over Rs320 million in September from Rs3.548 million in March this year; 67.8 million units were exported against feasibility target of 64.9 million units and 62.2 million units Nepra target during cumulative energy production comparison for invoiced months. He said the cost of 100 MW solar plant is $131.15 million.
Comparing few countries for installed solar power and potential for solar in various countries, Shah said irradiation for 100 MW installed plant in Pakistan was 1,920 KWh/m compared to India’s 1,900 against 4GW installed capacity, China 1,700 (28GW), and Germany 1,100 (38GW).
The solar energy fits very well into Pakistan’s energy situation (fuel imports, land curve) while the country is a good location for solar energy (e.g better than Germany, Spain or China).
The visit to the site showed that the 100 MW solar power plant was injecting power into national grid through a centralised monitoring system while Chinese company Zonergy was currently raising PV plant and substations at three 100 MW plants each. A 220 KV grid station is being installed for producing and transmitting 600 MW next year.
The QASP is being guarded by 700 security officials of the Special Protection Unit headed by an SP rank officer. The SPU is giving outer and internal cover to 675 Chinese workers and few other foreigners.
Once again, the prevailing atmosphere of pessimism and constant criticism of everything is getting irritating and one feels like hearing something a little different. So here’s a thought that brightens the future up a little: electricity will soon become a free commodity. Allow me to explain.
If you haven’t been following the developments taking place in solar thus far, you’re missing out. It wasn’t very long ago that we used to think of solar electricity as something that will come in the distant future. The key to the spread of the technology was the cost. Once a single unit of electricity generated from solar power, including the cost of installation, becomes equal to the cost of the same unit purchased from the grid, we have a situation that industry insiders call ‘grid parity’.
The objective of getting grid parity for solar was developed a little earlier than 2010, and received a major boost from the presidency of Barack Obama, who had made it one of his principal campaign pledges in 2008. Three years ago, in 2012, research conducted by the Institute for Local Self Reliance (ILSR) predicted that by 2015, 22 million Americans and two large metropolitan areas would have grid parity.
Things moved a lot faster than that in reality. Today, six metropolitan areas and close to 30 million people in America are living in grid parity, as per figures compiled by ILSR itself, and the adoption of solar is accelerating.
To get an idea of what the revolution will look like, think about what has just happened in communications. Remember the old days when getting a landline telephone was such a huge hassle? Remember booking an international call, and hurrying through it because of the exorbitant charges? Remember the early days of mobile communications, when we all knew one person who had a mobile phone?
Now recall how quickly all that changed. In the early ’90s, mobile phones were rare and communications was limited and expensive. By the late ’90s, more and more people possessed mobile phones but they were still a status symbol. Something happened in the early 2000s, and very quickly before our very eyes, mobile phones became ubiquitous and we joked about seeing a rickshaw driver carrying a mobile phone.
Today, communications is basically a free commodity in the era of WhatsApp and Facebook messenger and Skype. Today, we can not only speak with anybody in the world whenever we wish, we can share photographs and videos and make video calls pretty much for free, except for the initial cost of a smartphone and the monthly cost of a high-speed connection, whether 4G- or DSL-based. And this revolution happened very fast, so fast in fact that we could see and feel its impact on our lives in real time.
The technology to make this revolution happen was around for a very long time, but what made the revolution possible was a steep drop in its cost. Once the cost of satellite uplinks dropped, private TV channels became possible. Once the cost of mobile phone towers dropped, and the cost of batteries, which were the main expense item in a mobile handset in any case, came down, connectivity and handsets could become commercially viable on a mass scale.
And when that happened, the lack of landline infrastructure became a source of latent demand. Just think about how much your own world has changed because of these technologies. I remember the first time I received an email from home, when I was in college, and how exciting it seemed at the time, when we were accustomed to communicating with family through letters that took weeks to arrive, or through expensive phone calls which were a rarity.
Something similar is about to happen in the power sector. Today you might know a few people who are using solar to power their homes, either partially or in full. In a few years, you’ll know a lot more and it will be a bit of a status symbol. Then a day will come when they will be so cheap, and their use will spread so fast, that everyone will have one, and the lack of grid electricity will become a source of latent demand, spurring on the adoption of the technology at an accelerating rate.
Once you digest the implications of what free power means, you’ll realise the world is set to change in ways even more fundamental than how the spread of communications changed it. Ever since the early days of the industrial revolution, one of the biggest constraints to the growth of technology has been energy, and the search for cheaper and abundant sources of energy has fuelled much of modern history. With the advent of solar, that history is about to change as we learn to tap the infinite energy that the sun bathes our planet in every day.
What is needed at the moment is to create a policy space that helps spur this revolution on. Bringing down the price of solar is one thing. Encouraging its spread will also involve raising awareness about its benefits, and creating regimes like feed-in tariffs for homes to sell their surplus electricity into the grid. The cost of batteries that can store up to 10KWh of electricity, equal to a generator that can run two air conditioners in addition to powering the entire house, is already dropping at a faster rate than what was imagined earlier this year.
We are at the very start of this revolution now. It might take a decade, or perhaps longer still, before its full transformative impact sweeps over us, but it’s coming for sure and I for one cannot wait to see what kind of a world it will create.